Disney Swings To Profit As Parks Reopen

Walt Disney Co. has swung into profit as reopened parks provide a revenue bounce.

Gatekeepers News reports that as theme parks which were earlier closed last year, reopened for part or all of this year’s quarter, revenue in the parks and products division has surged to $4.3 billion from $1.1 billion a year ago.

Last summer, Disney World in Florida reopened while California’s Disneyland came back at the end of April 2021.

The company states that the effect of the pandemic lingers at the parks as many are operating at reduced capacities.

Disney is among the country’s largest employers to require worker vaccinations. In July, it announced that visitors to its U.S. theme parks must wear masks indoors.

Disney CEO Bob Chapek while commenting on concerns of the infectious delta variant affecting the park business, said the company sees “strong demand” at the parks continues to stay open, although there have been group and convention cancellations.

Third Bridge analyst Joe McCormack said, Disney’s ability to keep its parks and resorts open “is clearly of the utmost importance to their bottom line.”

On Thursday, Disney reported that its net income was $918 million in the three months through July 3, compared with a loss of $4.72 billion in its fiscal third quarter a year ago.

It added that earnings per share came to 50 cents, or 80 cents excluding one-time items, while revenue climbed 45% to $17.02 billion.

Earlier, analysts polled by FactSet predicted earnings of 55 cents per share on revenue of $16.76 billion, however, Disney shares jumped more than 5% to $188.72 in after-hours trading.

Entertainment companies like Disney are trying to win the viewers of the future with streaming services as the traditional TV networks business shrinks. Chapek said, “Our direct-to-consumer business is the company’s top priority.”

Having ended the quarter with 116 million Disney+ subscribers, about double the number from a year ago, and nearly 174 million streaming subscribers including Disney+, ESPN+, and Hulu; the company stated that it expects 230 to 260 million Disney+ subscribers by 2024.

Its kid-friendly back catalog and original hit series like Marvel’s “WandaVision” and the Star Wars spinoff “The Mandalorian” have also helped to drive sign-ups as people stuck at home during the pandemic needed some means of entertainment.

As subscribers grow, the company makes less from each one as it expands its significantly cheaper Disney+ Hotstar service in countries like Indonesia, Malaysia, and Thailand.

Reports stated that the average amount of money it pulled from each customer fell 10% in the quarter, to $4.16; without Hotstar, which makes up about 40% of the subscriber base, it would have been $6.12.

Meanwhile, the streaming industry leader, Netflix, has had some growing pains this year after 2020′s record-setting subscriber gains and competition increases.

Revenue from Disney’s streaming services, TV networks, and the company’s huge movie business, rose 18% to $12.68 billion.