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Cable/Video

Revenues at Disney's direct-to-consumer/international unit climb to $4B

BURBANK, Calif. – The Walt Disney Company (NYSE: DIS) today reported earnings for its third fiscal quarter ended June 27, 2020. Diluted earnings per share (EPS) from continuing operations for the quarter was a loss of $2.61 compared to income of $0.79 in the prior-year quarter. Excluding certain items affecting comparability(1), diluted EPS for the quarter decreased 94% to $0.08 from $1.34 in the prior-year quarter. EPS from continuing operations for the nine months ended June 27, 2020 was a loss of $1.17 compared to income of $5.97 in the prior-year period. Excluding certain items affecting comparability), EPS for the nine months decreased 53% to $2.22 from $4.74 in the prior-year period. Results in the quarter and nine months ended June 27, 2020 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Parks, Experiences and Products segment as most of our theme parks and resorts were closed for the entire quarter and our cruise ship sailings were suspended.

Media Networks
Media Networks revenues for the quarter decreased 2% to $6.6 billion, and segment operating income increased 48% to $3.2 billion. The following table provides further detail of the Media Networks results (in millions):

Cable Networks
Cable Networks revenues for the quarter decreased 10% to $4.0 billion and operating income increased 50% to $2.5 billion. The increase in operating income was due to increases at ESPN and, to a lesser extent, the FX Networks.

Broadcasting
Broadcasting revenues for the quarter increased 12% to $2.5 billion and operating income increased 55% to $477 million. The increase in operating income was due to lower network programming and production costs, an increase in affiliate revenue due to higher rates, higher program sales and lower marketing costs. These increases were partially offset by lower advertising revenue.

Parks, Experiences and Products
Parks, Experiences and Products revenues for the quarter decreased 85% to $1.0 billion, and segment operating results decreased $3.7 billion to a loss of $2.0 billion. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses and to a lesser extent, at our merchandise licensing and retail businesses.

As a result of COVID-19, our domestic parks and resorts, cruise line business and Disneyland Paris were closed for all of the current quarter. Our Asia parks and resorts were closed for a portion of the current quarter, as Shanghai Disney Resort re-opened in May and Hong Kong Disneyland Resort re-opened in late June (Hong Kong Disneyland Resort closed again in July).

We estimate the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $3.5 billion.

Studio Entertainment
Studio Entertainment revenues for the quarter decreased 55% to $1.7 billion and segment operating income decreased 16% to $668 million. The decrease in operating income was due to lower theatrical distribution results, partially offset by growth from TV/SVOD distribution, a decrease in home entertainment marketing costs and lower film cost impairments.

Direct-to-Consumer & International
Direct-to-Consumer & International revenues for the quarter increased 2% to $4.0 billion and segment operating loss increased from $562 million to $706 million. The increase in operating loss was due to costs associated with the ongoing launch of Disney+, partially offset by higher results at Star and ESPN+.

The increase at Star was primarily due to lower programming costs, partially offset by a decrease in advertising impressions. The decrease in programming costs was due to the comparison to the quadrennial International Cricket Council World Cup matches that aired in the prior year quarter and a shift in the timing of Indian Premier League cricket games to later quarters due to COVID-19. The decrease in advertising impressions was primarily due to the lack of cricket matches.

Read the full announcement here.

The Walt Disney Company

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