Walt Disney Co (NYSE:DIS) reported a loss for its fourth quarter that was less bad than feared as the media giant reported strong subscriber growth in its recently launched streaming service Disney+.
Overnight on Thursday, the company reported an adjusted loss per share of US$0.20, better than forecasts for a US$0.73 loss but swinging from a US$1.07 profit last year. Revenues meanwhile, stood at US$14.71bn, above estimates of US$14.2bn but down from US$19.1bn a year ago.
The swing into loss and revenues declines were mainly attributed to the effects of the coronavirus pandemic, which forced the company to shutter its theme parks while the closure of cinemas weighed on its studio and media businesses. Disney estimated that the total cost of the pandemic for its 2021 financial year could run to around US$1bn.
The company also refrained in noting the performance of its recent Mulan film, which was released in September amid controversy over comments made by the members of the cast regarding the 2019 Hong Kong protests as well as the decision of the company to film multiple scenes in the Xinjiang region of China in light of the evidence of the existence of re-education camps for the area’s Uyghur minority.
However, one bright spot was the company’s streaming arm, which the company reported had brought in 73.7mln subscribers at the end of the quarter, above estimates of 65.5mln.
“Even with the disruption caused by [coronavirus], we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth”, said Disney chief executive Bob Chapek, adding that the growth of Disney+ had far surpassed their expectations in its first year of existence.
The results followed news in October that Disney has restructured its media and entertainment arm in an effort to accelerate the growth of Disney+ as well as other streaming services under its umbrella.
The company has separated content production from distribution in a bid to be more responsive to consumer demands, while its studios, sports and general entertainment arms are being brought under one division, with distribution and commercialisation to fall under a separate unit.
Nicholas Hyett at Hargreaves Lansdown said the restructuring and the focus on Disney+ marked “a clear bet on a digital first, streaming centric, future”.
“It’s a big gamble for a company which isn’t in the best of financial health at the moment. Net debt is high despite a pretty resilient performance at the cash level, and direct to consumer is still heavily loss making. While a vaccine might accelerate a return to normal in the key parks business, it’s still likely to take months and possibly years before business is back to where it once was. Disney is a unique and honestly exceptional business, controlling some unique and remarkable assets. But, for the first time in forever, the group’s having to completely rethink how it gets its world beating content to consumers. There’s potential to get a reasonable slice of the streaming pie, and that’s a slice worth fighting for”, he added.