The Walt Disney Company today reported a 37 percent drop in theme park segment revenue in the fiscal year ending September 30, due to the ongoing effects of the pandemic. But in an investors's conference call, company leaders pointed to improving performance at reopened parks, especially at Walt Disney World, which is now operating at higher capacity, even though the Disney anticipates Disneyland in California remaining closed for the remainder of the year.
Disney's Parks, Experiences and Products segment reported $2.58 billion in revenue during the fourth quarter of the fiscal year — down 61 percent from $6.655 billion in the same period in 2019. Disney estimated that the total net adverse impact of Covid-19 on segment operating income in the quarter was approximately $2.4 billion, leading to a loss of $1.1 billion for the quarter.
The Disneyland Resort and Disney Cruise Line were closed for the entirety of the quarter, while the Walt Disney World Resort and Disneyland Paris re-opened in mid-July and Hong Kong Disneyland Resort was open for about two weeks at the beginning of the quarter and about one week at the end of the quarter.
For the year, Disney reported $16.5 in revenue for its theme park segment, down from 2019's $26.225 billion.
"Even with the disruption caused by COVID-19, we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth,” Disney CEO Bob Chapek said. "The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we’re pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year."
"On the parks side, we've proven over many months that we're able to operate our parks responsibly, following strictly enforced guidelines provided by health care experts and successfully reopening our parks in Orlando, Shanghai, Tokyo and Hong Kong," Chapek said. "We've also reopened Disneyland Paris for several months, although the resort is now temporarily closed due to President Macron's recent lockdown order in response to a resurgence in Covid cases in Europe.
"People have shown a willingness to visit our parks, which I believe is a testament to the fact that they feel competent in the measures we've taken. And we're very encouraged by the positive news earlier this week on the progress of potential vaccines.
"Unfortunately, we're extremely disappointed that the state of California continues to keep Disneyland closed, despite our proven track record. Our health and safety protocols are all science-based and have the support of labor unions representing 99 percent of our hourly cast members. Frankly, as we and other civic leaders have stated before, we believe state leadership should look objectively at what we've achieved successfully in our parks around the world — all based on science — as opposed to setting an arbitrary standard that is precluding our cast members from getting back to work while decimating small businesses in the local community."
Chief Financial Officer Christine McCarthy noted that the Walt Disney World Resort is seeing park reservations at 77 percent of current capacity for the current quarter, with Thanksgiving week booked close to capacity.
"We are pleased to report that Walt Disney World, Shanghai Disney Resort, and Hong Kong Disneyland all achieved a net positive contribution in the quarter, which means we generated revenue that exceeded the variable costs associated with reopening," McCarthy said.
"We're actually very encouraged by what we're seeing right now in our parks across the world," Chapek said. "There are really two dynamics that are going on. Number one, our park operators — which as you know are the best in the world — are becoming much more efficient and effective in operating under Covid guidelines, and we've been able to pretty materially increase our capacity and still stay within the guidelines that local governments are giving us, for example, six-foot social distancing, and this is happening across the across our parks across the world.
"In fact, Walt Disney World, which was at a 25 percent capacity constraint, which was our industrial engineering estimate to keep six-foot social distancing, now has been able to increase to 35 percent of capacity — so almost a 50 percent increase in the number of guests that we can allow in and still adhere to the local guidelines and the guidelines that are stipulated by the CDC with the six-foot social distancing. So we're very pleased by how we've become adept at operating under these constraints.
"But the second thing that's even more encouraging is the increasing demand that's growing for our parks across the world. I think it says two different things. Number one, it shows the love that guests have for our experiences that we have within our parks and the tremendous IP that we have as a company have, but I also think it speaks to the trust that people have, given the track record that we now have after months of operating across the globe with very stringent guidelines."
* * *
We wanted you to read this article before we make our newsletter pitch, unlike so many other websites. If you appreciate that — and our approach to covering theme park news — please sign up for our free, three-times-a-week email newsletter. Thank you.
This article has been archived and is no longer accepting comments.