In its quarterly earnings call with investors on Tuesday afternoon, homebound Disney executives offered sobering assessments of the impact of the coronavirus outbreak on the multinational entertainment company's businesses.
With closures of its theme parks, resorts and cruise ships, a shuttered movie business and declining television ad revenue, the company estimates losses to be "as much as $1.4 billion" in the second quarter of 2020.
Chairman of the Board of Directors Bob Iger, who delayed a planned retirement to help guide the company through the crisis, began the call sounding beleaguered. "Like so many other industries, the pandemic has hit us hard." Iger's replacement, Bob Chapek, said that when he started the new job of CEO just two and a half months ago, "None of us could've imagined the suffering and sacrifice that we're now seeing around the world."
Disney also announced that Shanghai Disney will open on May 11. Chapek, a 30-year veteran of the company, called it a "phased approach," explaining they would limit attendance and everyone, employees and guests, would wear masks.
As the nation's largest media conglomerate, Disney's brands include Pixar, Marvel, Star Wars, 21st Century Fox, ABC and ESPN. Disney also controls Hulu and launched its new streaming service, Disney+, last November.
UBS analyst John Hodulik says, even accounting for the lack of live sports during the pandemic, Disney added far fewer subscribers to Hulu Live than he was expecting. As the economy slows and people continue to lose their jobs, "we've got a very tough quarter coming."
During the call, Disney CFO Christine McCarthy announced the board's decision to forgo paying a cash dividend for the first half of fiscal 2020, saving the company about $1.6 billion in cash.
"It makes sense," analyst Hodulik says. Since Disney furloughed more than 100,000 employees, "there's no reason why the shareholders shouldn't have to share in some of the pain."
Disney's next big movie, Mulan, is scheduled to open July 24. Chapek said "fingers are crossed" that by then there will be "incredible pent-up demand."
Iger, the former CEO who saw the company through economic downturns and natural disasters, believes the need for Disney's "messages of hope and optimism" is greater than ever and will sustain the company through this unprecedented time.
"People want good news. They want to feel joy and the feeling of togetherness," he said. In other words, a magical kingdom.
NOEL KING, HOST:
And speaking of crowds, Disney is all about crowds - parks, resorts, cruises. So for Disney, this pandemic has hurt. We see evidence of that in the company's first quarterly earnings report since the COVID-19 outbreak in the U.S. Here's NPR's Elizabeth Blair.
ELIZABETH BLAIR, BYLINE: A lot of Disney's business relies on things people can't do right now, whether it's stand in line at a theme park, go to the movies or attend live sports that are broadcast on ESPN. Bob Chapek recently became Disney's CEO.
(SOUNDBITE OF ARCHIVED RECORDING)
BOB CHAPEK: When I stepped into this new job two and a half months ago, none of us could have imagined the suffering and sacrifice that we're now seeing around the world.
BLAIR: More than 100,000 Disney employees have been furloughed, and the Disney board announced it will not pay dividends to shareholders, saving the company $1.6 billion. One area of growth is Disney+, where the number of subscribers exceeded the company's expectations, thanks to shows like "The Mandalorian."
(SOUNDBITE OF TV SHOW, "THE MANDALORIAN")
PEDRO PASCAL: (As The Mandalorian) I don't know if you heard, but the Empire is gone.
BLAIR: Still, the new streaming service isn't yet profitable. Parks and resorts are closed. Cruises are suspended. Ad revenue is down. John Hodulik, an analyst for UBS, says there were other disappointments.
JOHN HODULIK: We had expected Disney to add 300,000 to Hulu Live customers here in the March quarter. They added 100,000. Now, again, there's no live sports, and they did do a price increase, so that number was still less than we thought.
BLAIR: Hodulik says the next quarter could be worse. Former CEO and board chairman Bob Iger delayed his retirement to help the company get through the crisis. He sounded beleaguered but still optimistic that people's emotional connection to Disney is strong.
(SOUNDBITE OF ARCHIVED RECORDING)
BOB IGER: People want good news. They want to experience joy and the feeling of togetherness. And for all these reasons, we will continue to tell stories that uplift and enrich people's lives.
BLAIR: A bright spot during the earnings call was the announcement that Shanghai Disneyland will reopen on May 11. Attendance will be limited, and everyone will be required to wear masks.
Elizabeth Blair, NPR News. Transcript provided by NPR, Copyright NPR.