Disney Adds Fewer-Than-Expected Disney+ Subscribers; Revenue Falls Short
May 13 2021 - 4:14PM
Dow Jones News
By Erich Schwartzel and Allison Prang
Walt Disney Co. added 8.7 million Disney+ subscribers in the
second quarter, and its parks segment logged an operating loss as
the company faces an economy trying to emerge from the Covid-19
pandemic.
Disney+ ended the quarter with 103.6 million subscribers,
compared with 94.9 million on Jan. 2. Analysts polled by FactSet
were expecting 109.3 million subscribers.
In March, the streaming service passed the
100-million-subscriber mark after just 16 months of operation,
cementing its status as the most successful streaming entrant since
Netflix Inc. defined the field years ago.
Meanwhile, the company's parks, experiences and products
business -- which includes its storied Disney World and Disneyland
resorts -- saw a 44% drop in revenue compared with a year earlier.
That division reported an operating loss of $406 million.
Overall, Disney's total revenue fell 13% from the comparable
2020 period to $15.61 billion. According to FactSet, analysts were
expecting $15.86 billion.
Disney logged $901 million in net income, or earnings of 49
cents a share. A year earlier, the company's earnings were $460
million, or 25 cents a share. The company's tax expenses a year ago
were higher, which hurt its year-earlier results, and the company
also logged $305 million in net other income for the recent
three-month period.
Adjusted earnings were 79 cents a share, while analysts were
expecting 26 cents a share according to FactSet.
Shares fell 4.2% in after-hours trading.
Disney's quarterly earnings have lately provided a glimpse of a
company at a crossroads. Covid-19 immediately shut down two of its
core businesses -- parks and movies -- but also accelerated focus
and investment toward streaming services seen by Wall Street as
critical to its post-pandemic future. Good news about its streaming
growth kept the stock price soaring despite steep losses in other
divisions. However, summer travel and pent-up demand for live
events could depress sign-ups at Disney+ and its other services in
the months ahead.
Disney shares plummeted to their lowest point since 2014 when
the pandemic hit in March 2020, but they had rebounded to record
highs a year later. Shares have been on a slight downward trend
since then, hovering around $180.
In February, Disney eked out a quarterly profit after two
quarters of losses. The second-quarter earnings, which cover
roughly the first three months of the year, are likely to reflect
continued disruption in parks and studio entertainment.
Walt Disney World in Orlando and other parks around the world
were open for the quarter, though at reduced capacity, and a
majority of U.S. theaters weren't operating until the last few
weeks of March. Disney's only major theatrical release so far this
year, "Raya and the Last Dragon," made $44 million after opening in
early March. In normal times, Disney animated releases typically
gross more than $150 million at the domestic box office.
Instead, the most popular Disney products from the quarter were
streaming shows on Disney+ like "WandaVision." It brought new fans
into the Marvel fold and benefited from Friday night premieres with
little outside competition like happy hours or live music.
Netflix shares are down more than 11% since disclosing on its
earnings call last month that the reopening was leading to a
slowdown in sign-ups. "There's a boost in engagement that you get
when people are in a lockdown situation," Netflix operations chief
Gregory Peters said at an investor event in March.
At Disney, the streaming service has also become a key piece of
its theatrical strategy. The company has two major releases on the
docket for this summer: "Cruella" and "Black Widow," starring
Scarlett Johansson as the Marvel superhero.
Both movies will be released on the big screen but also offered
for home viewing on Disney+ for an additional $30. On Thursday,
Disney announced its July 30 release "Jungle Cruise," starring
Dwayne Johnson and based on a Disneyland theme-park ride, will also
be released in theaters and for $30 at-home viewing.
Write to Erich Schwartzel at erich.schwartzel@wsj.com and
Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
May 13, 2021 16:59 ET (20:59 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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