Disney Q1 profit falls but beats expectations due to streaming services

NEW YORK (AP) — The Walt Disney Co’s net income fell sharply in its most-recent quarter, as the coronavirus pandemic still weighs heavily on many of its businesses, from theme parks to movies.

But the results on Thursday surpassed Wall Street’s expectations thanks to subscribers flocking to Disney+ and other of the entertainment giant’s streaming services.

Disney’s parks and resorts have been closed or operating at significantly reduced capacity since shortly after the pandemic forced lockdowns across the United States (US) in March of last year. Its cruise ships have also been suspended during that time, live sporting events have been cancelled, and film and TV projects have been disrupted.

Disney said it expects coronavirus disruption to cost about USD1 billion in its current fiscal year. The biggest hit to the company in the quarter that ended January 2 was the closure and limited reopening of its theme parks, which cost the company about USD2.6 billion.

The company based in Burbank, California, has been focussing on its steaming services — Disney+, ESPN+, and Hulu — to drive growth. Disney+ subscribers totalled 94.9 million at the end of the quarter, more than double the subscriber base a year ago, when the service had been operating for only about two months. ESPN+ subscribers jumped 83 per cent to 12.1 million and Hulu subscribers rose 30 per cent to 39.4 million.

Guests watch a show near a statue of Walt Disney and Mickey Mouse in front of the Cinderella Castle at the Magic Kingdom at Walt Disney World in Lake Buena Vista, Florida. PHOTO: AP

For Disney’s fiscal first quarter, net income totalled USD17 million, or one cent per share, compared with USD2.1 billion or USD1.16 cents per share a year earlier. Excluding one-time items, net income totalled 32 cents per share, compared with USD1.53 per share in the prior-year quarter.

Revenue fell 22 per cent to USD16.25 billion from USD20.88 billion. The results beat Wall Street expectations.

The average estimate of 14 analysts surveyed by Zacks Investment Research was for a loss of 45 cents per share. Eleven analysts surveyed by Zacks expected revenue of USD15.84 billion.

Disney’s stock rose about 1.7 per cent in after-market trading following the release of the earnings report. The shares are up 5.4 per cent since the start of the year, compared with a 4.3 per cent rise in the S&P 500 index.