According to the Hollywood Reporter, the Coronavirus is having a negative impact on the Walt Disney Company as all the Disney parks have closed as well as the Disney Stores across the world as of today. Laura Martin an analyst reported that the Coronavirus illness is having a significant negative impact on Disney’s “three largest profit centres”, affecting its theme parks and more sporting events including “NCAA, NBA, MLB, MLS and NHL” who have either canceled or postponed their seasons. Likewise, many film openings such as Disney’s Mulan have also been postponed or Pixar’s Onwards, which as seen a dramatic drop in the box office.
Furthermore, Laura Martin also feels that the Coronavirus will continue to have a negative impact on the Walt Disney Company and will not “dissipate by April 1st” and so this would have a further impact on the second quarter for Disney. In addition, Laura said, “we do not believe that lost demand is moved to later periods because: Disney parks operate at near capacity levels normally, sports seasons end; and postponed films face tougher competition and require more marketing spending.”.
Her predictions continue as she predicts a lower second-quarter 2020 Disney revenue estimate by 7.6% to $19.7 billion and her earnings per share estimate by 14% to $1.20. With estimates to continue to trick down over the next several weeks, however, their projections predict “normal operations for parks, ESPN and films by the end of June, based on successful COVID-19 containment.”
Disney’s Parks and Coronavirus
In regards to Disney’s Parks, Experiences and Consumer Products segment, Martin cut her second-quarter earnings estimate before interest, taxes and amortization estimate by 14% to $1.63 billion and her full fiscal-year estimate by 4% to $6.8 billion. Disney’s fiscal year ends in September.
Furthermore, Imperial Capital analyst David Miller said that Coronavirus will have a negative impact on the Walt Disney Company, particularly Walt Disney World Resort due to its closures, more than Disneyland Park in Anaheim. This will also affect the surrounding areas as 85% of visitors in Orlando are from “out-of-state or out-of-country people, with theme parks being a mostly fixed-cost business”.
Disney Cable and Coronavirus
In regards to Disney’s cable networks unit, Martin reduced her second-quarter earnings estimate by 10 % to $1.38 billion and her full fiscal-year estimate by 6 & to $5.36 billion. She questions if the leagues that canceled or postponed their seasons “will compensate ESPN for disruption from a pandemic” and depends on their contacts. This will cost a significant amount for ESPN, who will now have many hours of programming to fill on such short notice, increasing production costs as well as the fear of reduced viewings which will hurt ad revenue!
Disney Film and Coronavirus
In terms of filmed entertainment unit earnings estimate for the June quarter by 11 % to $613 million and her full-year estimate by 2 % to $3.13 billion. So far, it has been confirmed that Disney has postponed Mulan, The New Mutants and Antlers.
They have predicted that Disney’s streaming services will break even in 2024, with the possibility that its investments will “lower Disney’s earnings per share for the next several years.”
Therefore, overall due to the Coronavirus and the closures of Disney parks, sporting events and delayed cinematic releases, investment companies are predicting “increased uncertainty” for the Walt Disney Company and are “revising [their] outlook on Disney to negative from stable.”
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