Friday, February 12, 2021

Disney Returns To Profit, Streaming Surges

Walt Disney Co swung to a surprise quarterly profit on Thursday, as “The Mandalorian” and “Soul” lifted its fast-growing streaming business, outweighing pandemic worries about its hobbled theme park operations.

The Wall Street Journal reports Disney registered a profit of $17 million, or one cent a share. The blow came from Disney’s legacy businesses: Two-thirds of North American movie theaters remain closed, and Disneyland is closed to anyone who isn’t showing up for a Covid-19 vaccine shot.

In the comparable period a year ago, before the Covid-19 pandemic started to affect the U.S., its profit was $2.11 billion, or $1.16 a share.

Disney’s first-quarter profit comes after the company reported two quarterly losses in a row. But in a sign of how much has changed at the world’s largest entertainment company, Disney’s quarterly profit was about 2% of the domestic box-office gross of the company’s top-performing 2019 release, “Avengers: Endgame.”

With the traditional movie business hurting, Bob Chapek, approaching his first anniversary as Disney’s chief executive, reiterated the shift toward a streaming-first model.

“Our goal is to increasingly put the consumer in charge,” Mr. Chapek said.

The company’s flagship streaming service, Disney+, added more than 21 million new subscribers in the first quarter to hit 94.9 million subscribers as of Jan. 2, compared with 73.7 million subscribers at the end of the fourth quarter. The service was launched in November 2019.

WSJ reports Disney remains a tale of two companies, and the quarterly performance underscored its high-stakes pivot toward the direct-to-consumer streaming business. Disney executives provided some details of what a post-Covid-19 company might look like now that vaccinations have begun and the reopening of theaters and parks is on the horizon. The company maintains that “Black Widow,” a Marvel superhero movie scheduled to premiere in May, will get a theatrical release, and said mass vaccinations by April would be a game-changer for its struggling parks division.

All told, the Disney division that includes its theme-park business registered a $2.6 billion hit from Covid-19 in the quarter, the company said. Mr. Chapek said that, even when the parks open, he expects social-distancing and mask-wearing to be required at least through the end of the year.

Wall Street seems to have its eye on one figure: Disney+ subscribers. In December, Disney revised subscriber projections to reach as many as 260 million by 2024, a benchmark that sent its stock price soaring. Disney shares rose about 2% in after-hours trading on Thursday.

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