By Munsif Vengattil and Lisa Richwine
LOS ANGELES (Reuters) – Walt Disney Co (N:) on Tuesday reported financial results that avoided the unmitigated disaster some investors feared as it eked out an adjusted profit amid the coronavirus pandemic that shut down parks, movie theaters and sporting events globally.
Disney’s quarterly profit of 8 cents per share on an adjusted basis beat expectations of a 64 cents-per-share loss, sending shares up 5% in after-market trade on the New York Stock Exchange.
COVID-19 wiped out $3.5 billion in operating profit in the parks division.
Investors overlooked total revenue that fell short of expectations by nearly $600 million and focused on divisions including parks and its media networks whose declines in revenue were not as bad as expected.
The Disney+ streaming service, which now reaches 60.5 million customers as of Monday, has also been a bright spot in the quarter, Bob Chapek, Disney chief executive, told analysts on Tuesday. Disney had 54.5 million subscribers as of May 4.
The outbreak forced the company to close some of its parks globally and delay the release of films, including the much-anticipated “Mulan”.
In a surprise move, Disney said it will release “Mulan” directly to consumers on Disney+ for $30 on Sept. 4.
Executives said the release is a one-off event and does not represent a shift in strategy.
Disney’s decision comes as rival studio, Comcast Corp’s (O:) Universal Pictures struck a deal in July with cinema chain AMC Entertainment Holdings Inc (N:) to allow the studio to release films directly to consumers after just three weeks in theaters, down from the average three months.
Closure of theme parks in the quarter resulted in an operating loss of $1.96 billion in parks and consumer products business. Even as four of its six theme park resorts around the world have opened, social distancing rules have weighed on visitors allowed.
Disney Chief Financial Officer Christine McCarthy said demand at its profit center Walt Disney World park in Orlando, Florida was lower than expected because of the resurgence of coronavirus infections in Florida.
The media network segment, which includes ESPN and Disney channels, reported a 48% jump in operating income to $3.15 billion.
The direct-to-consumer and international segment, which houses its streaming service, Disney+, reported an operating loss of $706 million, compared with an operating loss of $562 million in the year-ago quarter.
Operating income in the movie studio segment, which includes Marvel, Pixar, Lucasfilm and Fox, fell 16% to $668 million, in a quarter marked by movie theater closures.
Overall revenue fell 42% to $11.78 billion. Analysts on average had expected revenue of $12.37 billion, according to Refinitiv IBES data.
Net loss from continuing operations was $4.72 billion, or $2.61 per share, in the third quarter ended June 27, compared with a net profit of $1.43 billion, or 79 cents per share, a year earlier.