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Disney posts $2.8 billion annual loss after summer of theme park woes

Disney+ remained a bright spot for the company.
In this July 2, 2020, file photo, cars drive under a sign greeting visitors near the entrance to Walt Disney World in Lake Buena Vista.
In this July 2, 2020, file photo, cars drive under a sign greeting visitors near the entrance to Walt Disney World in Lake Buena Vista. [ JOHN RAOUX | AP ]
Published Nov. 13, 2020
Updated Nov. 13, 2020

With the movie and theme park industries still reeling from the disastrous impact of the coronavirus pandemic, the Walt Disney Company on Thursday posted a rare annual loss of $2.8 billion during the 2019-20 fiscal year.

For the quarter ending Oct. 3, the company’s parks, experiences and products division suffered another brutal hit, losing $1.1 billion. Since the start of the pandemic, Disney parks' staggering losses more than wiped out any early profits from what had started out as another standard banner year.

Disney chief executive officer Bob Chapek said the company is seeing signs people are ready to return to its parks as soon as they’re given the green light by state and local governments.

“People have shown a willingness to visit our parks, which I believe is a testament to the fact that they feel confident in the measures we’ve taken,” he said. “And we are very encouraged by the positive news earlier this week on the progress of potential vaccines."

Related: Busch Gardens' parent company, SeaWorld, reports 81 percent drop in attendance

Chapek blamed California leaders for keeping Disneyland closed throughout the quarter, saying the state was “setting an arbitrary standard that is precluding our cast members from getting back to work, while decimating small businesses in the local community.”

Chief financial officer Christine McCarthy said she does not anticipate Disneyland reopening before the end of the next fiscal quarter.

In September, Disney decided to lay off 28,000 employees, including around 18,000 at its Florida facilities. Many were union performers.

Yet on Thursday’s earnings call, Walt Disney World was hailed as something of a bright spot in the division, with McCarthy saying the park yielded positive earnings in the last quarter.

“Park reservations at our reduced capacity limits are already 77 percent booked for (early 2021), with Thanksgiving week booked close to capacity,” she said. “These trends provide us with further confidence around consumer demand for our parks and experiences.”

Chapek said that after opening in mid-July at 25 percent capacity, Disney World was now running at about 35 percent capacity — “so almost a 50 percent increase in the number of guests that we allow in and still adhere to the guidelines that are stipulated by the CDC," he said.

Disney executives were quick to tout the huge success of streaming platform Disney+, which launched a year ago Thursday. The platform has 73 million paid subscriptions, “far surpassing our expectations,” Chapek said. He said the company would work to build upon the success of Mulan, a potential theatrical blockbuster that instead debuted as a premium title on Disney+, only to endure controversy over its production.

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“We saw enough very positive results before that controversy started to know that we’ve got something here in terms of premiere access strategy,” he said.

Disney stock closed at $135.52 on Thursday, down slightly on the day, though it rallied by around 5 percent in early after-hours trading.