The Washington Post - USA (2020-11-13)

(Antfer) #1

A20 EZ RE THE WASHINGTON POST.FRIDAY, NOVEMBER 13 , 2020


BY STEVEN ZEITCHIK

A year ago this month, Disney
was riding high as it revealed it
had racked up a massive $70 bil-
lion in revenue and $15 billion in
operating income for fiscal 2019
while it also celebrated the
launch of Disney Plus.
On Thursday, the company an-
nounced darker news for 2020:
Amid the coronavirus, it saw op-
erating income drop 45 percent
for the year to just $8.1 billion,
and fall a whopping 82 percent
for the fourth quarter to just
$600 million. Once taxes are fac-
tored in, the company lost
$700 million during the quarter,
which encompassed the July-Sep-
tember period, a rare drop for the
country’s most prominent enter-
tainment company.
Disney has been battered by
the pandemic, which has kept it
from attracting large numbers to
its theme parks and from opening
new movies in theaters. Theaters
in many states remain closed or
underpopulated, forcing Disney
to shift many of its movies to



  1. And Disneyland is shut-
    tered as California Gov. Gavin
    Newsom (D) has maintained
    strict reopening requirements.
    Walt Disney World in Florida is
    open, but executives have ac-
    knowledged business has been
    slower than anticipated.
    The company did offer some
    cheerier news amid the bleak-
    ness. It disclosed that it counted
    73 million global subscribers to
    Disney Plus, making the stream-
    ing service a juggernaut in its first


12 months and a clear favorite in
the streaming wars among any
service not named Netflix. Rev-
enue totals for the quarter of
$14.7 billion were also higher
than analysts’ forecasts of $14 bil-
lion, while its loss per share was
about 20 cents compared with
expectations of 70 cents. Revenue
for 2020 was down 6 percent.
The company benefited during
the quarter from an 11 percent
revenue jump in its TV division. A
further boost could come from its
prime-time series, many of which
have resumed shooting. Its highly
rated “The Good Doctor” has just

returned to the air, as has “Danc-
ing With the Stars”; the former
saw a star’s positive coronavirus
test but continues to shoot.
Disney also saw revenue
growth in the merchandising-
heavy division that includes Dis-
ney Plus, which increased 41 per-
cent compared with the fourth
quarter a year ago, before Disney
Plus had launched.
Wall Street was heartened by
some of those numbers, sending
the share price 3 percent higher
in after-hours trading.
Disney also said it lost $1.1 bil-
lion at its theme parks during the

fourth quarter. Although that
number is dismal, it is a reduction
in losses from the previous quar-
ter of $2 billion, as the company
reopened parks in Florida over
the summer.
But some analysts noted that
the quarterly revenue figure was
still down 23 percent compared
with 2019. And once all expenses
and taxes are included, the com-
pany lost about $700 million in
the quarter after running in the
black many previous summers.
One curiosity Thursday arose
with the studio division, for
which Disney reported a $1.6 bil-

lion revenue figure — a 52 percent
drop — despite the fact that its
two notable releases, “The New
Mutants” and “Mulan,” barely
grossed $100 million worldwide.
Much of the money came either
from outside licensing deals —
the very deals Disney Plus aims to
get rid of — or from Disney Plus
paying the studio division for
rights.
In response to the challenges,
Disney has sought to tighten its
belt. It laid off 300 workers from
ESPN earlier this week and also
has drastically pared down the
number of employees at theme
parks. It also has sought to cen-
tralize more of its delivery to
digital, last month rearranging
various distribution departments
of the company toward that aim,
particularly on Disney Plus.
That service has been home to
a number of social media hits,
including “The Mandalorian,”
whose new season debuted last
month. The company is aiming to
release at least one piece of major
content each quarter, with the
Pixar original “Soul” coming in
December. On Thursday, Disney
announced that “WandaVision,”
the service’s first Marvel series,
will be released on the platform in
January.
But Disney Plus’s success is
tempered by the investment costs
associated with it. A MoffettNa-
thanson report says the division
could lose $2 billion each this
year and next; Disney had ac-
knowledged it won’t be profitable
until 2024.
The company on Thursday also
did not reveal numbers for “Mu-
lan,” which cost Plus subscribers
$30 to watch. Disney chief execu-
tive Bob Chapek said in an earn-
ings call that the experiment was
successful enough in the compa-
ny’s eyes that it could well be
repeated with other movies.

“We saw enough very positive
results,” he said, “to know we’ve
got something here in terms of
the premiere access strategy.”
H e added, “What we’ve learned
from Mulan is there will be a role
for it strategically with our port-
folio of offerings.”
There was little acknowledg-
ment in the call of the country’s
rising coronavirus numbers, as
new cases hit a record of 153,
on Thursday. Chapek noted the
advent of a new cruise ship that
will be ready in 2021, when he
said executives believe the worst
of the pandemic will be over,
allowing the ship to be used.
Executives also cited encouraging
news this week in vaccine re-
search.
Chapek attempted to put a
good spin on the news. “Even with
the disruption caused by COVID-
19, we’ve been able to effectively
manage our businesses while also
taking bold, deliberate steps to
position our company for greater
long-term growth,” he said in a
statement, referring to the dis-
ease the coronavirus causes.
But in the call, he also acknowl-
edged the difficulties in theme
parks and pointed the finger at
Newsom.
“We are extremely disappoint-
ed that the state of California
continues to keep our theme
parks closed despite our proven
track record,” he said, as he re-
ferred to reopenings in Florida
and Asia. “We believe state lead-
ership should look objectively at
what we’ve achieved... as op-
posed to setting an arbitrary stan-
dard.”
In light of the shaky numbers,
the company also announced that
it would forgo its semiannual
dividend for the second half of
2020, following a similar action
last spring.
[email protected]

Disney’s profits plummet as its core businesses struggle


Virus closures hit t heme
parks, but s treaming
service is a bright spot

PATRICK T. FALLON/BLOOMBERG NEWS
Employees outside Disneyland in Anaheim, Calif ., which remains closed because of strict state
reopening requirements. D isney said it lost $1.1 billion at its theme parks during the fourth quarter.

measures attached to the spend-
ing bill — but that seems unlikely
if Republicans and Democrats re-
main far apart.
Shelby said he spoke with Pelo-
si on Wednesday about spending
bills, “And I also mentioned a
smaller targeted stimulus bill.
Well she ’s got, her view is a bigger
one, you know, so I don’t know,”
Shelby said.
“As far as the big package for
everything like that Democrats
were doing over in the House,
that’s not going anywhere,” Shel-
by said.
Collins, a moderate who defied
expectations by winning reelec-
tion in Maine and is one of a small
handful of Senate Republicans
who has congratulated Biden on
his victory, called on Democrats
to join Republicans in hashing
out a deal.
“We need another covid relief
bill,” Collins told reporters, tick-
ing off needs including for small
businesses, schools, health care
providers, airlines and bus lines,
testing and more. “We need to
keep making the investments,”
she said.
House Minority Leader Kevin
McCarthy (R-Calif.) blamed the
stalemate on Pelosi, accusing her
of playing politics in refusing to
agree to modest relief measures
such as repurposing unspent
small business funds.
“The only thing that’s standing
in the way in my view is Speaker
Pelosi,” McCarthy said at a n ews
conference. “People need some
relief and we can provide it.”

Rachel Siegel and Seung Min Kim
contributed to this report.

ed Pelosi and Schumer’s call for a
big economic relief bill.
“My view is the level at which
the economy is improving further
underscores that we need to do
something at about the amount
that we put on the floor in Sep-
tember and October,” he said, re-
ferring to a roughly $500 billion
package Democrats blocked. “I
gather [Pelosi and Schumer] are
looking at something dramatical-
ly larger. That’s not a place I think
we’re wiling to go. But I do think
there needs to be another pack-
age.”
Behind the scenes, no negotia-
tions are happening whatsoever,
according to aides in both parties.
That means it’s highly unlikely
that an economic relief deal will
come together during the lame-
duck session, and it would be-
come the first order of business
for Biden once he takes office on
Jan. 20.
Congress has not acted to pro-
vide any relief since approving
$3 trillion in aid in the spring. It
appears that Americans will have
to continue to wait. The economy
continues to strain. Another
709,000 Americans filed new un-
employment claims last week, a
level that remains elevated and
higher than any period before the
pandemic began.
Congress is confronting a
Dec. 11 deadline when govern-
ment funding will expire, and
lawmakers are at work on a
spending package to forestall a
government shutdown. Senate
Appropriations Committee
Chairman Richard C. Shelby (R-
Ala.) said Thursday he would like
to see some coronavirus relief

many tests of young people.”
In fact, the death rate is climb-
ing rapidly, and hospitals are
nearing capacity in a number of
places, with parts of Iowa, Wis-
consin, Illinois, Michigan, Penn-
sylvania and multiple other states
scrambling to deal with the surge.
Democrats have called for a
wide-ranging bill that would ex-
tend new unemployment ben-
efits, send another round of
$1,200 checks to American house-
holds, provide more small busi-
ness aid, money for states and
cities, and expand access to test-
ing, among other things. Cases
are rising so rapidly in some parts
of the country that some local
leaders are reinstating or weigh-
ing whether to reinstate business
restrictions.
“The longer Senate Republi-
cans are playing this sad game is
the longer they are denying fami-
lies much needed relief from the
covid health and economic crisis,”
Schumer said.
McConnell and other top GOP
leaders have declined to acknowl-
edge Biden won the election, in-
stead arguing that Trump has the
right to pursue the legal avenues
available to him.
The election also has not
changed the GOP’s views on eco-
nomic relief. Congressional Re-
publicans have long rejected a
relief bill along the lines of the
$2 trillion package Pelosi and
Schumer are seeking.
Instead, McConnell has said
that third-quarter economic news
showing the unemployment rate
has dropped makes a case for a
smaller relief package.
McConnell on Thursday reject-

enormous new relief bill, particu-
larly given how coronavirus case
numbers are skyrocketing.
“They’re engaged in an absurd
circus right now refusing to ac-
cept reality... making it even
harder to address the massive
health and economic crisis that
we are facing,” Pelosi said at a
joint news conference with Schu-
mer at the Capitol.
The economy contracted
sharply earlier this year when the
coronavirus struck the United
States, particularly in March and
April. The U.S. economy has par-
tially recovered, though millions
of Americans remain unem-
ployed. But this new spike in cases
and deaths has caught Washing-
ton mostly flat-footed, particular-
ly as Trump has soured on many
of his health advisers and he con-
tinues to refuse to accept the
results of last week’s election.
Nor has Trump acknowledged
the recent surge in cases on his
Twitter feed, which is his primary
method of communicating at the
present time. On Oct. 28, he pre-
dicted that after the election the
“talk will be how low the death
rate is, plenty of hospital rooms, &

they could use to put a quick
response in place.
Democrats have pushed for a
stimulus package that would ex-
ceed $2 trillion since this sum-
mer, and before the election
Trump said he would support
something even more substan-
tial. The president tweeted inces-
santly about the need for a giant
economic relief bill before the
Nov. 3 e lection but he has been
silent on the matter since.
Biden discussed the matter
Thursday on a phone call with
House Speaker Nancy Pelosi (D-
Calif.) and Senate Minority Lead-
er Charles E. Schumer (D-N.Y.). In
a joint readout following the call,
the Democrats said they had
talked about “the urgent need for
the Congress to come together in
the lame duck session on a bipar-
tisan basis to pass a bill that
provides resources to fight the
COVID-19 pandemic,” including
relief for families and businesses
and support for state and local
governments.
At a separate news conference,
Pelosi and Schumer insisted that
Biden’s election win constitutes a
mandate for their demands for an

invoke similar moves. Biden cam-
paigned on stringent policy mea-
sures to stop the spread of the
coronavirus, but Trump has not
weighed in at all.
After rallying earlier in the
week amid optimism about a new
vaccine, the Dow Jones industrial
average fell 317 points, or 1 per-
cent, amid new worries.
Federal Reserve Chair Jerome
H. Powell on Thursday said Con-
gress could need to provide more
economic relief to help sustain
growth, though he didn’t endorse
a specific proposal.
“The path forward is going to
be challenging for a number of
reasons,” he said, speaking on a
virtual panel hosted by the Euro-
pean Central Bank. “My sense is
that we will need to do more and
that Congress may need to do
more as well.”
And Trump’s refusal to ac-
knowledge Biden’s presidential
win and participate in a normal
transition process seemed likely
to stall the federal response even
more, depriving Biden and his
team of some of the resources


CONGRESS FROM A


GOP’s refusal to accept Trump loss is imperiling virus relief, Democrats say


STEFANI REYNOLDS/BLOOMBERG NEWS
Senate Majority Leader Mitch McConnell (R-Ky.), seen outside the Senate subway on Capitol Hill,
rejected Democrats’ call for a big economic measure but said some sort of additional relief is needed.

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