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The crippling effects of the coronavirus pandemic took a hit on Disney. The company reported on Tuesday that they lost $3.5 billion in operating income during the third quarter due to closure of theme parks.
For three months, Disney’s revenue, which ended on June 29, had a significant 42 percent drop in the year-over-year basis. The $3.5 billion loss marks a decrease of 85% from last year’s output.
The total loss in unit includes all six of Disney’s international theme parks, cruise lines, merchandise, and hotels and tours, which ultimately spelled doom in their revenue, shrinking to $1 billion.
“The impact of COVID-19 and measures to prevent its spread is affecting our segments in several ways, most significantly at Parks, Experiences and Products where we have closed our theme parks and retail stores, suspended cruise ship sailings and guided tours and experienced supply chain disruptions,” Disney stated in a news release.
As the COVID-19 began to spread rapidly, Disney was forced to halt operations in its cruise line businesses and parks and resorts in North America, Asia, and Paris in mid-March.
Disney’s theme parks in China and Hong Kong had been shut down as early as January as those were the few locations hit by COVID-19 first.
While Disney was able to reopen its theme parks in Shanghai, Hong Kong, and Japan during the quarter, most of its parks business is still based in the United States. California Disneyland remains closed as the state government has yet to release guidelines for the reopening of amusement parks. At the same time, Disney World in Florida was only opened to the public last month.
Another aspect severely hit by the pandemic shutdown is Disney’s merchandise licensing and retail business. The lackluster operating results were evident as stores were primarily closed for the majority portion of the quarter.
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses…The global reach of our full portfolio of direct-to-consumer services now exceeds an astounding 100 million paid subscriptions — a significant milestone and a reaffirmation of our DTC strategy, which we view as key to the future growth of our company.”Disney Chief Executive Officer Bob Chapek