Disney’s Theme Park and Cruise Line Division Lost Almost $2 Billion Last Quarter

Disney held its quarterly earnings report today, and unsurprisingly the news was grim for its theme parks. The Parks, Experiences and Products division saw an 85% drop from the same quarter last year, with revenues of just under $1 billion this quarter compared to $6.5 billion a year ago, and an operating loss of just under $2 billion. That’s $3.5 billion less than the division reported as income from the same quarter a year ago.

So yeah, if you somehow didn’t know, this pandemic has destroyed the travel industry.

Disney’s two American theme park resorts, Disneyland Resort and Walt Disney World Resort, as well as Disneyland Paris, closed in the middle of March. Its Chinese and Hong Kong parks closed in January, with Tokyo Disneyland closing in February. Disneyland Shanghai was the first park to reopen, in May; Hong Kong followed in June, before closing again in July after about a month of operation. Tokyo Disneyland, Disney World, and Disneyland Paris all eventually reopened in July, with the original Disneyland in California remaining closed indefinitely. All parks that have reopened have done so with significantly limited guest capacity, along with a host of other COVID-19 precautions. So for the quarter in question, which Disney classifies as its third quarter for reporting reasons, but is actually the second quarter, April through June, most of Disney’s theme parks were closed, with only two weeks of the Hong Kong theme park and one month of the Shanghai park contributing to the division’s revenues.

It was no secret before this earnings call that theme parks are hemorrhaging money during the pandemic. Universal just scrapped its plans for a third park in Orlando due to its parks division’s massive drop in revenue in the second quarter. This is why so many theme parks in Florida, from Universal to Sea World to Disney World, have reopened, despite the ongoing coronavirus crisis within that state. If California was as permissive as Florida’s government, those theme parks would probably be open, too. Seeing these numbers in black and white underscores how desperate the situation is becoming for these companies.

What could this loss mean for the multiple new projects Disney had planned for its theme parks? It’s already been announced that some of the upcoming additions to Epcot have been postponed, including the latest upgrade of Spaceship Earth and a planned Mary Poppins attraction for the park’s England pavilion. Projects that were already well under construction, like the Tron roller coaster coming to the Magic Kingdom and the Guardians of the Galaxy roller coaster being built in Epcot, have seen activity return since the parks reopened. The Epcot version of the Ratatouille ride, which was originally scheduled to open this summer, is believed to be mostly finished, and could still open this year. Of course, it’s deeply questionable why the parks reopened to begin with, and entirely possible they could shut down again as the coronavirus continues to spread and demand for a theme park visit remains light. Either way, this pandemic has wreaked havoc within Disney, and not just with its theme parks—it also reported a 55% drop in revenue for its Studio division. When your company is largely built on theatrical releases and theme parks, you’re especially susceptible to something like a pandemic.

Overall, the company reported growth in its Direct-to-Consumer division, driven by the success of Disney+, which now has 60.5 million subscribers—a goal the company had planned to hit by 2024. Disney’s stock closed at $117.29 today, but has jumped to $123.20 a share during after hours trading based on the earnings report.