Disney last night revealed their earnings for Q3 of their 2020 fiscal year, with a loss of $3.5 billion due to COVID-19 and the closure of the parks around the world. This from Christine McCarthy, Senior Executive Vice President and Chief Financial Officer….
As we reopened many of our businesses, we have incurred and will continue to incur additional costs related to addressing the safety of our cast members, talent and guests as well as various government regulations. These include, but are not limited to, incremental costs as it relates to responsibly resuming production of film and television content as well as the enhanced measures we have put into place at our parks and resorts. We estimate that through the end of fiscal 2021, these incremental cash costs could total approximately $1 billion. We expect many of these expenditures, particularly those related to restarting productions, to be capitalized and amortized over future periods.
At parks, experiences, and products, third quarter results largely reflect the closures of our domestic parks and resorts, cruise line business and Disneyland Paris for the entirety of the quarter. Our Shanghai and Hong Kong resorts were also closed for part of the quarter with Shanghai reopening on May 11 and Hong Kong reopening on June 18. However, Hong Kong was subsequently closed July 15 due to a government order. As a result of these widespread disruptions, operating results at parks, experiences, and products declined significantly versus the prior year to an operating loss of about $2 billion.
These results also reflect an adverse impact at our consumer products business due to the effects of COVID-19. At Walt Disney World, we are achieving our objective of driving a positive net contribution at current attendance levels, and we expect demand will grow when the COVID situation in Florida improves. We are also closely monitoring trends at our reopened sites internationally and, in particular, have been pleased with what we’ve seen at Shanghai since reopening in May. While uncertainty still exists regarding the timing for reopening some of our businesses, we remain committed to creating high-quality experiences for all of our guests and are confident in our ability to generate long-term value through these assets.
At Studio Entertainment, operating income decreased in the quarter as higher TV SVOD distribution results, lower home entertainment marketing costs, and lower film impairments were more than offset by lower theatrical distribution results. Worldwide theatrical results were adversely impacted by COVID-19. Given the closure of theaters, both domestically and internationally, no significant titles were released in the quarter. This resulted in a difficult comparison against the outstanding performance of Avengers: Endgame in the prior year quarter.
You can listen to the call in full here. During the call they announced the current subscriber count for Disney+, that the second season of The Mandalorian was still on schedule for October, and the release of Mulan on Disney+ as a pay-per-view. There was no other Star Wars news, and the next earnings call is in November.
Disney’s stock was trading up around 2.3% after the earnings were released.
