The Walt Disney Company (NYSE: DIS) reported earnings for its fourth quarter and fiscal year ended October 3rd, 2020 and with it higher than expected revenue of $14 billion, even though there was a net loss of $2.83 billion. Disney+ paid subscribers rose to 73 million.
Diluted earnings per share (EPS) from continuing operations for the fourth quarter was a loss of $0.39 compared to income of $0.43 in the prior-year quarter. Excluding certain items affecting comparability(1), diluted EPS for the quarter was a loss of $0.20 compared to income of $1.07 in the prior-year quarter. EPS from continuing operations for the year was a loss of $1.57 compared to income of $6.26 in the prior year. Excluding certain items affecting comparability(1), EPS for the year decreased to $2.02 from $5.76 in the prior year. Results in the quarter and fiscal year ended October 3, 2020 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Parks, Experiences and Products segment where since the second quarter of the fiscal year, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended.
“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,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we’re pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year.”
COVID-19 and measures to prevent its spread impacted our segments in a number of ways, most significantly at Parks, Experiences and Products where our theme parks were closed or operating at significantly reduced capacity for a significant portion of the year, cruise ship sailings and guided tours were suspended since late in the second quarter and retail stores were closed for a significant portion of the year. We also had an adverse impact on our merchandise licensing business. In addition, at Studio Entertainment we have delayed, or in some cases, shortened or cancelled, theatrical releases, and stage play performances have been suspended since late in the second quarter. We also had adverse impacts on advertising sales at Media Networks and Direct-to-Consumer & International. Since March 2020, we have experienced significant disruptions in the production and availability of content, including the shift of key live sports programming from our third quarter to the fourth quarter and into fiscal 2021 as well as the suspension of production of most film and television content since late in the second quarter, although some film and television production resumed in the fourth quarter. As our businesses reopen we have incurred, and will continue to incur, additional costs to address government regulations and implement safety measures for our employees, talent and guests. The timing, duration and extent of these costs will depend on the timing and scope of the resumption of our operations. We currently estimate these costs may total approximately $1 billion in fiscal 2021. Some of these costs may be capitalized and amortized over future periods.
The most significant adverse impact in the current quarter and year from COVID-19 was approximately $2.4 billion and $6.9 billion, respectively, on operating income at our Parks, Experiences and Products segment due to revenue lost as a result of the closures or reduced operating capacities. The impacts at Media Networks, Studio Entertainment and Direct-to-Consumer & International were less significant. Media Networks had an adverse impact in the current quarter from higher sports programming cost, partially offset by higher advertising revenue, reflecting the shift of sports programming from prior quarters to the current quarter. For the year, Media Networks had a modest benefit reflecting the deferral of sports programming costs into fiscal 2021, when we expect the events to occur, partially offset by lower advertising revenue. At Studio Entertainment, lower revenues due to the deferral or cancellation of significant film releases as a result of theater closures were partially offset by lower amortization, marketing and distribution costs for both the quarter and year. At Direct-to-Consumer & International for the quarter and year, lower advertising revenue was partially offset by lower costs including the deferral of sports programming costs into fiscal 2021. In total, we estimate the net adverse impact of COVID-19 on our current quarter and full year segment operating income across all of our businesses was approximately $3.1 billion and $7.4 billion, respectively, inclusive of the impact at Parks, Experiences and Products.
Read the statement in full here. With attendance slowly rising at Walt Disney World, the hopes that Disneyland in California will open early in 2021, and the studios returning to make feature films, there is high hopes that a COVID-19 vaccine will see life returning to some form of normality in the second half of 2021.
