The Walt Disney Company 3rd Quarter Earnings Report Shows Revenue Down 42%, Parks Income Down $3.5 Billion

Disney's 3rd Quarter Report Shows Revenue Down 42% The DIS TWDC-logo

Tuesday afternoon, The Walt Disney Company released their earnings report for the 3rd fiscal quarter of 2020 (ending June 30, 2020), showing revenue down 42% and income down 72% over last year for the quarter. Diluted earnings per share decreased 94%.

Chief Executive Officer Bob Chapek said in a written statement:

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 grown of our company.

During the earnings call that followed the release of the report, Chapek was joined by Chief Financial Officer Christine McCarthy. Both executives spoke remotely from their homes.

Chapek commented that these continue to be challenging times for our world, but that The Walt Disney Company is making encouraging progress. He said that Disney is working to find innovative (and better) ways of conducting business.

Chapek said that the Direct To Consumer model is the top priority and the key to the future of the company.

Chapek also celebrated the 145 Primetime Emmy Nominations, 92 of which were produced by the Disney family of studios.

Chapek said his is “optimistic about our way forward.”

McCarthy added that despite the challenges, Disney is still “well positioned.”

McCarthy said the impact of the COVID-19 pandemic was $3 billion for the quarter, including a $3.5 billion loss in the parks segment that was off-set by other segments. McCarthy added that in the 4th quarter, not including theme parks, there will be an extra $1 billion in costs due to COVID-19.

McCarthy said that the Walt Disney World theme parks were having a positive net contribution, but that it was lower than they had expected.


  • Chapek shared that as of August 3rd, Disney+ had 60.5 million paid subscribers. Combined, Disney+, Hulu and ESPN+ have 100 million subscribers.
  • Mulan, which had its theatrical release delayed several times, will be released to theaters and as a premier access offering on Disney+ on September 4th. Disney+ subscribers will be able to enjoy the blockbuster for an additional $29.99.
  • Disney will be using the familiar Star brand, rather than Hulu, in international markets, featuring content from ABC Studios, Fox Television, FX, Freeform, Searchlight, and Fox Studios.


  • When asked about the current demand at the Walt Disney World theme parks, Chapek elaborated that initially there were more than enough reservation to fill the parks to socially distanced approved levels, but as COVID-19 rates increased in Florida, they received higher than expected cancellations. Most of those open spots were filled by locals and Annual Passholders, who typically spend less. McCarthy added that per capita spending was still great as locals and Passholders purchased more than usual since it had been awhile since they were in the parks.
  • When asked to elaborate more about the $29.99 Mulan release on Disney+ and if they’re would be more examples of this strategy, Chapek said they are looking at this as a “one-off,” not a new business model. He commented later that they are using this a learning tool and will watch not only the number of purchases for the film, but also the number of new subscribers to Disney+ the release generates.
  • Continuing with Disney+, Chapek was asked if the growth in the platform can be sustained with production down. Chapek said that ideas were still flowing for new content and the production will resume. He added that while new content brings in new subscribers, it’s the massive library of content that keeps the subscribers.
  • When asked about the strategy of using the Star brand in international markets, Chapek said they were mirroring the Disney+ strategy by using their existing content and combining it with a successful international brand. The Star platform is expected to be the same as Disney+.

Overall Earnings

Diluted earnings per share were down 430% from last year’s 3rd quarter, from $0.79 to a negative $2.61. Revenues for the company were down 42% compared to last last year, from $20.262 billion to $11.779 billion for the quarter. Operating income decreased 72% from $3.952 billion to $1.099 billion for the 3rd quarter.

  • Parks, Experiences, and Consumer Products: 85% decrease in revenues and 214% drop in operating income for the 3rd quarter
  • Direct-to-Consumer and International: 2% growth in revenues and 26% decrease in operating income for the 3rd quarter
  • Media Networks: 2% decrease in revenues and 48% increase in operating income for the 3rd quarter
  • Studio Entertainment: 55% drop in revenues and 16% decline in operating income for the 3rd quarter

Parks, Experiences, and Consumer Products

Compared to last year’s 3Q, Parks, Experiences, and Consumer Products saw decline of 85% in revenues, from $6.575 billion to $983 million. For the quarter there was a 214% drop in segment operating income compared to last year’s 3rd quarter, from $1.719 billion to a loss of $1.960 billion.

All domestic parks and resorts, Disneyland Paris, and Disney Cruise Line were closed for the entire quarter. Shanghai Disney Resort reopened in May and Hong Kong Disneyland Resort briefly reopened in late June.

Disney Stores were also closed most of the quarter as were many other retail locations that would be selling Disney merchandise.

Disney estimates that the COVID-19 pandemic caused a drop of $3.5 billion in operating income in the parks segment.

Direct-to-Consumer and International

The Direct-to-Consumer and International division saw revenue growth of 2% for this quarter over last year, from $3.875 billion to $3.969 billion. Operating income loss increased 26%, from a loss of $562 million to a loss of $706 million.

The segment continues to see an operating loss due to costs from the launch of Disney+, which were slightly offset by higher results at ESPN+ and Star internationally.

Star saw lower progamming costs due canceled and shifted international sporting events, but also lower advertising revenue because of the lack of sporting events.

ESPN+ saw subscriber growth, plus higher income from pay-per-view events.

Media Networks

The Media Networks division brought in $6.562 billion in revenue this quarter compared to $6.713 billion last year, a decrease of 2% over 2019’s third quarter. Segment operating income for the division’s Q3 increased 48% over last year — $3.153 billion up from $2.136 billion.

Cable Networks saw an increase in operating income due to lower programming and production costs at ESPN, which were partially offset by lower ad revenue. FX also saw reduced costs compared to last year.

ABC also saw reduced costs due to production shutdowns. Program sales income increases were driven by The Simpsons, Modern Family, and The Politician.

Studio Entertainment

Revenue at Studio Entertainment was down 55% compared to this quarter last year, from $3.836 billion to $1.738 billion. Operating income declined 16%, from $792 million to $668 million for the quarter compared to last year.

There were no significant titles released to theaters this quarter, compared to Avengers: Endgame, Aladdin, and Dark Phoenix last year.

The segment benefited by the “sale” of content to Disney+, including Star Wars: The Rise of Skywalker and Onward.

Source: The Walt Disney Company

Tom is the host and producer of the DIS Unplugged: Disneyland Edition podcast, plus Disneyland Editor of The DIS. He enjoys traveling with his wife and teenage son. At this point, their favorite destination is Alaska, with a FIFTH cruise there planned for the Summer of 2019. In his spare time he volunteers with Boy Scouts and Cub Scouts, and help found his son's former Cub Scout Pack. His favorite Disneyland attraction is Space Mountain.


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