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Mickey and Friends at Disneyland

Today the Walt Disney Company revealed its quarterly financial numbers and, probably not surprising, it's not good news for Disney. With both movies and theme parks shut down for nearly the entire quarter (March-June 2020) the financial loss has been extensive. For the Parks, Experiences, and Products division especially, it was a really rough quarter. Revenue was down 85% and the drop in operating income was approximately $3.5 billion

While the number is massive, it's not exactly surprising. The entirety of Disney's theme park empire, as well as the cruise lines, were closed for basically the entire quarter, the parks in China and Hong Kong were open for part of the quarter. What money the division did make probably came through online sales of consumer products, because there wasn't any place else people could spend money with Disney if they wanted to.

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Things will start to get slightly better from here. Most Disney Parks are now open and while they're seeing a limited number of guests. We're at a point where something is better than nothing. The one major exception is Disneyland Resort, which at this point is still closed, with no estimate as to when that might change.

The biggest question, however, is just how quickly things will improve. The fact is that right now the parks that are open can only allow a limited number of guests inside safely, but even as the crowds are allowed to grow, it's unclear how many people will actually be willing to go. If potential guests are apprehensive about visiting the parks, we could see the parks grow back to where they once were over the next several months or even years.

On the plus side, during Disney's earnings conference call, it was confirmed that Walt Disney World is operating at a "positive net contribution," which is to say, Disney is contributing to the company's bottom line, though perhaps it's not profitable every day strictly speaking. Even though the park is seeing a limited number of guests there is money coming in. Having said that, because of Florida's surge in COVID-19, the park isn't seeing the revenue that Disney thought it would upon reopening. Only about half of Walt Disney World's visitors are coming from outside the local area, which is much lower than is usually the case. Shanghai Disneyland is also operating at a "net positive" as well.

There will be long term consequences to this loss as well. Without the income from the parks, the plan for new attractions will likely be adversely impacted. We already know that the refurbishment of Spaceship Earth and the construction of a new Mary Poppins attraction, both at Epcot, have been delayed. We have no idea when these updates will now come, and we could ultimately see them scrapped if the money isn't there to make them happen down the road.

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