Tuesday, June 15, 2021


Walt Disney Co.

DIS 0.28%

added 8.7 million Disney+ subscribers in its fiscal second quarter, and its parks segment logged an operating loss as the company faces an economy trying to emerge from the Covid-19 pandemic.

Disney+ ended the quarter with 103.6 million subscribers, compared with 94.9 million on Jan. 2. Analysts polled by FactSet were expecting 109.3 million subscribers.

In March, the streaming service passed the 100-million-subscriber mark after just 16 months of operation, cementing its status as the most successful streaming entrant since

Netflix Inc.

defined the field years ago.

Meanwhile, the company’s parks, experiences and products business—which includes its storied Disney World and Disneyland resorts—saw a 44% drop in revenue compared with a year earlier. That division reported an operating loss of $406 million.

Overall, Disney’s total revenue fell 13% from the comparable 2020 period to $15.61 billion. According to FactSet, analysts were expecting $15.86 billion.

Disney logged $901 million in net income, or earnings of 49 cents a share. A year earlier, the company’s earnings were $460 million, or 25 cents a share. The company’s tax expenses a year ago were higher, which hurt its year-earlier results, and the company also logged $305 million in net other income for the recent three-month period.

Adjusted earnings were 79 cents a share, while analysts were expecting 26 cents a share according to FactSet.

Shares fell 4.2% in after-hours trading.

The launch of Disney+ has brought a bit of magic to a company whose stock had taken a nosedive after the coronavirus shut down theme parks and movie theaters. WSJ explains how Disney’s streaming platform has become a top competitor in an already crowded field. Photo illustration: Jacob Reynolds/WSJ

Disney’s quarterly earnings have lately provided a glimpse of a company at a crossroads. Covid-19 immediately shut down two of its core businesses—parks and movies—but also accelerated focus and investment toward streaming services seen by Wall Street as critical to its post-pandemic future. Good news about its streaming growth kept the stock price soaring despite steep losses in other divisions. However, summer travel and pent-up demand for live events could depress sign-ups at Disney+ and its other services in the months ahead.

Disney shares plummeted to their lowest point since 2014 when the pandemic hit in March 2020, but they had rebounded to record highs a year later. Shares have been on a slight downward trend since then, hovering around $180.

In February, Disney eked out a quarterly profit after two quarters of losses. The fiscal second-quarter earnings, which cover roughly the first three months of the year, are likely to reflect continued disruption in parks and studio entertainment.

Walt Disney World in Orlando and other parks around the world were open for the quarter, though at reduced capacity, and a majority of U.S. theaters weren’t operating until the last few weeks of March. Disney’s only major theatrical release so far this year, “Raya and the Last Dragon,” made $44 million after opening in early March. In normal times, Disney animated releases typically gross more than $150 million at the domestic box office.

Instead, the most popular Disney products from the quarter were streaming shows on Disney+ like “WandaVision.” It brought new fans into the Marvel fold and benefited from Friday night premieres with little outside competition like happy hours or live music.

Netflix shares are down more than 11% since disclosing on its earnings call last month that the reopening was leading to a slowdown in sign-ups. “There’s a boost in engagement that you get when people are in a lockdown situation,” Netflix operations chief

Gregory Peters

said at an investor event in March.


When would you feel comfortable going back to a theme park? Join the conversation below.

At Disney, the streaming service has also become a key piece of its theatrical strategy. The company has two major releases on the docket for this summer: “Cruella” and “Black Widow,” starring Scarlett Johansson as the Marvel superhero.

Both movies will be released on the big screen but also offered for home viewing on Disney+ for an additional $30. On Thursday, Disney announced its July 30 release “Jungle Cruise,” starring Dwayne Johnson and based on a Disneyland theme-park ride, will also be released in theaters and for $30 at-home viewing.

Write to Erich Schwartzel at erich.schwartzel@wsj.com and Allison Prang at allison.prang@wsj.com

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