COVID-19

Quarterly earnings will show how Disney is weathering the pandemic economy

Andy Uhler Aug 3, 2020
Heard on: Marketplace Morning Report
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People demonstrate social distancing at Walt Disney World Resort in Florida in this handout photo from the company. Matt Stroshane/Walt Disney World Resort via Getty Images
COVID-19

Quarterly earnings will show how Disney is weathering the pandemic economy

Andy Uhler Aug 3, 2020
People demonstrate social distancing at Walt Disney World Resort in Florida in this handout photo from the company. Matt Stroshane/Walt Disney World Resort via Getty Images
HTML EMBED:
COPY

Disney reports quarterly earnings this week. It’s fair to say the company, like many others, has had its share of ups and downs during the pandemic. It had to close theme parks and dock cruise boats early on. Now it’s negotiating the reopening of some parks around the world. It’s also seeing opportunities to interact with users through its Disney+ TV streaming services.

Much of what Disney does involves density: packing people into theme parks, movie theaters, cruises.

“If there was ever a poster child for being vulnerable to COVID-19 in terms of your business model, Disney is it,” said Lloyd Greif, CEO of an investment bank in Los Angeles.

He said Disney was flying high just six months ago. Now things are very different.

“Disney has to be rethinking the model in this environment,” Greif said.

And it’s starting to capitalize more on people staying at home. Disney purchased 21st Century Fox last year and recently started a new streaming service, Disney+, that attracted a lot of attention when it aired “Hamilton,” and, more recently, Beyoncé’s visual album, “Black Is King,” which is now the top-trending title on the platform.

Abraham Ravid, professor of finance at Yeshiva University, said Disney is diversified enough to hold on even if the pandemic lasts for a while.

“If they could go back to normal, so to speak, by the end of the year, they should be OK,” Ravid said. “They’ll have losses, but they should be able to withstand it.”

One key for the future, he said, is for the company to keep adding subscribers to Disney+.

COVID-19 Economy FAQs

What does the unemployment picture look like?

It depends on where you live. The national unemployment rate has fallen from nearly 15% in April down to 8.4% percent last month. That number, however, masks some big differences in how states are recovering from the huge job losses resulting from the pandemic. Nevada, Hawaii, California and New York have unemployment rates ranging from 11% to more than 13%. Unemployment rates in Idaho, Nebraska, South Dakota and Vermont have now fallen below 5%.

Will it work to fine people who refuse to wear a mask?

Travelers in the New York City transit system are subject to $50 fines for not wearing masks. It’s one of many jurisdictions imposing financial penalties: It’s $220 in Singapore, $130 in the United Kingdom and a whopping $400 in Glendale, California. And losses loom larger than gains, behavioral scientists say. So that principle suggests that for policymakers trying to nudge people’s public behavior, it may be better to take away than to give.

How are restaurants recovering?

Nearly 100,000 restaurants are closed either permanently or for the long term — nearly 1 in 6, according to a new survey by the National Restaurant Association. Almost 4.5 million jobs still haven’t come back. Some restaurants have been able to get by on innovation, focusing on delivery, selling meal or cocktail kits, dining outside — though that option that will disappear in northern states as temperatures fall. But however you slice it, one analyst said, the United States will end the year with fewer restaurants than it began with. And it’s the larger chains that are more likely to survive.

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