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Disney lost nearly $5 billion while theme parks were closed due to coronavirus

Curtis Tate
USA TODAY

The Walt Disney Co. lost nearly $5 billion in April, May and June, while its theme parks were shut down due to the coronavirus pandemic, according to a presentation Disney executives made Tuesday.

It cost the company $3.5 billion just to close the parks during the third quarter, on top of the $1 billion it cost to shut them down the second half of March.

In all, the company posted a loss of nearly $5 billion for the third quarter, including a $2 billion loss in its parks, experiences and products segment.

Disney's domestic parks – Disney World and Disneyland, as well as Disneyland Paris, resorts and cruise operations were closed for the entirety of the quarter and the final two weeks of the previous quarter.

The company's parks, experiences and products segment revenue declined 85% to $1 billion compared with the same quarter in 2019. Operating income fell $3.7 billion to a loss of $2 billion.

Disney's media networks segment helped offset the losses from parks, experiences and products. Across all segments, the coronavirus pandemic's impact cost the company $2.9 billion in April, May and June.

"This is obviously a very uncertain time," CEO Bob Chapek said during an earnings webcast Tuesday. "We should be in good shape once consumer confidence returns."

Disney has felt the full impact of the coronavirus pandemic, from its theme parks, resort hotels and retail stores, to its cruise lines and TV and film production.

Disney World in Florida and Disneyland Paris both opened in July; Disneyland backed off its plan to reopen July 17 amid the COVID-19 surge in California and has not announced a new reopening date.

Shanghai Disneyland reopened in May. While Hong Kong Disneyland reopened in June, it closed again in July because of a new coronavirus outbreak.

Both California and Florida have the highest numbers of coronavirus cases in the country.

As of Tuesday, the Florida Department of Health counted more than 497,000 total cases, making the state second only to California, with more than 519,000 cases.

Guests wear masks as required to attend the official reopening day of the Magic Kingdom at Walt Disney World in Lake Buena Vista, Fla., Saturday, July 11, 2020. Disney reopened two Florida parks, the Magic Kingdom and Animal Kingdom, Saturday, with limited capacity and safety protocols in place in response to the coronavirus pandemic.

The coronavirus surge in Florida has resulted in more cancellations and lower attendance than the company was expecting, with the park operating at lower capacity, Disney executives said Tuesday in the earnings presentation. 

Chapek said Disney World had experienced a falloff in visitors coming to the park from out of state. Long-distance travel remains well below last year's volume, and airlines have cut flights from their schedules.

The impact of the park's reopening on the company won't be known until it releases fourth-quarter results.

"We expect demand will grow when the COVID situation in Florida improves," said Christine McCarthy, Disney's chief financial officer.