Disney’s Streaming Service Slows, Coloring a Profitable Quarter

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Operating income at Disney’s traditional television business — ESPN, ABC, Disney Channel, FX, Freeform, National Geographic and other networks — reached $2.8 billion, a 15 percent increase. Disney attributed the improved results to lower programing costs and higher fees from cable distributors (based on multiyear contracts). Costs at ABC fell primarily because of the timing of the Academy Awards, which aired later than in past years — after the quarter ended — because of the pandemic.

Profit in the quarter, the second in Disney’s fiscal year, totaled $912 million, up 95 percent from a pandemic-battered $468 million a year earlier. When one-time items are excluded, per-share profit rose 32 percent, to 79 cents from 60 cents. (Analysts had expected about 27 cents.)

Revenue was $15.6 billion, a 13 percent decline from a year earlier.

Disney estimated that the pandemic had a $1.2 billion impact on its theme park and cruise empire. As a result, the division had a loss of $403 million. Disneyland in California, two theme parks in France and the Disney Cruise Line were closed during the recent quarter. Disneyland reopened on April 30 with capacity limited to 25 percent, as mandated by California officials.

Mr. Chapek told analysts that the company’s largest tourist destination, Walt Disney World in Florida, would benefit from the relaxed mask-wearing guidance given by federal officials on Thursday.

“That is very big news for us,” he said. Vacationing “in Florida in summer with a mask on can be quite daunting.”

In terms of theme park demand for the months ahead, Mr. Chapek noted that Disney research had found that “intent to visit” by families was on a par with 2019, suggesting a bounce-back for the resorts once capacity restrictions and other measures (mandatory face coverings) are lifted or relaxed.

In another signal of a recovery, Disney said two films, “Shang-Chi and the Legend of the Ten Rings” and “Free Guy,” starring Ryan Reynolds, would receive exclusive 45-day runs in theaters before appearing on Disney+. “Free Guy” is scheduled to arrive in cinemas on Aug. 13 and “Shang-Chi,” a Marvel spectacle, in early September.

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