Walt Disney Co (NYSE:DIS) notched up a huge increase in subscribers to its Disney+ service, helping to offset losses in other parts of the business.
The subscription video streaming service racked up 95mln paying users as of January 2, up from 26.5mln a year before. ESPN+ subscribers rocketed 83% to 12mln and Hulu gained 30% to 39mln.
Revenues in the Disney Media and Entertainment Distribution dipped 5% to US$12.6bn with operating income down 2% to US$1.4bn.
The Disney Parks, Experiences and Products segment saw revenues tumble 22% to US$16.2bn with operating income plunging 67% to US$1.3bn, with COVID-19 closures causing a US$2.6bn hit on profits.
During the quarter, the entertainment giant’s theme parks were closed or operating at significantly reduced capacity and cruise ship sailings and guided tours were suspended.
Theatrical releases were delayed, shortened or cancelled and stage play performances have been suspended.
There were also disruptions in the production and availability of content, including the cancellation or shift of key live sports programming into 2021, as well as the suspension of production of most film and television content.
Most of the production resumed in the last few months of 2020 but there is still disruption depending on local lockdown measures, while there are additional costs to ensure safety, which are expected to come in at US$1bn this year.
“It’s this diversity in the face of adversity that is Disney’s real strength. An excellent content catalogue, whether that’s Princess in Parks or Quarterbacks on ESPN, is one thing – but Disney’s ability to sell those products through a variety of channels multiplies the benefit many times over,” commented Nicholas Hyett, Equity Analyst at Hargreaves Lansdown.
“Disney trades on a monstrous 74.1 times earnings, a valuation more common among cloud computing giants and electric car manufacturers.”
“The stellar valuation is partly down to the pandemic depressed earnings expected this year, but also reflects a genuine investor enthusiasm for Disney’s direct to customer streaming service. It’s a vote of confidence by the market, but also sets Disney a high bar for success.”
Shares rose 1% to US$190.91 in afterhours trading.