Disney on Wednesday said its profit slipped in the recently ended quarter but its theme parks and streaming service Disney+ were booming.
The entertainment giant reported net income of $470 million,
just over half of the $912 million profit it made in the same period a year
earlier.
But park attendance that had fallen due to the ongoing
COVID-19 pandemic rebounded and Disney+ gained 7.9 million subscribers to hit
137.7 million.
When adding in subscriptions to Disney's streaming services
Hulu and ESPN+, the overall number tops 205 million.
"Our strong results in the second quarter, including
fantastic performance at our domestic parks and continued growth of our
streaming services once again proved that we are in a league of our own,"
said Walt Disney CEO Bob Chapek.
Chapek told analysts Disney is open to raising its streaming
service subscription price in the future, but has no specific plans. Disney+ is
pursuing a version of the service that would be supported by advertising, set
to launch later in 2022.
Disney+ gained more subscribers than analysts had expected,
in stark contrast to a dive in subscriber numbers reported by rival Netflix in
the first quarter of this year.
A drop of just 200,000 users — less than 0.1 percent of the
total Netflix customer base — caused shares in the Silicon Valley firm to
plunge and prompted a shareholder to file a lawsuit accusing the streaming
television titan of not making it clear that subscriber numbers were in peril.
"Disney+ has been taking Netflix out at the knees [in
the US]," tech analyst Rob Enderle of Enderle Group told AFP.
"Kids have always chased their content, and for parents
it has been a no-brainer to get their service."
About half of Disney+ subscribers are families with children,
executives said on the earnings call.
Disney stopped licensing its coveted content to Netflix to
make it exclusive to its own streaming service, and said it planned to stick
with the tactic when it comes to rivals in the market.
Parks and politics
Disney said that as its streaming television service
continues to grow strongly, its resorts and parks are generally operating
without any of the significant COVID-19 related restrictions on capacity that
were in place last year.
The pandemic does continue to vex film and television show
production, Disney said, but it has been able to release films in theatres so
far this year.
"Our slate for the remainder of this year is incredibly
strong," Chapek told analysts while discussing the company's line-up of
shows for streaming and theatres.
Chapek acknowledged challenges getting Disney films released
in China, saying the situation there is "very complicated" from
political and business standpoints.
He said he was encouraged by the fact that a freshly
released Doctor Strange film based on a Marvel comics character took in more
than $500 million in its first week, even without being shown in China.
Disney has run into political turbulence closer to home,
with the Florida governor recently signing a law that eliminates a statute that
has for decades allowed the entertainment giant to act as a local government in
Orlando, where it has a theme park.
The move was the latest episode in a dispute between the
state's Republican administration and Disney, after the company criticised the
passage in March of a law banning school lessons on sexual orientation.
"From a financial standpoint, Disney will come out
ahead with the plug pulled," analyst Enderle said.
"It's almost like Florida gave them a monetary favour;
Disney was covering all the costs of the municipality they are in."
The Reedy Creek Improvement District was an area created by
Florida's congress in 1967 to facilitate the construction of Disney World in
Orlando.
Under that agreement, Disney runs the district as if the
entertainment juggernaut were a local government, including collecting taxes
and guaranteeing essential public services such as garbage collection and water
treatment.
Under Florida law, if the special district is dissolved, its
assets and debts would be transferred to local governments that surround the
area.
"Removing district could transfer $2 billion debt from
Disney to taxpayers," state Democratic senator Linda Stewart warned after
the bill was signed.
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