Disney CEO Bob Chapek slams California for ‘arbitrary’ rules keeping park closed
COVID-19 costs Disney $2.4B in operating income
Capitalist PIG Hedge Fund founding member Jonathan Hoenig and Barron's Financial Markets reporter Carleton English react.
Disney CEO Bob Chapek didn't mince words when discussing California's local government and their handling of the COVID-19 pandemic, calling rules in place "arbitrary."
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"We are extremely disappointed that the State of California continues to keep Disneyland closed despite our proven track record. Our health and safety protocols are all science-based and have the support of labor unions representing 99% of our hourly cast members," he said on the company's quarterly earnings call.
Chapek noted that the theme park giant has successfully re-opened parks in Orlando, Shanghai, Tokyo and Hong Kong, based on safety protocols, but blamed the local government for being out of touch.
"We believe state leadership should look objectively at what we’ve achieved successfully at our parks around the world, all based on science, as opposed to setting an arbitrary standard that is precluding our cast members from getting back to work while decimating small businesses in the local community" he lamented.
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Disney's Parks, Experiences and Product Division took a 61% revenue hit in the fourth quarter, dropping to $2.5 billion compared to $6.6 billion a year ago, with an operating loss for the quarter of $1.1 billion.
"We estimate the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $2.4 billion," the company added.
Late Thursday, California became the second state in the U.S. to top one million total coronavirus cases, following Texas, according to data from Johns Hopkins University.
However, Disney chief financial officer Christine McCarthy said that the revenue generated from the reopening of Walt Disney World, Shanghai Disney Resort and Hong Kong Disneyland at reduced capacity allowed the company to exceed the costs associated with the Florida theme park's reopening.
In addition, McCarthy said theme park reservations for the first quarter are already 77% booked, with Thanksgiving week in particular close to capacity, showing encouraging signs of increasing demand and trust in the way the Disney theme parks have operated during the pandemic.
The company anticipates Disneyland Resort will remain closed through at least the end of the fiscal first quarter.
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The company reported an adjusted loss of $0.20 per share for the fourth quarter, much smaller than Wall Street analysts expected, according to Refinitiv data. Disney generated $14.71 billion in quarterly revenue, surpassing a projected $14.20 billion.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DIS | THE WALT DISNEY CO. | 109.12 | +6.46 | +6.29% |
Disney shares have lost over 6% this year, compared to the S&P 500's 9.5% rise.