Walt Disney (NYSE:DIS) is losing nearly half a billion dollars in ad revenue and earnings after the National Basketball Association canceled its season because of the coronavirus outbreak.
The basketball league made the decision to cancel the season after Utah Jazz player Rudy Gobert tested positive for COVID-19. A message on the NBA's website says:
The NBA has temporarily suspended the 2019-20 season in response to the coronavirus pandemic. That decision was made to safeguard the health and well-being of NBA fans, players, team and arena personnel, media members and the general public. The league intends to resume the season, pending further developments related to the pandemic.
According to industry site Broadcasting & Cable, MoffettNathanson Research analyst Michael Nathanson said Disney stands to lose $481 million in ad revenue if the remainder of the season and the playoffs are not played, and it will take a hit to earnings of $306 million, or a 3% decline, as a result.
It is possible the entertainment giant has insurance to cover such an event, and Nathanson says it is unclear whether or how much Disney would still have to pay the NBA for the rights for the games. Disney has also closed its theme parks and suspended live-action movie production.
Nathanson also said AT&T (NYSE:T) had $379 million at risk from the cancellation, with $211 million coming from lost ad revenue and $168 million lost due to a 2% decline in earnings.
The potential of a lost season is costing these two companies an estimated $860 million in revenue and profits.