The fiscal second quarter was rough for Disney (DIS 3.51%). Revenue rose sharply as a result of the Fox entertainment assets that it didn't own through most of the prior year's quarter. Earnings, operating income, and all of the media giant's profitability measures fell sharply for the period.
Disney shares initially moved lower following Thursday's report, a combination of weaker-than-expected earnings and Disney+ subscriber numbers. However, there was still a lot to like within the report. Let's get into a few of the silver linings.
1. Shanghai Disneyland will open on May 11
The first of Disney's theme parks is now less than a week away from reopening. The shopping, dining, and entertainment district that Disney runs just outside Shanghai Disneyland has been open in a limited fashion for weeks, so it makes sense that this would be the first park to get rolling again.
The experience won't be ideal. We're talking about temperature checks and mask requirements for guests and employees. There will be social distancing measures in place. Capacity will be limited to 30% of the park's actual capacity of 80,000 guests, with online reservations required to secure a spot. It's going to be a slow ramp-up process, but hey, it's starting.
2. Farewell summer dividend
Disney will skip its semiannual distribution this summer, a move that will preserve roughly $1.6 billion in cash for the entertainment bellwether. No one likes to see an end to a payout streak, but it's the right thing to do. There were already some activists firing at Disney on social media about the shareholder payouts in light of roughly 100,000 theme park employees who were furloughed last month.
Disney shareholders won't miss the payout. The yield had bumped up to nearly 1.7% after the stock's correction, but no one is buying Disney for the income.
3. ESPN is a non-sports hit -- for now
There's a lot of chatter about how ESPN will fare as live sports are shut down. The hot topic these days is whether cable and satellite television customers should be required to pay the costly ESPN fees. Well, ratings were up 11% for ESPN in April for the key 18-to-49 demographics group. The Last Dance documentary and the NFL Draft attracted record audiences.
The long-term outlook for ESPN without live sports is painful. However, for now it's holding up better than expected.
4. Mulan is still coming to theaters in July
Studios have pushed out upcoming theatrical releases, given the near-term uncertainties of when movie theaters will open again, and even when they do there will probably be some capacity restrictions. It's been two months since Disney bumped the live-action Mulan from a late March release to late July -- and it's staying there for now.
This isn't the first major release hitting theaters. Christopher Nolan's Tenet is slated to be released a week earlier, and Disney will get a good feel for what will be possible with Mulan after seeing how Tenet fares.
There's a lot of risks with Disney these days, and it was no longer one of the market's thinning pool of safe stocks even before Tuesday's dividend cut. The uncertainties are everywhere, but there's no denying that Disney will continue to be a major player in entertainment no matter how the crisis shakes out.