The spread of coronavirus in China and potentially beyond could have negative near-term business results for U.S. media and entertainment companies, according to one media/entertainment analyst.
Neil Begley, senior vp at Moody’s Investors Service, writes: “specifically companies with exposure to China box office revenue, Chinese theme parks and tourism by Chinese nationals outside the country” are a concern.
Although the spread of Coronavirus has been contained largely to China, Begley adds: “If the contagion spread becomes a pandemic outside of China, we expect similar containment measures will need to be taken elsewhere, which will further affect U.S. media and entertainment companies.”
“This could include broader constraints on travel, closures of theme parks and cinemas, and cancellations of concerts and sporting events. Steps by companies to mitigate the effects could include postponing film releases, concerts and sporting events.”
Begley points to The Walt Disney Company in particular as having the most direct financial exposure to the outbreak and contagion of the virus. “The company generated the largest share [more than 30%] of global box office receipts in 2019.”
In addition, he says Disney operates two theme parks in the region, Shanghai Disney Resort and Hong Kong Disneyland. Disney owns 43% of the Shanghai resort; 47% of the Hong Kong park. Currently, Comcast is in the midst of constructing its Universal Beijing theme park, of which it has a 30% equity interest.
Overall China makes up 22% of all global theatrical box office revenues -- with other studios possibly being affected such as Universal Pictures, Warner Bros., Lionsgate and MGM.
Video game companies could also be hurt. Currently, 14% of Activision Blizzard revenue comes from the Asia-Pacific regions, while Electronic Arts gets around 60% of its revenue internationally mostly from the Asia-Pacific region.