Theme parks, movie theaters and sporting events are the
basis for big TV/movie and other live content. Mass gathering places.
What company depends on all three in a big way? Walt Disney, of course.
Some say those three combined live
entertainment-sports entities pull in 90% of all Disney’s business. The other 10%? Disney+, the big streaming service launched late last year.
Of the three big businesses, Disney’s biggest revenue generator is its theme parks. MoffettNathanson Research says, at best, Disney parks could
open -- in part -- in July. That’s just two months away.
In reality, many expect it will take much longer.
After all, how would that work with COVID-19 still on the loose?
Disney could restrict attendance to 25% or perhaps 50% of its usual traffic. Plus, no doubt, require face masks -- which could come on and off at concession stands — as well as possibly
flying off completely during rides!
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Does that sound like a realistic experience for the high price of roughly $100 to $175 per day entrance fee? Figure fanatical Disney park fans will come no
matter what. Still, all that will result in lower attendance overall, with many staying away. Good news: Less wait time on those traditionally long ride lines.
Movie theaters: Disney was far
and away the biggest movie studio in terms of U.S. box-office revenues in 2019. Now, some movie theaters have been toying with spacing out attendees and leaving seats empty in between.
Disney’s "Mulan” is now scheduled in July -- moved from its original spring start. Expectations are that, at best, “Mulan” could be pulling in far less than originally
forecast at the box office.
If that happens, look for Disney to perhaps make some risky decisions in moving films earlier to video on-demand windows. Movie theaters owners won’t be real
happy.
Sporting events: Question marks still exist for the conclusion of the NBA season, affecting both ABC and ESPN. Then, in the fall, if the NFL and college football gets dinged with a late
start or worse, there will way more problems for the big cable TV sports networks.
Bottom line: We will see much lower advertising numbers. And that’s not all. Pay TV providers, which
pay big affiliate fees to ESPN and other sports networks, are already asking for price relief with the lack of live sports.
Positives? Disney+ — as well as Hulu and ESPN+ and other
direct-to-consumer businesses. Continued higher home viewing through the rest of the year is expected for those platforms. MoffettNathanson says revenue this year is still expected to sharply rise
160% to $12 billion in 2020 from $4.6 billion in 2019.
But what about expenses, big streaming TV/movie production budgets? Yes, these newbie, D2C businesses will have that as well -- a rise of
140% of costs to $16 billion in 2020 versus $6.8 billion in 2019.
For Disney, all this will be equivalent to a wild blindfolded theme park ride. Good news: Plenty of seats are available.