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COVID-19 Has Left Disney Extremely Vulnerable

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COVID-19 Has Left Disney Extremely Vulnerable

Back in February when first cases of the COVID-19 virus were just making it to the U.S., Walt Disney Co (NYSE: DIS) CEO Bob Iger was supposed to retire after four attempts with a bow tied on top of a magnificent reign. The executive, who even seriously considered running for president, was rejoicing Disney's successful debut into streaming as Disney+ immediately threatened Netflix (NASDAQ: NFLX). It was all going so well before the COVID-19 outbreak.

Disney's beyond successful and much-imitated business model is what made the iconic House of Mouse perfectly exposed to the pandemic. Ironically, the things that helped Disney become the biggest media company in the world are what made it impossible to protect the company from the severe consequences of COVID-19.

After turning franchises like Pixar, Marvel, and Lucasfilm into the biggest media business in the world, Mr. Iger is now forced to fight for the survival of the legendary company. The company's largest division brought in more than $26 billion in the year ending last June by putting cruise ships and theme parks under its umbrella. Due to the coronavirus outbreak, all those revenue streams are now entirely shuttered.

Switch To Executive Chairman

The arrangement was finalized at the end of January a few days after Disney was forced to close its Shanghai theme park due to the outbreak. On Feb. 25, Hollywood was shocked to hear that Mr. Iger's 15-year run had ended, though he is staying on as executive chairman.

The change couldn't have come at a less opportune time, as the threats to the core business were already clear at that point. No big media company could be more harmed by social distancing than Disney and only a few have been hit harder by the pandemic. 

The Nightmare

To give you a better idea, Disney is losing at least $30 million a day. The company borrowed $6 billion at the end of March, a sign both of grave trouble but also lenders' confidence that it could rebound from the crisis. Disney employed 223,000 as of last summer, and won't say how many workers are furloughed, but the numbers are huge.

There are 30,000 workers in the California resort business alone and another 43,000 workers in Florida who will be furloughed as the company confirmed on Sunday. All workers will keep their benefits, but their last paychecks came on April 19. 

The New Disney

Earlier this month, the company announced it will release its live-action "Mulan" at the end of July, while "Black Widow" is now set for a November release date. According to Wedbush, this year's box office is expected to fall 40% compared to last year, with an estimated haul of $6.6 billion. The last time box office revenue fell that dramatically was 1998.

The future is unclear for everyone and we know things won't be the same. But there has been a glimmer of good news in Disney+ surpassing the milestone of 50 million subscribers. This is but a small part of their business however, and likely years away from generating revenue that could replace a big movie opening in theaters. Plus, the service will soon badly need new content with production shut down.

Mr. Iger's Legacy Will Be Redefined

Mr. Iger's legacy has received an unexpected sequel, as this iconic American company is fighting to make it through this crisis. But if anyone can shepherd through this, it's Mr. Iger, whose bold acquisitions created his reputation as one of the best executives in America. Now the question is does he have one more trick up his sleeve?

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be sent to ivana@iamnewswire.com

The post Even Disney Is Fighting for Its Life in the Battle Against COVID-19 appeared first on IAM Newswire.

 

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