The COVID-19 pandemic has resulted in some major hits to every area of daily life and that includes entertainment and the business side of the industry, too. Entertainment giant Disney, like many other companies, is set to take a huge financial hit as the pandemic continues thanks in part to the closure of theaters and theme parks, but according to analysts, Disney has enough cash that they can weather the disruption.
According to Moody's (via Deadline), there's no change in the company's ratings or outlook currently thanks to its sizeable cash balance.
"No change in ratings or outlook (at this time)," Moody's SVP and lead entertainment analyst Neil Begley. "Liquidity reigns supreme."
According to Begley, Disney has $12.25 billion of revolver capacity and a sizable cash balance, more than enough to cover bond maturities through the end of the fiscal year. He also indicated that Disney will likely also look for ways to mitigate costs and take other measures to reduce their financial strain.
"We also expect the company will endeavor to control costs, delay capital expenditures and pay significantly lower taxes for fiscal 2020," Begley said.
Of course, while the outlook for Disney isn't bleak, that doesn't mean that there isn't still room for a major economic hit if the pandemic and associated shutdowns continue too deeply into the year.
"There is potential for a significant economic hit to Disney if the closures last beyond June, but we expect the park closures and cruise ship suspensions to be a temporary disruption, hurting margins and adding to the $175 operating income hit to the segment for the parks closed in Shanghai and Hong Kong earlier this year," Moody's said.
All of this comes after a recent report indicated that Apple could be in a position to buy Disney. Earlier this week, Rosenblatt Securities' Bernie McTernan suggested that the Tim Cook-led company could make a reasonable bid for Bob Chapek's Disney now that shares of the company have slipped as a direct result of the coronavirus crisis. Of course, the idea Apple might buy Disney isn't exactly new. Following Disney's purchase of Pixar in the mid-200s, Steve Jobs became the largest shareholder at Disney, even having a seat on the board of the company.0comments
In Bob Iger's memoir he released last September, the former Disney suggested the companies might have even merged already if Jobs were still alive. Jobs died due to complications of pancreatic cancer in 2011.
"If Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously," Iger wrote.