Disney Warns Of Continued Disruption To Its Business

Disney is now warning of more business disruption due to coronavirus’ spread. The company told [...]

Disney is now warning of more business disruption due to coronavirus' spread. The company told The Hollywood Reporter about how their operations have had to be tweaked as a result of the pandemic. During a conference call on Feb. 4th, Disney estimates that they had lost $280 million due to closing Shanghai and Hong Kong Disney Parks. It has only grown since then, with the closing of the parks in the United States and even other locations around the world. Factor in the losses from the summer movie slate having to shuffle around, and the picture is clear.

"The impact of the novel coronavirus...and measures to prevent its spread are affecting our businesses in several ways," the company revealed to the Securities and Exchange Commission in a regulatory filing. "We have closed our theme parks; suspended our cruises and theatrical shows; delayed theatrical distribution of films both domestically and internationally."

"Our businesses could also be impacted should the disruptions from COVID-19 lead to changes in consumer behavior," the SEC filing continues. "The COVID-19 impact on the capital markets could impact our cost of borrowing. There are certain limitations on our ability to mitigate the adverse financial impact of these items, including the fixed costs of our theme park business."

The giant company also decided to shut down all North American Disney stores amid the pandemic. That means Downtown Disney in Anaheim and Disney Springs in Orlando also shuttered for the time being. Add both Disney's hotels at Walt Disney World to the mix as they close tomorrow as well. Everything is pointing to business facing a bit of squeeze as travel is limited.

"There has been a disruption in creation and availability of content we rely on for our various distribution paths, including most significantly the cancellation of certain sports events and the shutting down of production of most film and television content," Disney added.

Fitch Ratings is a debt rating agency, and they put Disney on credit watch this week. That means they assigned the company a negative outlook because of the concerns related to how the Hollywood giant will bounce back this year. But, coronavirus is suspected to affect their credit profile over the next two to three quarters. After that, the path forward will be to normalize gradually. The situation will be like that not only for business but for people on the ground as well.

Were you looking forward to making a trip to Disney this summer? Let us know in the comments!