November 10, 2021
Disney Nov. 10 said its “content sales/licensing and other” segment posted a fourth-quarter (ended Oct. 2) operating loss of $65 million on revenue of $2 billion. That compared with operating income of $86 million on revenue of $1.8 billion in the previous-year period during the pandemic.
Content sales and licensing includes Walt Disney Studios Home Entertainment and distribution of movies and TV shows to proprietary and third-party streaming services. Disney said the lower results were due to a decrease in theatrical and home entertainment distribution, reflecting the ongoing impact COVID-19 has had on the theatrical slate since March 2020.
The decrease in theatrical distribution operating income was due to a higher operating loss from titles currently in release, and increased marketing expenses for future releases. Jungle Cruise, Shang-Chi and the Legend of the Ten Rings, Free Guy and Black Widow were all released in the current quarter, whereas the prior-year quarter included just The New Mutants.
Specifically, the studio incurs significant marketing costs before and throughout the theatrical release, which often results in a loss during theatrical distribution. Lower TV/SVOD distribution results were due to a decrease in sales of film content, partially offset by an increase in income from sales of episodic content.
Fewer titles sold in retail channels in the current year as a result of the impact of COVID-19, and, not insignificantly, Disney’s shift from licensing original content to third parties and instead to Disney+, combined to undermine revenue, the company reported.
“While theaters have generally re-opened, we are experiencing a prolonged and gradual recovery in this business,” CFO Christine McCarthy said on the fiscal call.