Disneyland Theme Parks Re-Opening July 17

The Walt Disney Company June 10 announced plans to re-open its branded theme parks on July 17 — 65 years to the date Walt Disney opened the original Disneyland in Anaheim, Calif., in 1955. All domestic theme parks have been shuttered since mid-March due to the coronavirus pandemic.

Pending state and local government approvals, Disney’s Grand Californian Hotel & Spa and Disney’s Paradise Pier Hotel plan to reopen on July 23. Additionally, Downtown Disney District will begin re-opening on July 9.

Because theme park capacity will be significantly limited to comply with governmental requirements and promote social distancing, the Disneyland Resort will manage attendance through a new theme park reservation system that will require all guests, including Annual Passholders, to obtain a reservation for park entry in advance, according to Michael Ramirez, public relations director, Disneyland Resort.

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“At this time, there will also be a temporary pause on new ticket sales and Annual Passport sales and renewals,” Ramirez wrote in a post, adding that parades and nighttime spectaculars will return at a later date. And character meet and greets will be temporarily unavailable.

Upon re-opening, a “Guest Experience Team” will be available throughout the parks and Downtown Disney District to assist visitors with questions regarding new social distancing policies.

“With the health of guests and Disney cast members at the forefront of planning, several operational changes will be implemented based on guidance from health authorities to promote physical distancing and cleanliness throughout the Downtown Disney District,” Ramirez wrote.

Chapek: Disney Sticking with Theatrical Window — For Now

Walt Disney Studios plans to stick with the traditional 90-day theatrical window for all major movie releases, CEO Bob Chapek said from his home on the company’s May 5 fiscal call.

With Universal Pictures causing a maelstrom of controversy last month when it announced it would opt for concurrent theatrical and premium video-on-demand distribution for new move releases after generating $100 million from animated feature Trolls World Tour, Chapek said the results awakened Disney to the reality of alternative distribution — especially during the pandemic and unusual market conditions.

He said any changes to Disney’s theatrical distribution would be done on film-by-film basis going forward, including transitioning Artemis Fowl from the box office to Disney+ on June 12.

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“With changes involving consumer dynamics or certain situations like COVID-19, we may have to make some changes to that [90-day theatrical] strategy just because theaters aren’t open or aren’t opened to the extent that [they’re] financially viable,” Chapek said.

He said that with other major Disney box office releases re-scheduled later in the year or into 2021, the studio “very much so” believes in the 90-day window for major movies.

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Universal’s decision to include PVOD caused major exhibitors such as AMC Theatres and Regal Cinema to warn they would not screen any title being concurrently made available on digital platforms.

Chapek reiterated that Disney has dominated the global box office in recent years with its Marvel, Pixar and Star Wars movies. The studio generated about $13 billion in worldwide box office in 2019, including a record seven $1 billion releases, including latest Lucasfilm release Star Wars: The Rise of Skywalker.

Disney Eyeing Possible Fiscal ‘Black Tuesday’

Among media companies navigating the coronavirus, few are more in the fiscal crosshairs of the pandemic than The Walt Disney Co.

When the Mouse House and new CEO Bob Chapek disclose second-quarter fiscal results on May 5, scuttlebutt suggests a sobering fiscal reality underscoring the impact COVID-19 has had on the brand’s amusement parks, movie studio, cruise ships and consumer products — all of which have been shut down worldwide for almost a third of the fiscal quarter due to government mandates in place to stop the spread of the virus.

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Disney last month cut executive pay and reportedly furloughed about 100,000 workers, many of whom worked at Disney’s shuttered Parks and Resorts, which include six amusement parks and cruise lines, and accounts for about 33% of Disney’s total revenue — a financial nightmare that continues to consume a third of the current Q3 period.

Disney’s studio business, which accounted for more than 40% of the global box office in 2019, has been shuttered since March. The studio has delayed  launching tentpole titles such as Mulan and Black Widow, while releasing other titles to the upstart (and lone bright spot) Disney+ SVOD platform.

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Disney, unlike Universal Pictures, is not in favor of bypassing the traditional theatrical window for premium VOD — even in a pandemic and despite Universal generating a record $100 million in PVOD revenue for animated release Trolls World Tour.

Analyst firm Lightshed Partners contends Disney would have to raise the price of Disney+ from $6.99 to upwards of $20 month to recoup the theatrical losses.

“How long can Disney wait or do you have to just acknowledge that film profitability will fall dramatically until consumers are comfortable again [frequenting movie theaters]?,” analysts Rich Greenfield, Brandon Ross and Mark Kelley collectively wrote in a note last month.

The analysts contend Disney is looking a minimum 30% drop, or $3 billion decline, in studio revenue this year — a figure that could top 50% if production and exhibition channels remain closed.

For the flagship ESPN pay-TV platform, with no live sports to broadcast or stream, subscriptions are expected to fall. Dish Network CEO Charlie Ergen is demanding ESPN reimburse it and other pay-TV distributors for the lack of content, among other issues. The executive cited legal “Force Majeure” (“unforeseeable circumstances that prevent someone from fulfilling a contract”) to get out of Dish’s ESPN retransmission contract.

“U.S. multichannel video subscribers effectively paid ESPN $650 million in April to watch one original series (Chicago Bulls/Michael Jordan documentary ‘The Last Dance’) with literally no live sports on TV or for their talk show hosts to even talk about,” Greenfield wrote.

Longtime Disney bull Michael Nathanson downgraded Disney shares from buy to neutral, citing “significant and unrivaled earnings risk for the foreseeable future.”

Meanwhile, other analysts suggest the virus is just a temporary obstacle. Alexia Quadrani, analyst with J.P. Morgan, early last month said the virus represented a short-term issue for Disney that could be negated by the brand’s skyrocketing appeal in direct-to-consumer streaming video.

“We are impressed with Disney’s ability to balance growth in its traditional businesses with investment in an incredibly successful streaming service,” Quadrani wrote on April 2 — before Disney began furloughing staff and cutting executive pay.

ViacomCBS, Charter Close Funding (Debt) Initiatives

With a traditional media revenue businesses turned upside down by the coronavirus, and not wanting to wait for government bailouts, ViacomCBS and Charter Communications are the latest content creator/distributors to seek outside funding (and debt) to sustain operations.

Charter April 17 announced the closing of $3 billion in bonds, which include $1.6 billion of senior secured notes due in 2031, and $1.4 billion of senior secured notes due in 2051.

Separately, ViacomCBS said it would redeem all of its outstanding senior notes due on Feb. 15, 2021, and all of its outstanding senior notes due on March 1, 2021. The separate aggregate amounts of senior notes disclosed April 17 included $300 million and $500 million, respectively.

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The moves come on the heels of major Hollywood players going to Wall Street in search of funding sources. AT&T sought upwards of $5 billion in loans, while Discovery pulled the trigger on $500 million of its credit line. Comcast sold $4 billion in debt while The Walt Disney Co. secured a $5 billion loan from Citibank.

“Right now, it’s all about liquidity,” Neil Begley, SVP of corporate finance group, told The Hollywood Reporter.

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Bob Chapek Named to Disney Board

New Disney CEO Bob Chapek has been officially named to The Walt Disney Company’s board of directors, according to a regulatory filing. Chapek assumed the chief executive position in February after 15-year chief executive Bob Iger decided to step away from day-to-day operations.

“Bob Chapek has demonstrated remarkable leadership in the face of unprecedented challenges that were unimaginable when he became CEO just seven weeks ago, and we’ve watched him navigate this very complex situation with decisiveness and compassion,” Iger and Susan Arnold, independent lead director, said in a joint statement.

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Iger, who assumed a newly created position of executive chairman of the board, earlier this week said he is returning to daily duties in an effort to assist Chapek as the latter confronts disastrous conditions across most Disney business units as a result of the coronavirus pandemic.

Prior to becoming CEO, Chapek served as chairman of Disney parks, experiences and products. During his tenure at Parks, Chapek oversaw the opening of Disney’s first theme park and resort in mainland China, Shanghai Disney Resort, and creation of the new “Star Wars: Galaxy’s Edge” lands at Disneyland and Walt Disney World. From 2011 to 2015, Chapek was president of the former Disney consumer products segment, where he drove a technology-led transformation of the business. He also served as president of distribution for The Walt Disney Studios, and was president of Walt Disney Studios Home Entertainment, where he spearheaded the successful “vault strategy” for the company’s legacy movies.

Disney reports second-quarter (ended March 31) fiscal results on May 5.

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Disney Secures $5 Billion Loan From Citibank

Taking advantage of low interest rates and its strong brand, The Walt Disney Co. said it has entered into a 364-day loan for upwards of $5 billion from Citibank, according to an April 10 regulatory filing. Disney said it would use the funds for general purposes.

The loan, which has different interest rates based on European and American currencies, is scheduled to mature on April 9, 2021. Disney has the option to extend the maturity for an additional 364-day period, subject to lenders’ consent.

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Disney’s business units have been hammered by global shutdowns to prevent the spread of the coronavirus. The media company is reportedly losing $30 million a day since the closure of all its theme parks, cruise lines and movie and TV production studios and box office.

Disney has furloughed nearly 75,000 amusement employees. It has also asked for a 15% cut in salary from its ESPN on-air talent.

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Disney to Furlough Non-Essential Employees Beginning April 19

In the wake of the coronavirus pandemic, The Walt Disney Co. will start furloughing non-essential U.S. employees April 19, the company announced.

Disney committed to full pay and benefits for all employees through April 18.

“With no clear indication of when we can restart our businesses, we’re forced to make the difficult decision to take the next step and furlough employees whose jobs aren’t necessary at this time,” a Disney representative said in a statement.

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Furloughed workers will remain Disney employees through the furlough period and will receive full healthcare benefits with Disney will paying the cost of premiums.

Disney did not report the number of employees that would be affected.

Disney Parks Donates 100,000 N95 Masks, 150,000 Rain Ponchos to Healthcare Workers

With its amusement parks shuttered, The Walt Disney Co. April 1 announced it is giving healthcare workers in California, New York and Florida access to 100,000 N95 masks and 150,000 rain ponchos.

“Disney Parks has a longstanding history of helping hospitals and communities, dating back to the 1930s, when Walt, himself, took Disney characters and animators on outreach visits,” Disney said in a blog post. “Sharing the magic of Disney continues today through contributions, collaborating with nonprofit organizations, in-kind gifts and employee volunteerism.”

“The COVID-19 pandemic is unlike anything we’ve seen before,” said Charles Redding, MedShare CEO. “We have to find ways to pool our resources and work together to help the healthcare workers who are doing their very best to treat patients and contain COVID-19. We appreciate Disney partnering with us to support hospitals and healthcare workers on the frontlines.”

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With all 12 of its branded theme parks closed due to the coronavirus pandemic, Disney said since the beginning of March, its Parks segment has given nearly $3 million in in-kind donations benefiting communities around the globe.

“These are some of the ways Disney brings positive, lasting change to communities around the world,” the media giant said.

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Disney Executives Forgo Salary, Perks During Pandemic

While some media companies have set aside tens of millions of dollars for displaced workers and production personnel, The Walt Disney Co. is cutting salaries and perks to senior executives as its business units get hammered from all directions due to the coronavirus pandemic.

With nearly all business segments either idled or severely curtailed due to shutdowns and consumer quarantines in major markets, Disney will subject its senior executives to significant payroll cuts and related perks, effective April 5.

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According to a regulatory filing, former CEO Bob Iger, who earlier this year transitioned to executive chairman, will forgo his entire $3 million salary, in addition to the use of a company car. Disney will still pay Iger his health care benefits.

Iger’s successor, Bob Chapek, will have his $2.5 million salary cut in half. In addition, general counsel Alan Braverman, CFO Christine McCarthy, human resources chief Jayne Parker, and head of corporate communications Zenia Mucha will see 30% cuts to their base salaries.

Disney said that except for the amount of compensation for paid time off, the salary reductions are not intended to reduce any company employee benefit provided to executives that is determined by reference to the base salary payable, except as may be required at law.

Chapek is still eligible for a bonus of “not less than 300% of the annual base salary,” according to a SEC filing. He is also in line for “a long-term incentive award having a target value of not less than $15 million” for each fiscal year of the agreement through Feb. 28, 2023.

The cuts come as Wall Street downgrades Disney’s fiscal estimates going forward. Credit Suisse analyst Doug Mitchelson, in a note, said his two-week old forecasts for Disney are moot.

“There remains virtually no visibility as to when sports and Hollywood content production will resume and re-openings for theme parks and theaters will take place — we assume beginning of June,” Mitchelson wrote. “As for the media business, the depth of ad declines is also uncertain.”

It should be noted that base salaries are what constitutes the majority of Disney’s payroll taxes and related employee costs. The bulk of senior executive compensation revolves around stock options, which are based on, and compensated by, the stock market.

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Indeed, Iger received total compensation in excess of $66 million in 2018 and $47.5 million in 2019 — the bulk of it stock options and bonuses, including a combined $18.5 million if he remained employed with the company past July 2, 2019, and closing of the Fox studio acquisition.

The Disney board  later rescinded the Fox bonus (after fiscal contributions plummeted) and Iger voluntarily forfeited the employment deadline perk.

Bob Iger: Disney+ Streaming Service Nearing 30 Million Subs

Retired Disney CEO Bob Iger March 11 told attendees at the media giant’s annual shareholder meeting in Raleigh, N.C., that the company would successfully withstand challenges from the global spread of the coronavirus (COVID-19).

“We’re all sobered by the concern we feel for everyone affected by this global crisis,” Iger said. “What we’ve demonstrated repeatedly is that we are incredibly resilient.”

The executive chairman, who introduced successor Bob Chapek to shareholders, said Disney’s future remains bright.

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“What we create at the Wall Disney Co. has never been more necessary or more important,” Iger said.

Indeed, his comments come as Disney said Tokyo Disneyland would remain shuttered until April. Shanghai Disney remains closed expect for select retail merchants. Disneyland Paris remains open.

Separately, Iger said the branded subscription streaming service, Disney+, had reached nearly 30 million subscribers in just three months of operation.

“The decision to pivot to a direct-to-c0nsumerstrategy was a critical one and it is our top priority,” Iger said. Disney+ will launch in Europe on March 24.

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