For Disney, a Stricken Empire
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LOS ANGELES — It was once a prospering kingdom, the envy of all the land. But in crept an invisible menace.

It could be the story line for a classic Disney movie. Instead, Disney is living it — and happily ever after is nowhere in sight.

After a decade of spectacular growth, the entertainment conglomerate has been devastated by the coronavirus pandemic. Its 14 theme parks (annual attendance: 157 million) delivered record profits in 2019. They’re now padlocked. Its movie studios (there are eight) controlled a staggering 40 percent of the domestic box office last year. Now, they’re sitting at a near standstill.

“From great to good to bad to ugly,” Michael Nathanson, a leading media analyst, wrote in a report of Disney’s extreme reversal in fortunes. “Recession will cause further pain.”

On Tuesday, Disney’s new chief executive, Bob Chapek, and Robert A. Iger, Disney’s executive chairman, will offer their first assessment of the damage. Disney is scheduled to report quarterly results after the stock market closes. Analysts are expecting per-share profit of 88 cents, down 45 percent.

The true scale of the pandemic’s impact on Disney will not be known until late summer, when Mr. Chapek reports results for the current quarter — the one in which Disney has furloughed an estimated 100,000 employees, slashed executive pay up to 50 percent and taken out a $5 billion line of credit to bolster its liquidity (on top of $8.25 billion secured in March). The Disney board must decide in June whether to pay the company’s usual summer dividend; management is unlikely to recommend it.

Disney turned itself into a colossus over the last 14 years. It bought Pixar, Marvel and the “Star Wars” franchise. Most recently, to withstand Silicon Valley’s incursion into Hollywood, Disney swept up media properties like “The Simpsons” and National Geographic with its $71.3 billion purchase of 21st Century Fox assets.

Now, however, Disney’s vastness has become a liability, creating a mind-boggling collection of holdings, some of which are often overlooked: four TV studios that together produce about 70 shows; 42,000 hotel rooms and time-share units across three continents; the world’s largest licensing business, with annual merchandise sales of $55 billion; a publishing arm that churns out children’s books, magazines and digital products in 68 countries and 45 languages; a chain of 25 Disney English schools in China.

And that is just the tip of Mickey’s toe. Here is a look at the state of some of its operations:

ABC

The good news? ABC, which Disney bought in 1995, has been outperforming rival broadcast networks in recent weeks, according to Nielsen data, as young-adult viewers have flocked to comfort-food ABC shows like “Grey’s Anatomy,” headed toward its 17th season, and “American Idol,” one of the few series still shooting. A whipped-together special, “The Disney Family Singalong,” attracted 13 million total viewers, a big number that underscored the power of the Disney brand, especially among families starved for new content during the shutdown. A second singalong is scheduled for Mother’s Day.

Still, ABC urgently needs a new generation of hits, and shooting was halted on 14 pilots. Cameras are still months away from rolling again. (Writing has continued.) Television advertising is weakening in the dismal economy, analysts say, hurting both ABC nationally and the eight local ABC stations that Disney owns. Political ad spending in the fall will “offset the carnage,” Mr. Nathanson said on a conference call with clients.

Cruises

Disney has four ships (total passenger capacity: 13,400) with three more under construction, at a cost of roughly $1 billion each. Disney’s private Caribbean island, Castaway Cay, serves as a port of call, and Disney is spending hundreds of millions of dollars to build a second island destination.

But the Centers for Disease Control and Prevention on April 9 extended its no-sail order until further notice. Even when ships do begin sailing again, demand is expected to be soft. One lucky break: Those new Disney ships will likely be delayed (the first was originally scheduled to set sail in 2022) because the German shipyards building them are closed.

Streaming

Disney’s major streaming services — Hulu and Disney Plus — have been sizzling as the home-quarantining masses seek out entertainment.

Disney Plus has been particularly impressive. The company pressed ahead with a previously planned rollout of its signature streaming service in Europe in March. Disney Plus now has more than 50 million subscribers. Disney will introduce the service in more than 40 additional countries, mostly in Central and South America, by the end of the year.

The production shutdown will almost certainly delay Marvel shows like “The Falcon and the Winter Soldier,” which was supposed to arrive in August. But the service’s big hit, “The Mandalorian,” finished shooting its second season before the pandemic spread to the United States and will arrive in the fall on schedule. Mr. Nathanson estimates that Disney Plus will lose $2 billion this year, with programming a major expense.

Stage Shows

Disney Theatrical Productions had 29 productions on four continents that were either already running or were set to open by early 2021; all are on pause. They range from the Broadway megahit “The Lion King,” which has been running since 1997, to the touring “Hunchback of Notre Dame” in Japan. The theatrical unit also has seven Disney on Ice arena tours.

Live theater is likely to be among the last segments of the economy to recover because it involves large gatherings in closed spaces and also requires putting performers in proximity with one another. (How do you social distance in an orchestra pit?) Broadway is unlikely to reopen before Labor Day, and may not reopen until next year.

But the division professes optimism. “We believe in the business of theater and expect that — when it’s safe to gather — there will be a greater appetite for it than ever,” a spokesman said.

Theme Parks

Shanghai Disneyland, closed since January, is expected to reopen its main gates to a limited number of visitors in the next two-to-three weeks. With Florida starting to ease restrictions, Walt Disney World will likely follow.

When Disney World gradually reopens, park goers are expected to have their temperatures taken as they enter and be required to stand six feet apart while waiting in line for rides. Disney can’t afford to have its parks join meatpacking plants and nursing homes as coronavirus hot spots. “There’s far more risk than reward to Disney reopening parks too soon,” said Steven Cahall, a Wells Fargo analyst.

Will people even want to frolic in theme parks again? Disney executives believe that there is enormous pent-up demand for public activities, pointing to the 40,000 people who swarmed a California beach when it reopened last month.

Disney Stores

Some of the 312 Disney Store locations in the United States, Europe, Japan and China are on the cusp of reopening, including a few located in malls operated by Simon Property Group. In recent weeks, Disney’s online store, ShopDisney.com, has seen a flood of new customers, with items like sleepwear, puzzles and Mickey Mouse waffle makers in high demand. On Thursday, Disney started selling cloth face masks with characters printed on them ($20 for a four-pack) and said the first $1 million in profit would be donated to a medical supplies nonprofit; the company has already reached that threshold.

Cable Networks

“Thank God for ESPN. No really.”

Benjamin Swinburne, a Morgan Stanley analyst, made that counterintuitive comment in a report last month. ESPN and its four sibling channels have been at the center of Disney’s problems in recent years, as more households cut the cable cord. The pandemic has left ESPN without its usual programming, hurting both viewership and ad sales.

But Mr. Swinburne pointed out that ESPN’s costs have gone down — no live sports to cover — “more than offsetting lost ad sales.” And ESPN will still generate billions in cash flow for Disney because of the fees that cable providers pay to carry it, regardless of what content it has been showing. (There is a growing cry about that being unfair, however.)

All told, Disney’s cable portfolio includes more than 300 channels around the world, including FX, History, Disney Junior, Vice, Freeform, Star, Disney Cinemagic and Nat Geo Wild.

Movies

Global film production came to a halt in March and, with theaters closed, finished movies like Marvel’s “Black Widow” and Pixar’s “Soul” have been postponed. But Disney’s movie operation was the strongest in Hollywood before the shutdown, which puts it in the best position to recover when theaters reopen and cameras begin rolling again.

Cinema chains, for instance, hope that Disney’s big-budget “Mulan,” now set for July 24 release, will help revive moviegoing. “Black Widow” and “Soul,” about a musician who has lost his groove, have been reset for November. December will bring three major releases from Disney’s 20th Century label, including Steven Spielberg’s “West Side Story.”

Michael Paulson contributed reporting from New York.

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