Disney ( DIS - Free Report) in a recent regulatory filing with the Securities and Exchange Commission cautioned against the adverse impact of the coronavirus or COVID-19 outbreak on its business. Management stated that it has become difficult to estimate the near-to-medium term performance of its businesses. The media conglomerate expects the coronavirus outbreak and the precautionary measures taken to prevent its spread including quarantines and lockdowns to not only hurt its financial and operational results but also to bring a change in consumer behaviour that can ruin its long-term prospects. Notably, Disney already closed its theme parks in California and Florida because of the pandemic. (Read More: Disney Shuts Theme Parks as Coronavirus Threat Looms) Moreover, Disney delayed theatrical distribution of films both domestically and internationally. The company also experienced “supply chain disruption” and “ad sales impacts.” VIDEO
Cancellation of sports events is expected to hurt its ESPN business. Additionally, shutting down production of most film and television content is expected to affect future slate of releases.
Further, the impact of coronavirus on capital markets is expected to cripple Disney’s borrowing capacity. Shares of Disney, which has a Zacks Rank #3 (Hold), have declined 34.3% on a year-to-date basis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Movie Slate Goes for a Toss, Disney+ Content Expands Disney postponed its May movie releases including the Marvel superhero film Black Widow, which stars Scarlett Johansson besides Mulan, The New Mutants and Antlers. Other well-known studios like Paramount, a division of ViacomCBS ( VIAC - Free Report) , postponed A Quiet Place Part II and The Lovebirds. Universal & MGM also rescheduled the new James Bond movie release from Apr 10 to Nov 25. However, Disney launched Frozen 2, three months ahead of schedule on Disney+ in the United States on Mar 15. Following Disney’s lead, major studios like Universal and Warner Bros. also announced early digital purchase option of their movies, namely Emma and Birds of Prey, respectively. Disney Defers Disney+ Release in India Reportedly, per a TechCrunch report, Disney is postponing the launch of Disney+ in India following the rescheduling of Indian Premier League (IPL) due to the coronavirus outbreak. The company was set to launch Disney+ content on Hotstar on Mar 29. Notably, a beta trial was made available to a limited number of users on Mar 11. Further, the coronavirus outbreak in Europe can compel Disney to push back the launch in France on Mar 31, 2020. The stay on launch is definitely a setback for Disney as the Disney+ is likely to have benefited from the ongoing social-distancing trend due to the coronavirus-related lockdowns in different parts of India. Disney’s latest decision also puts it behind Netflix ( NFLX - Free Report) and Amazon ( AMZN - Free Report) prime video in terms of competition. Netflix’s offering of a mobile-only cheaper plan and a solid content portfolio are expected to drive user base in India. Reportedly, the company will spend $420 million this year and next on producing original content for the audience in India. Moreover, Amazon prime video’s slate of solid local content is expected to intensify rivalry for both Netflix and Disney in 2020. Amazon Prime is currently available across India on a monthly plan of INR 129 and at annual membership fees worth INR 999 that include mobile access. Today's Best Stocks from Zacks Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%. This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year. See their latest picks free >>