Disney Hands Out Pink Slips As A Thanksgiving Present

Disney is suffering big time from the shutdowns due to COVID-19. The company posted its first loss in 40 years when it took a $1 billion hit in the last quarter.

In September, it announced it was laying off 28,000 employees worldwide. This mostly is coming from the theme park division.

Like most things in the hospitality industry, Disney is getting hammered. The company, in addition to the parks, operates cruise ships, hotels, and a movie studio. These are all areas that are decimated by the lock downs.

One positive is that the subscriptions for Disney+, the streaming service, exploded. This is a high margin unit but it is still very small as compared to the other areas of the company.


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This means more layoffs are coming. Disney presented another 4,000 employees with their walking papers. This move is expected to take place in the first quarter of 2021.

It brings the total to 32,000 including those announced in September.

With many countries around the world heading towards a second wave of lock downs, it seems that Disney is in for more rough waters ahead. They will not be able to bounce back in the theme parks or cruise lines anytime soon.

Another area that is not often discussed is the company's near monopolistic control over college football. Many of the games were cancelled earlier in the season. They are playing now but an outbreak among any team is always a risk.

Disney is rapidly going from one of the strongest companies in the world to one that is on edge. While the balance sheet is still strong, cash flow is getting hammered. The next year could be even worse for the company.

Film studios are in an interesting situation. Even if they do get the permitting to film, movie theaters are in deep water. Many are either entering bankruptcy or nearing it. Between social distancing, the concern of patrons, and the lack of new films, the theaters are empty.

Thus, even if Disney does put out a number of films, it is unlikely they will clean up at the box office. Many are taking films direct to streaming. While this gets them out there, it is far less profitable.

This is not financial advice but it seems like there is more pain in store for Disney. The company is involved in too many industries that are going to be down for a long time.

It is one company that emerge out of this as a much smaller company than what they entered.


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