Parks and resorts powered Disney’s growth. Then came covid-19

A LONG TIME ago in a galaxy far, far away—February, to be precise—Bob Iger quit as head of a wildly successful company. Disney ruled the box office, with seven of the ten biggest hits of 2019. It had just launched a streaming service, Disney+, to take on Netflix. And it had completed a $69bn debt-fuelled acquisition of 21st Century Fox. In Mr Iger’s 14 years in charge, the firm’s share price quintupled. On May 5th he was back, like a Jedi summoned from semi-retirement, to introduce a first-quarter earnings call where Disney suspended its dividend and said covid-19 had caused net profit to fall by 91% from a year ago.

Covid-19 has infected all big media groups. Cinemas are shut; advertising is down; shooting is disrupted and there are no live sports to televise. But few have suffered as badly as Disney (see chart). Netflix is thriving as locked-down consumers sign up. AT&T and Comcast are stabilised by their dull yet dependable cable and mobile businesses. Disney has been whacked for the same reason that for years it thrived: under Mr Iger, the world’s best-known media company grew into far more than a media company. Alas, it diversified into exactly the wrong businesses for a pandemic.

A decade ago Disney’s media networks, which include the Disney Channel, ESPN sports and ABC broadcasting, raked in two-thirds of...



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