Disney’s U.K. subsidiary is in need of a little fairy dust. The London-based outpost for the House of Mouse – The Walt Disney Company Limited – has posted a loss of almost $300 million for the financial year ending Oct. 2, 2021.
The number is a significant drop on the previous year’s accounts (for the year ending Oct. 2020), which showed a restated profit of $291 million.
The figure comes from the company’s financial report, which was filed at the U.K. business registrar, Companies House, on Thursday. The report represents the first full year of accounts in which Disney+ has been operational (the streaming service launched in March 2020) as well as the first full year impacted by the COVID-19 pandemic.
According to the report, which was signed by EMEA exec Sarah Williams, the loss of £244.5 million ($292.7 million) is down to “impairments of investments” as well as an increase in development costs for Disney+ and theatrical content. Williams pointed out the revenues for the latter “will materialize in the coming years.”
The company took an impairment charge of $270 million across “eleven equity investments,” according to the report, although it did not appear to specify what those investments were. This was due to restructuring and “less than satisfactory performance of certain subsidiaries,” although again the report did not specify which subsidiaries these were.
The report also pointed out that, due to the pandemic, its live shows such as “The Lion King” at the Lyceum Theatre in London took a significant hit, as did Shanghai Disneyland, which, according to the report, suffered from “extensive disruptions to park operations” due to COVID-related closures.
On a more positive note, gross revenues were up from $2.7 billion to $3.1 billion, driven “by the success of Disney+” and the recovery of character merchandising revenue as pandemic restrictions were lifted.
Media and entertainment distribution – which includes Disney+ – accounted for approximately $2.5 billion of that gross revenue while the Disney parks made up the remainder with $539 million.
The financial report also set out risks and uncertainties the company faces, which included, among other factors, the ongoing impact of the pandemic as well as wider global economic and political conditions, the legal standing of intellectual property rights, Brexit and “changes in public and consumer tastes and preferences and competitive landscape.”
“The success of our business depends on our ability to consistently distribute filmed entertainment, TV programming, online material, electronic games and consumer products that meet the changing preferences of our broad consumer market,” the report warns. “We face substantial competition in each of our businesses from alternative providers of the products and services we offer and from other forms of entertainment.”
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