Disney+ Hits 58 Million Subscribers

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Credit…Joe Burbank/Orlando Sentinel, via Associated Press

The Walt Disney Company reported doomsday financial results on Tuesday, with padlocked theme parks, idled cruise ships, postponed film releases, darkened Broadway marquees, closed mall stores and the absence of live sports on ESPN as a result of the coronavirus pandemic all contributing to $4.72 billion in quarterly losses.

But Disney’s newest and, as far as many investors are concerned, most important business — streaming — experienced growth as people quarantined at home. Disney said it had more than 100 million subscribers worldwide across its Disney+, Hulu and ESPN+ streaming services. Disney+ has about 58 million by itself, an astounding number for a platform that is less than nine months old.

Crossing the 100 million threshold was “a significant milestone and a reaffirmation of our direct-to-consumer strategy, which we view as key to the future growth of our company,” Bob Chapek, Disney’s chief executive officer, said in a statement.

In total, revenue in the quarter that ended on June 27 added up to $11.78 billion, falling from $20.26 billion and underscoring the extreme difficulties that the world’s largest entertainment company has faced during the coronavirus pandemic. During the quarter, Disney furloughed an estimated 100,000 employees, slashed executive pay by up to 50 percent and took out a $5 billion line of credit to bolster its liquidity, on top of $8.25 billion secured in March.

Per-share losses in the quarter, the third in Disney’s fiscal year, totaled $2.61 — a stark departure from the spectacular growth the company delivered from 2006, when it bought Pixar, to last year, when it swallowed the majority of Rupert Murdoch’s entertainment empire. In the same period last year, Disney had a profit of 79 cents per share.

Excluding one-time items, Disney squeaked out per share profit for the most recent quarter of eight cents, better than analysts were expecting.

Disney’s share price has been remarkably buoyant, however, because investors have focused on comeback efforts — the return of some sporting events and a retrofitted Walt Disney World that reopened to a limited number of visitors in mid-July — and the success of Disney’s streaming division. Hulu has been on a roll because of new programming, including the FX-supplied series “Mrs. America,” which received eight Emmy nominations. Disney+ created a cultural thunderclap in early July, when it released a live capture of the original “Hamilton” stage production.

Credit…Ryan Jenq for The New York Times

Fox News remains the profit king at Rupert Murdoch’s diminished media empire. The cable news behemoth was the lone bright spot at its parent company Fox Corporation, which reported a drop in quarterly profit and revenue because of impacts from the coronavirus pandemic.

Profit plummeted 69 percent to $145 million in three months ending in June because of a decrease in advertising and an increase in costs, including a significant impairment charge related to exiting a rights agreement with U.S. Golf Association.

Since Mr. Murdoch sold the majority of his business to The Walt Disney Company, his Fox empire has slimmed down to focus on sports and news. Fox News has benefited from people in lockdown, but the absence of major sports programming has severely cut into the business.

Revenue was down 4 percent to $2.5 billion, slightly better than Wall Street’s expectations of $2.3 billion. Fox News helped dampen the downturn. The cable news channel saw an uptick in advertising despite a recent marketing boycott of the network’s biggest prime time star, Tucker Carlson.

Lachlan Murdoch, the chief executive, characterized the performance as a strong result in spite of the pandemic. “We entered the Covid-19 crisis on sound operational and financial footing and we expect to emerge from this pandemic more competitive, more focused and even more strongly positioned to deliver value for our viewers, partners and shareholders in the years ahead,” he said in a statement accompanying the results.

The division that houses Fox News saw a 12 percent jump in profit to $674 million, accounting for 90 percent of the company’s total operating profit. The company also benefited from contractual rate increases that cable and satellite operators pay to carry Fox’s networks. In addition to Fox News, the company also owns Fox broadcasting and the FS1 cable sports channel.

As at other media networks, Fox saw an enormous defection in total ad revenue, which dropped 22 percent to $712 million. Carriage fees rose 7.7 percent to $1.5 billion.

On the earnings call after the report, Mr. Murdoch underscored how sports had started to return, including Major League Baseball, despite flare-ups in coronavirus cases among some teams. He sounded an optimistic note about the return of football by September, saying “we fully expect college football and N.F.L. to come back.”

Credit…Nathaniel Brooks for The New York Times

A surge in shares of Eastman Kodak before a deal was announced with the Trump administration to produce critical components for the pharmaceutical industry has come under scrutiny after a senator called for a federal investigation and news reports suggested that one was already underway.

On Monday, Senator Elizabeth Warren, Democrat of Massachusetts, called on U.S. securities regulators to investigate trading in shares of Eastman Kodak before the company disclosed that it would receive a $765 million federal loan to produce ingredients to make critical drugs in the United States.

Then on Tuesday, The Wall Street Journal reported that the Securities and Exchange Commission had begun a preliminary inquiry. Ms. Warren applauded the news in a post on Twitter that linked to The Journal article.

Kodak, based in Rochester, N.Y., said in a statement it “intends to fully cooperate with any potential inquiries.” Arielle Patrick, a spokeswoman for the company, said Kodak never intended for news about the loan to run in a local publication before the Trump administration announced on July 28 that the company had been tapped to work on a potential treatment for Covid-19 and other ailments.

An official with the S.E.C. declined to comment. Kodak had not received any notification from the commission as of Tuesday, said a person familiar with the matter who spoke on condition of anonymity because the matter was not public.

The timing of the loan to Kodak, best known for its camera and film processing business, raised controversy because the official announcement came a day after the company had awarded Jim Continenza, the company’s chairman and chief executive, 1.75 million in stock options.

Kodak awarded those stock options to Mr. Continenza at the same time it was alerting local media in Rochester about the impending loan deal. At least one news outlet in Rochester jumped the gun on that news — one potential reason behind the 25 percent surge in Kodak shares on July 27. The stock closed at $2.62 that day and rose more than 1,000 percent over the next two days on news of the Trump deal.

Within 48 hours of the options being granted to Mr. Continenza, they were worth about $50 million. For now, though, any gains in the value of those options are just theoretical as Mr. Continenza has yet to exercise them to buy shares.

In her letter, Ms. Warren said there were “questions about how Kodak handled what appears to be ‘non-intentional disclosure of material nonpublic information.’’’ She said the company might have violated a securities rule intended to handle such inadvertent disclosures.

Credit…Vincent Tullo for The New York Times

NBCUniversal, the media giant that includes Universal Pictures, the NBC broadcast network and several cable channels, started layoffs this week because of the affects of the coronavirus pandemic, according to two people familiar with the matter.

The company plans to eliminate about 10 percent of its full time work force of 35,000.

The pandemic has cut into sports broadcasts, closed movie theaters and shut down theme parks. A large portion of the staff cuts will happen at NBCUniversal’s theme parks group, which took a $399 million loss in the second quarter, the only unit to lose money in the period.

The company recently reopened its locations in Florida and Japan after closing for several months. Its California location remains closed.

Total sales for NBCUniversal, owned by Comcast, fell 25 percent to $6.1 billion in the second quarter, as the virus continued to wipe out spending. Sales at the Universal Studios division declined nearly a fifth to $1.2 billion as the country waited for theaters to more fully open.

The ad giant Publicis Groupe cut ties on Tuesday with an executive over his Twitter posts about the coronavirus pandemic.

Tom Goodwin, who became the company’s head of futures and insight in January, posted over the weekend that he found “the total obsession with Covid deaths over all other deaths entirely gruesome. 7,500 Americans die every day but only the ones with this precise new Virus matter.”

The post, like several others about the crisis in recent months, incited outrage from many in the advertising industry. On Sunday, Tom Morton, the U.S. chief strategy officer of R/GA, urged Mr. Goodwin to stop posting: “Please no more clickbait contrarianism. You’re better than this.” Mr. Goodwin hit back with a expletive-laced response, telling Mr. Morton to “get off your lofty perch” and mocking his “sourdough baking home-schooling.”

Publicis “parted ways” with Mr. Goodwin because his actions on social media “do not meet the standard of conduct we expect of our company’s employees and were not aligned with our values,” the advertising firm said in a statement first reported by the trade publication AdWeek.

Mr. Goodwin did not immediately respond to a request for comment, but seemed to address the uproar by posting on Monday that “in the free thinking world of 2020 we are only ‘allowed’ to have perfectly aligned “genuine concerns,” while adding that it was “time to repeat that I’m not a voice of Publicis.”

Credit…Kennedi Carter for The New York Times

The economic crisis caused by the pandemic has driven interest rates to rock-bottom levels, meaning there has hardly been a better time to borrow. But with tens of million of people out of work and coronavirus infections surging in many parts of the country, qualifying for a loan — from mortgages to auto loans — has become more trying, even for well-positioned borrowers.

Lenders that have set aside billion of dollars for future defaults have also tightened their standards, often requiring higher credit scores, heftier down payments and more documentation. Some, such as Wells Fargo and Chase, have temporarily eliminated home equity lines of credit, while Wells Fargo also stopped cash-out refinancing.

It’s not unusual for lenders to tighten the credit reins during a downturn, but the current situation has made it especially challenging for them to get an accurate read on consumers’ financial health. Borrowers have been able to pause mortgages, halt student loan payments and delay paying their tax bills, while millions of households have received an extra $600 weekly in unemployment benefits. Those forms of government support could be masking an underlying condition.

“It makes it hard for a lender to understand what the consumer’s true state of credit quality is and their ability to pay back a loan,” said Peter Maynard, senior vice president of global data and analytics at the Equifax credit bureau.

Credit…Lawrence Bryant/Reuters

Black-owned businesses have been hit particularly hard by the pandemic and the resulting economic crisis, a new study by the Federal Reserve found, underlining how minority communities have borne a disproportionate cost of the virus.

The analysis, from the Federal Reserve Bank of New York, shows that Black-owned businesses are heavily concentrated in areas that were hard-hit by the outbreak. And those businesses were already vulnerable before the crisis began, according to the briefing, written by Claire Kramer Mills and Jessica Battisto.

“Counties with the highest concentration of COVID-19 are also the areas with the highest concentration of Black businesses and networks,” the authors wrote, noting that “weaker cash positions, weaker bank relationships, and pre-existing funding gaps left Black firms with little cushion entering the crisis.”

Black-owned businesses now appear to be closing at a faster rate than those owned by other minority groups.

While the overall number of active business owners fell 22 percent between February and April, the number of active Black business owners dropped by 41 percent. Other minority groups also saw a major cost: The number of Latino business owners fell by 32 percent, and Asian business owners dropped by 26 percent. Those figures are based on a University of California Santa Cruz analysis of census data.

Even as minority communities shouldered heavier burdens amid the coronavirus crisis, they have sometimes failed to access federal help amid what the authors call “stark” coverage gaps.

In counties with the densest Black-owned business activity, Paycheck Protection Program loan coverage rates were typically lower than 20 percent, the report found. That was “not too different” from the national coverage rate of 17.7 percent, according to the authors, but there was big variation across counties.

For instance, only 7 percent of businesses in the Bronx, 11.3 percent in Queens, and 11.6 percent in the Michigan county that is home to Detroit received the forgivable loans.

Probably at play: Black communities often lack access to banks in the best of times. Black-owned businesses are far less likely than white-owned businesses to have stable banking relationships.

Lack of credit access in communities of color raises “questions that have heightened significance when banks are relied on to administer federal, taxpayer-supported relief programs, as is the case with PPP,” the brief said.

Stocks rose on Tuesday, extending a rally that has lifted technology shares to new highs as lawmakers in Washington continued to try to pin down a coronavirus relief package.

Investors have one eye on corporate earnings reports, and the other on lawmakers who are discussing the latest aid bill to help people and businesses hit by the economic crisis. Negotiations reconvened on Tuesday to try to reach an agreement on how to extend aid to tens of millions of Americans who lost crucial unemployment benefits at the end of July. Economists have warned that permanent damage could be wrought on the economy without action.

Trading on Tuesday was unsteady, with the S&P 500 falling back into negative territory at several points throughout the day. But sentiment was also lifted by a report showing an uptick in factory orders in June, another indication of rebounding economic activity. By the end of the day, the S&P 500 climbed about 0.4 percent, and the Nasdaq composite rose to another record.

On the earnings front, the London-based oil giant BP reported a $16.8 billion quarterly loss, and cut its dividend in half for the first time in a decade. The company also said it would increase its investments in low-carbon energy, like solar and wind power, by tenfold in a decade, while cutting its oil and gas production by 40 percent. Its shares rose despite the huge loss.

The gain on Tuesday adds to a steady climb for stocks that has lifted the S&P 500 to within 3 percent of its record. That has been fueled by government spending, the efforts of the Federal Reserve to backstop the economy and a surge in shares of technology stocks like Apple, Amazon and Microsoft — which have reported higher profits as more people work and shop from home.

  • Uber said it extended its timetable for employees to work from home, saying that they will not be asked to go back to the office until June 2021. Previously, Uber told employees that they could expect to return by the end of September. But as coronavirus cases continued to rise in the United States, the goal of returning safely in the fall became less realistic. In Europe, some of Uber’s offices have already reopened. If the pandemic subsides enough for U.S. offices to reopen before June, employees would have the option to return early, a spokesman said.

  • Wynn Resorts said on Tuesday that its operating revenue plunged 94.8 percent to $85.7 million for the second quarter, compared with $1.66 billion in the same period last year. The company, based in Las Vegas, reported a net loss of $637.6 million for the April-to-June period. Like other casinos, Wynn Resorts’ operations closed in the spring and reopened in June but with limited capacity because of health restrictions, including a limited number of seats per table and slots machines spaced farther apart to accommodate social distancing.

  • Booking.com plans to reduce its global work force of more than 17,500 employees by up to 25 percent as the coronavirus pandemic continues to take a devastating toll on the travel industry. Booking Holdings, the parent company of Booking.com, will make announcements to employees beginning in September on a country by country basis, according to a securities filing. Booking Holdings, which owns other travel websites including Kayak and Priceline.com, reported a 51 percent drop in gross travel bookings in the first quarter of 2020 compared to the same period last year.

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