Pre-market inventory: Disney really needs the coronavirus to go away

But the company still cannot escape the coronavirus pandemic.

Disney (SAY) stocks have gained less than 1% this year, far behind the S&P 500 index, which has risen more than 20% since Jan. 1. Disney may struggle to catch up until the pandemic recedes.

Video gains: Disney +, the company’s streaming service, could gain more subscribers if the Delta variant kept people at home. The service grew to 116 million subscribers in the quarter ended July 3, exceeding the 112 million figure expected by Wall Street analysts.

But the company’s huge theme parks and movie theater businesses remain exposed to the coronavirus, and their recovery could be slowed or reversed by the more contagious Delta variant.

“We had not anticipated and I have not thought of anyone the resurgence of Covid with the Delta variant which would have such a big impact on the market,” CEO Bob Chapek told analysts on Thursday.

Chapek was responding to a question about how Disney would handle the release of its next two potential blockbusters, “Free Guy” and “Shang-Chi and the Legend of the Ten Rings”.

Both films will spend 45 days in theaters before heading to Disney +, a departure from the strategy the company used for “Black Widow,” which was released in theaters and on the streaming service simultaneously.

Chapek said Disney couldn’t change its plan for “Free Guy” due to promises made during the film’s acquisition, while distribution commitments prevent last-minute changes to the “Shang-Chi” rollout.

“The market is changing rapidly,” Chapek added. “But at some point you have to put a stake in the ground and say, this is what we’re going to do, and that’s where we ended up on ‘Shang-Chi’ and ‘Free Guy.'”

Another problem: Disney’s decision to post “Black Widow” on its streaming service sparked a lawsuit against star actress Scarlett Johansson, who sued the company, claiming the strategy reduced her compensation.

Theme parks also remain vulnerable in Delta.

Disney’s parks division revenue rose more than 300% in the last quarter to $ 4.3 billion, and Chapek said bookings continued to show strong demand.

But one of the company’s largest parks, Disney World, is located in Florida, a Delta variant hotspot. And other tourism companies have issued warnings about Delta, including Southwest Airlines and Airbnb.

Disney World and Disneyland are already requiring employees and guests to once again wear masks and face coverings indoors.

Investors are ready to reward Disney for the progress made. But with Delta continuing to expand, it’s too early to say the company is out of the woods.

Delta hits the Chinese economy

The worst coronavirus outbreak in China in a year has prompted authorities to take dramatic action to eradicate the new infections.

But while city lockdowns, flight cancellations and trade suspensions can bring the virus back under control, these actions risk blocking an already shaky recovery, reports my CNN Business colleague Laura He.

As the number of coronavirus cases remains low compared to recent outbreaks of infections in the United States and Europe, China has aggressively relaunched its “zero-Covid” strategy.

It has isolated some cities, closed entertainment venues, canceled flights and deployed mass tests as it attempts to contain the spread – measures not seen on this scale since the pandemic began last year. Some trading at a large container port near Shanghai was even put on hold this week after a worker tested positive for the virus.

These drastic measures have already prompted some economists to reduce their growth projections for the world’s second-largest economy.

The impact: Goldman Sachs analysts predict that China’s GDP will grow just 2.3% in the third quarter from the previous quarter, which is significantly lower than the 5.8% increase initially forecast.

“With the virus spreading to many Chinese provinces and local governments reacting quickly to control the spread of the highly contagious Delta variant, we have started to see a weakening of national aggregate data,” the analysts said in a research report. earlier this week, adding that they expect services such as travel, dining and entertainment to be affected.

Despite the expected decline in the third quarter, analysts still expect the recovery to remain largely intact this year. For the full year 2021, they expect China’s economy to grow 8.3 percent, slightly lower than a previous estimate of 8.6 percent.

The “Lord of the Rings” leaves New Zealand

Middle-earth is moving from New Zealand to the UK, reports my CNN Business colleague Diksha Madhok.

Amazon Studios announced Thursday that it is moving the filming of the second season of its highly anticipated and extremely expensive “The Lord of the Rings” series to the UK.

“New Zealand’s move to the UK aligns with the studio’s strategy of expanding its production footprint and investing in studios across the UK,” Amazon said in a statement.

The series’ first season is being produced in New Zealand at a cost of nearly half a billion US dollars and is scheduled to debut September 2, 2022 on Prime Video.

Remember: almost two decades ago, Peter Jackson’s 17 Oscar winning trilogy “The Lord of the Rings” was filmed extensively in New Zealand and featured the country’s natural landscapes.

New Zealand is not happy with Amazon’s decision.

“Amazon Studios’ decision in no way reflects the capabilities of our local film industry or the talents of the people who work there. It is a multinational company that has made a business choice,” said Minister of Economic Development Stuart Nash in response.

Nash said Amazon is spending more than $ 460 million in New Zealand to produce the first season. He said that following the decision to relocate production, the government would withdraw certain financial incentives that had been granted to Amazon.

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