Disney Reopening Update: $11 Billion New Debt, July Uncertain for WDW, Disneyland Status
In this Disney reopening roundup, we’ll cover the latest meeting by the Orange County Economic Recovery Task Force during which Walt Disney World reiterated that a July opening is not certain, Disney’s rising debt, and the possibility that Disneyland could stay closed until at least August.
We’ll start with Disney’s new debt offering, as that is the backdrop against which the company is making other decisions that impact its financial health. In a new SEC prospectus, the Walt Disney Company disclosed that it has raised another $11 billion in new debt to weather the current crisis that has closed its theme parks and theaters, while halting film, television, and Disney+ productions.
Disney stated that the proceeds would be used for general corporate purposes, including the repayment of other near-term debt, while these senior notes will mature between 2026 and 2060. As you’re undoubtedly aware, Walt Disney World and Disneyland have been closed since mid-March. In Disney’s latest quarterly earnings call, the company revealed that profits were down 91% and the closure of the theme parks alone cost Disney $1 billion in lost revenue.
The Walt Disney Company has already cut executive salaries and furloughed more than 100,000 employees, while also raising raising billions in previous debt rounds to survive the current situation. At the end of last quarter, Disney’s current debt maturities were $12.7 billion over the next twelve months, while the company had $14.3 billion in cash on hand.
This comes as Shanghai Disneyland is open once again, albeit at a significantly reduced capacity. Given that attendance is capped at below 30% capacity, the park is likely operating at a loss. The same will probably be true for Walt Disney World and Disneyland when they first reopen, but incremental attendance caps are a necessary prerequisite to resuming normal, profitable operations.
For those wondering why All Construction Has Stopped at Walt Disney World, there’s your answer. With roughly $20 billion in new debt since the parks closed (on top of previous debt rounds prior to that) coupled with losing $30 million each day the parks are closed, Disney is looking to cut costs.
Theoretically, doing refurbishments and construction while no guests are around would be ideal, but Walt Disney World does not exist in a “theoretically ideal” world. As with everyone else, Disney is constrained by the practical realities of present circumstances.
Next, a look at the latest prospects for Disneyland. One emerging theme to the closures has been that Disneyland’s trajectory could be behind that of Walt Disney World due to divergent approaches being taken by California and Florida. In our recent Disneyland Delays Reservations Another Month, we shared the optimistic note on how San Diego is coming up with a plan to allow its theme parks to potentially reopen earlier, but that’s still probably months away.
Now some pessimistic news out of Los Angeles. That county’s officials are recommending that the stay-at-home order currently set to expire on May 15 be extended for another three months, with Los Angeles County’s Public Health Director saying the extension will happen “with all certainty” unless dramatic changes occur.
However, a couple things are worth noting here. First, Disneyland is not located in Los Angeles County–it’s in Orange County. The sentiment there has been markedly different, with yesterday’s Orange County Board of Supervisors meeting reflecting a desire for California to issue more realistic criteria for urban counties to fast-track phase two, and identify strategies for achieving a safe, reasonable, and sustainable reopening of Orange County’s economy.
Second, even in Los Angeles County, restrictions are being gradually relaxed under California’s four-phase plan. Beaches are reopening this week with restrictions, and some in-restaurant dining and shopping malls could also be allowed to reopen in the coming weeks. That would still leave theme parks several months away. Los Angeles County is home to a huge population of Disneyland Annual Passholders as well as Disney’s corporate headquarters, so how LA proceeds definitely could have an impact on Disneyland, as well.
Finally, another update from the Orange County Economic Recovery Task Force. During the latest virtual task force meeting (embedded above for your viewing pleasure…not that we actually recommend watching), the tone of the meeting was mostly upbeat and optimistic, with several participants expressing a belief that Orange County is doing everything right and trending in the right direction for a more aggressive reopening.
This was tempered by there was extensive conversation about the perception of safety, plus the uncertainty and risks posed by a second outbreak in the fall. There were also worries about a significant resurgence in local cases once more businesses start reopening and visitors return to the area. This in turn could overwhelm local hospitals and also discourage tourists from returning to Florida.
Thomas Mazloum, SVP of Walt Disney World Resorts & Transportation, spoke briefly and reiterated that the booking of reservations starting on July 1 is not necessarily indicative of a reopening date:
“We have taken reservations for July, but that should not mean we are operating in July yet. As you all saw on the news yesterday, we opened up Shanghai, which went extremely well. We were very prudent and very conservative, and things went extremely well. But at this point, we have really nothing to report about Walt Disney World yet. As we have said continuously, we will allow data to guide us as well as the government and not a specific date. So just wanted to make sure we had clarity around that.”
Mazloum was asked about Shanghai Disneyland, and indicated that the Walt Disney Company viewed the reopening of Shanghai Disneyland as a “stair-step” and a “baby step.” He also stated that the company was very encouraged by what they’ve seen thus far in Shanghai. He stated that the park was very disciplined, as were guests. (Which reiterates what CEO Bob Chapek said the previous day about much of when and how reopening goes being dependent upon guest behavior and acquiescence.)
While this might read pessimistically, it’s worth reiterating the signs of optimism. Disney Springs will reopen next week, with an ever-increasing roster of restaurants. Universal’s CityWalk reopens tomorrow! What got lost in the mask controversy that came out of CEO Bob Chapek’s interview is that it otherwise was fairly upbeat. There are signs of life again in the theme park world, and there’s plenty to be positive about.
Finally, I want to once again stress the importance of empathy and respect for those who choose to comment. We welcome a variety of viewpoints here, and will never delete anything on substance alone. However, we will not tolerate insults, arguing, or politically-charged comments. Don’t ruin a 95% fine and intelligent comment with an unnecessary cheap shot, as that 5% will get it deleted. You’re not changing any minds via the comments section of a Disney blog, so please do not incessantly harp on the same point. Say your piece and move along. If you want your voice to matter, contact Walt Disney World directly.
Ultimately, it might do us all collective good to take a step back and realize that even though this is most definitely not the new normal, some degree of compromise and flexibility will be necessary as we endure this temporary abnormal. Those who let perfect be the enemy of good are either going to be housebound for the next year-plus or will be protesting every inconvenience over which they have zero control, as the case may be. It might not be the time for unyielding rigidity–making lemonade out of lemons is probably the best case scenario for now. With all of that said, we truly appreciate everyone who reads and comments. It’s always illuminating to hear others’ perspectives, especially the thoughtful rationale of those with whom we may disagree.
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YOUR THOUGHTS
What do you think of this news? Does Disney’s growing debt concern you at all as a fan? What about the latest developments surrounding reopening dates at Disneyland and Walt Disney World? Any questions we can help you answer? Again, keep comments respectful, apolitical, and on topic. Anything not following these requirements will be removed, as will excessive back and forth arguments.
I’d be interested to hear your thoughts or those of others on how the opening of Shanghai Disney will compare to the openings of Disney World and Disneyland here in the U.S. Most notable, I think, would be how our culture here in the US will impact these openings. I’d hazard a guess that we in the U.S. are more inclined to see these new requirements as suggestions, where in China the requirements are followed more strictly (comparatively). It’s also possible I’m way off here, and that our cultural differences will have so little effect, that to compare the differences in opening procedures wouldn’t even be worthwhile.
It’s really hard to say–I think the most likely scenario is our culture differences and view of autonomy over conformity will result in WDW, DLR, and DLP opening way later than SDL, HKDL, and TDR.
As for specific practices, I’d expect everything except the Health QR code.
I just want to thank you, Tom and Sarah, for putting this information out there for us! Your hard work in putting info on this blog is greatly appreciated! I have nothing negative to say about the current events only that I am HIGHLY anticipating the re-opening of ALL the parks sometime down the road. I understand the situation we are all in and affected by but, I do so hate that Disney is struggling (as well as the rest of corporate America and small businesses) since it is supposed to be the happiest place on earth! It would be great to get to escape from the everyday once again soon and visit my favorite place! Thanks again for all you and Sarah do! Take care!
Thorough and thoughtful update, as always. Appreciate your call for courtesy! We just have to keep creating our own magic, folks.
PamThis is a process filled with many opinions. World-wide, this is something we are all trying to get past, live thru, survive from or learn to live with. All the speculation is just that … there is too much uncertainty.
I am old enough to remember both smallpox inoculations and polio vaccines. Until those diseases were understood and vaccines/preventatives developed, there was fear, anxiety, isolation and deaths.
Now in 2020, people have isolated and the earth has been given a chance to breathe, clean and heal a bit. The economy has suffered and continues to do so. People have displayed both their kindness and their anger. Weather is making big swings. The earth itself has shown it will survive. How many of its inhabitants will is another issue.
All of this is beyond our control … and that is a much bigger issue than personal freedoms, political ideals, or our own wishes & dreams.
Stay home, stay safe, and try to look forward to a cleaner, safer, healthier future.
No way Pamela! You should be looking forward to a great big, beautiful tomorrow…
We are booked for September and def planning to be there if safe and we as New Jersey residents can come to Florida and not be stuck in a hotel for 14 days which is our current requirement given how bad things are here. We are just glad we made it to Tokyo Disney in February about a week before it shut down since no trip to Japan is complete without our favorite park. With that being said some of the stuff they were already doing in Tokyo was making us feel safer then we feel currently in NJ. We also just booked for next Feb our Paris Disney trip I am less counting on that park since we were there last year and saw the mis behavior of many and with how small the park is I figure that will be harder to re open. I figure I have until end of July to make decision on September and hope there will be a free dining incentive to rebook for 2021 although if the parks do re open it may be nice to be there when a reduced capacity. Such a hard decision but one must be made to keep people safe.
Tom, I rarely comment on anything I read on the Internet; however, I find your blog to be informative, thoughtful, and intentional. I appreciate the effort it takes to publish on a schedule. You do an excellent job. Your photographs make me envious! Keep up the outstanding work!
Has anyone seen the possibility that the NBA would like to resume its season and use Walt Disney World for its East Coast teams. This could be a way for them to kind of enter Phase1 and work out operational logistics and bring employees back to work. Also, of course it’s great advertising for their brand.
I haven’t seen anyone talk about face mask usage on small children anywhere on blogs or
Social media. The CDC clearly states that children 2 and under should not ever wear a face mask. How will this look in the parks if and when they do open. Is Disney going to prohibit this age group from entering?
We had planned to be at Disney World for two weeks starting June 28, planned for over a year. Dining booked and FastPass booked and had to cancel today. Flights from Canada were cancelled and want to have the full Disney Experience. Kids heart broken but better safe than sorry.
Tom, thank you for your information and insight; your blog is one of my “must reads.” I have a question about park capacities. I definitely understand the need for restrictions when the opening-up gets underway, but how are these enforced? Is it simply a percent of capacity/first come-first served? I am an early riser, but I can imagine that if this is the method, so will everyone else be! I have a trip planned for late October, but I don’t want to travel 900 miles each way and be in a situation where I am not able to get in to any park on a given day. Thanks!
I always enjoy your articles and I very much agree with your commentary about comments and flexibility.
Any news from you, Tom and Sarah, are welcome additions to my day. I also hope I make it back and take the seniors with me that have never been. I too have the optimism and pessimism on Disney future. I do think Disney will be open when safe, but it will never be the same.
“For those wondering why All Construction Has Stopped at Walt Disney World, there’s your answer.”
It’s sad to say, but I imagine you (i.e. Mr. Bricker) will have a lot of content re: what projects were planned and didn’t happen as a result of the pandemic. There still seems to be optimism among fans that all those “shovel ready” projects are going to proceed as planned. Personally, I don’t think they have a shot. There will be massive cut backs to capital expenditures, even with the 50th anniversary looming.
These are of course first world problems when juxtaposed against the loss of life. It’s going to be disappointing as a parks fan nonetheless.
What’s “sad” is a matter of perspective. If Reflections gets cancelled, I wouldn’t be sad. Ditto the Mary Poppins spinner. Now, Future World being scaled back and other unannounced plans for Epcot being nixed–that’s a different story.
I’m also still cautiously optimistic about the 50th Anniversary. In fact, it would not surprise me in the least if they did something more substantive entertainment-wise to lure guests back. Pull a page out of the Summer Nightastic playbook.
Fair points as always.
Thanks for the (continued) excellent coverage of the parks during this unprecedented time.
first world problems to you perhaps, but to the over 100,000 Disney employees out of work, and now the contractors hired to do construction who are also out of work, I’m certain it is definitely not a first world problem. Being able to afford food and rent is a global problem, not one to be take lightly.
Tom, thanks for the updates, which some of us may not find immediately useful, at the present time, but they are always interesting and insightful. Also, thank you very, very, much for keeping them informational AND impartial. Your ongoing attempts to keep politics, nastiness, and negativity out of the equation are a refreshing change of pace in a world that is increasingly forgetting respect for other opinions, and good manners. Keep up the great work and giving us Disneyphiles our necessary fix. LOL! Thanks again!
I’m very intrigued by Universal opening its door. Not a universal fan, but this may be a great sign for Disney to open its gates as well.
My family has a June 21st trip planned. I’m hoping that all goes well and Walt Disney World will open to the public once again.
If not, I’m constantly checking for DVC openings for the month of July. I’m hoping that the Parks SVP wants to temper guests’ hopes about that the parks may not open even though they are planning on opening soon.
I’d assume they want to see how things go at Disney Springs. More importantly they want to see how guests behave – that guests can and will follow directions and safety guidelines.
I’d be fine going to hang out at the resorts and pool all day without the parks even being open.
Let’s all stay positive and optimistic. We’re all in this together.
“I’m hoping that the Parks SVP wants to temper guests’ hopes about that the parks may not open even though they are planning on opening soon.”
It seems like he wants to temper expectations of the other participants of these virtual meetings. I’ve watched all of them thus far (not recommended!) and the main picture that has emerged is other business leaders in OC wanting Walt Disney World to reopen. Their view is understandable, as so much in this area is dependent upon Disney.
Actually this is the time to BUY Disney stock Frank. This will pass and when it does you know these parks will be full again.
Sports resuming, even if played without spectators, would be good for ESPN. Things are pretty bleak over there, programming-wise.
It’s going to be interesting, no matter what.
I don’t think it much matters what L.A. says or extends their orders, if OC is good and Disneyland reopens, those AP will jump at the chance to go. Sure, a few will stay home but at this point most of us would rush a blockade to go!
I think it really comes down to Burbank’s desire to reopen DLR even if LA county is lagging behind.
The upside to doing so would be that (like you point out) it might limit attendance of Angelenos, which might be exactly what Disneyland needs. Unlike Walt Disney World, which will take a while to recover, Disneyland has so many APs and locals that those parks will likely have the opposite problem.
I appreciate your final comments about some posts. My husband and I (ages 77 & 72 respectively) had planned a WDW trip with our 9 and 6 year old grandchildren for June 10th. Of course we’ve cancelled flight, hotel, & WDW dining reservations. I just wanted to let others know that Southwest Airlines will reimburse us rather than just give a credit until Feb 6, 2021. Also, WDW will reimburse us for our park tickets. The hotel (not Disney) will return my points used. It’s definitely worth trying. At our ages (and underlying health conditions), I’m wondering whether we’ll ever get to return to WDW, and that saddens me very much.
Great update, as usual, Tom. Unfortunately, Disney seems perfectly aligned to be 100% negatively affected by a pandemic.
Other than its streaming business it is all about people and crowds: cruise ships, theme parks, etc.
And the fact that Disney is taking on more debt is not a good thing? If I had Disney stock I would be selling.
Even the streaming business isn’t doing as well as the subscriber numbers might suggest–they priced Disney+ to grow the subscriber base, rather than making it profitable. It’s definitely a long-term bright spot, though.
Regardless, how weary I’d be of Disney’s stock depends upon my general optimism/pessimism. As soon as live sports return (especially without audiences), ESPN should bounce back. Theme parks will take longer–and cruises even longer than that, but I’d never bet against Disney. I think it’ll be a rough couple years, but long-term is a totally different story.