Disney announces plans to furlough non-union theme park employees

Due to the COVID-19 pandemic, Disney is set to furlough non-union park employees beginning April 19. Yahoo Finance’s Dan Robert joins On The Move to break down the latest developments.

Video Transcript

ADAM SHAPIRO: Welcome back to Yahoo Finance. I want to talk about the Walt Disney Company. Shares are trading down, a little over 3 and 1/2% at this moment, $93 and roughly $0.50 in change.

Dan Roberts is not only a Disney fan, but he follows this very closely. We had the news about the furloughs at the park yesterday, not a surprise. Or is it?

DAN ROBERTS: Yeah, it's not a surprise, Adam. I mean, all of the Disney Parks actually in the world right now are closed. I thought a key line from the company in its statement about the news of doing the furlough is that, we have no way of knowing how long these businesses are going to be closed, which, of course, is what we all knew. But it's kind of stark to see it declared that way.

I mean, all the parks are closed right now. And this now furlough of a number of Parks' employees, and there are 175,000 Disney Parks' employees. Of course, Disney calls them cast members famously, or some find that a little annoying.

But Disney not sharing what percentage of that 175,000 number are being furloughed, but I have to imagine it's a very high percentage. It's non-union, park workers for now. And they will still get their health benefits while they're furloughed. But they'll also be eligible for the government help.

But this furlough is starting on April 19, and we know that we've been encouraged, at least in New York, to continue social distancing at least through April 30. So when will Disney Parks reopen? It's anyone's guess but certainly not in the month of April, I doubt in the month of May. So these are now non-essential workers, anyone who works at the parks.

And by the way, this is just one segment of Disney's business. It's a huge part. It's the profit engine, the parks. But look, there's also ESPN, and just this week, all of the highest level ESPN executives had to take salary cuts. And so, you know, I'm sure there are concerns at that part of Disney's business.

And then there's Disney Studios. You know, the company has delayed the release of finished movies, and also its filming of new projects is on hold. So if you work for some corner of Disney and it's not the parks, now you see this news, and you're probably concerned, will winter furloughs hit my corner of the business?

But furloughing Parks' workers makes sense. It's going to start on April 19. We don't know what percentage of the 175,000 parks employees, but I have to imagine it's most. And a lot of companies are resorting to this now, furloughs all over a number of industries. So it's unfortunate, but it also is no surprise because the Parks aren't open. Disney's making no revenue from its parks right now.

ADAM SHAPIRO: When you talk about revenue with the parks, too, that's still the single largest line of revenue generation for them. But I am curious, is anyone talking about, once you can go back to the parks, will families go back to Disney Theme Parks?

DAN ROBERTS: I think that's a very fair question, and I've been asking that question, Adam, about sports. So even when we get the all clear, so to speak, well, who are going to be among the first to go to a sports event where you are packed in tight with other fans and people sitting right next to you, touching you? I mean, at an NBA game, you're very close to the fans who are sitting next to you.

I don't know. I think it will take awhile even once those games are allowed to happen. So the same question is fair about the Parks.

But I'm glad you asked because, just yesterday, we had on Sonal Desai from Franklin Templeton on one of our shows. And Sonal was saying, are theme parks going to be in trouble now forever? I doubt it.

You know, are people going to stop going to theme parks? She said, I really doubt it. So you have to have a longer term view for companies like Disney. But I wrote already weeks ago, before Disney was furloughing anyone, that all of Disney's core pillars of its business are in trouble right now.

The parks are closed. They're not filming new shows or movies. And you know, ESPN is in trouble because there's no sports right now. The only glimmer for Disney is Disney Plus. People are streaming content on Disney Plus. But the Parks might be just the beginning of Disney segments where Disney has to do furloughs.

ADAM SHAPIRO: Dan Roberts, thank you very much for the update on Disney.