The Most Alarming Thing About Disney's Earnings Wasn't the Impact of Park Closures

As was largely expected, the coronavirus pandemic took a toll on Walt Disney (NYSE: DIS) last quarter. Although the top line was up more than 20% thanks to a booming cable television business, the closure of its theme parks and hotels as well as movie theaters proved costly. Operating income fell nearly 40% year over year, from $3.8 billion to $2.4 billion. Again, though, nothing about that profit headwind was a surprise.

There was something of a curveball buried in the breakdown of Disney's differing business units, however, for the three-month stretch ending in March. While its streaming service Disney+ has become a fast-growing hit, this business is proving very expensive to run. The company's direct-to-consumer (and international) arm contributed $4.1 billion to the top line, but its operating loss more than doubled year over year.

It's not too soon to start asking where Walt Disney's breakeven point on streaming lies.

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Source Fool.com