Disney reported a rare quarterly loss Tuesday — nearly $5 billion. Most of its business segments, from theme parks to cruise lines, are faring poorly in the pandemic. There was a bright spot, though: Steep losses were somewhat offset by the performance of its media business. Disney explained that one big reason has to do with an accounting decision it made.
Disney pays for the rights to broadcast sports like baseball and basketball. And under corporate accounting rules, when companies crunch their quarterly numbers, they’re not supposed to factor in costs from a purchase like that until they see the revenue. In this case, after the games air.
Enter COVID. Disney didn’t get to broadcast these games last quarter, which ended in June.
“So essentially, they’re saying since we haven’t broadcasted their season, we haven’t recognized this expense yet,” said Robert Rostan, chief financial officer at the financial education firm Training the Street.
That makes the company’s results look better.
Rostan said this is a standard accounting practice.
Parts of the calculation are subjective, though. For instance: How much of the cost should Disney push to the future? That depends on whether it thinks all of the scheduled NBA and MLB games will actually air.
The pandemic has created a lot of uncertainty, “and since accounting involves a lot of estimates about the future, it makes the accounting numbers much less reliable,” said Eli Bartov, an accounting professor at New York University’s Stern School of Business.
The pandemic could also tempt some companies to cross the line. They might use accounting tricks to smooth out revenue so it looks steady from quarter to quarter. Or include other metrics in their financial statements that say, well, if it weren’t for COVID-19, here’s what our numbers would have looked like.
“That has a time and a place, but we all know that you can’t keep that up forever,” Rostan said.
Because at a certain point, the pandemic becomes the new normal — and those kinds of metrics can be misleading.
It’s still the question on everyone’s minds: What’s going on with extra COVID-19 unemployment benefits?
The $600-a-week payments have ended, officially, as of July 31. For now, there is no additional federal pandemic unemployment assistance. House Democrats want to renew the $600 payments. Senate Republicans have proposed giving the unemployed 70% of their most recent salary by this October, when state unemployment offices have had time to reconfigure their computer systems to do those calculations. Until then, jobless workers would just get another $200. But, nothing has been agreed upon yet.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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