Disney posts quarterly results short of expectations
Media giant’s shares slip 2.2% on foot of ESPN advert fall and ‘Star Wars’ success distortion
Rogue One: A Star Wars Story: despite it grossing more than $1 billion so far, The Force Awakens earned more again the year before. Photograph: Jonathan Olley/Lucasfilm Ltd
Walt Disney Co’s reported lower-than-expected quarterly revenue, hurt by a drop in advertising revenue at ESPN and an unfavourable comparison in the movie business due to the record success of Star Wars: The Force Awakens a year earlier.
The unexpected drop in revenue overshadowed Disney’s profit-beating Wall Street expectations and sent the company’s shares down 2.2 per cent to $106.61 (€99.25) after the bell on Tuesday.
The company’s total revenue decreased to $14.78 billion in the first quarter ended December 31st from $15.24 billion a year earlier.
Analysts on an average had expected revenue to rise slightly to $15.26 billion, according to Thomson Reuters I/B/E/S.
Revenue in Disney’s cable networks business, which includes the company’s cash cow ESPN and the youth-focused Disney Channels, fell 2.1 per cent to $4.43 billion.
Analysts on average were expecting $4.53 billion, according to FactSet StreetAccount.
Disney’s cable networks unit has been under pressure since 2015 due to subscriber losses at ESPN as a result of “cord-cutting”, where people drop TV subscriptions for cheaper and more convenient online services.
The decrease at ESPN was due to higher programming costs and lower advertising revenue, the company said.
Disney’s movie business generated revenue of $2.52 billion in the latest quarter, down 7.4 per cent from a year earlier, but in line with analysts’ average estimate, according to FactSet StreetAccount.
The media company’s latest release, Rogue One: A Star Wars Story, was released in mid-December and has grossed more than $1 billion so far, according to tracking firm Box Office Mojo. But that is still short of The Force Awakens, which had grossed more than $2 billion at the box office.
Revenue from Disney’s parks and resorts business, the company’s second-largest business, rose 6.4 per cent to $4.56 billion, missing analysts’ average estimate of $4.59 billion, according to FactSet StreetAccount.
The company in November promised earnings per share growth from this fiscal year onwards, betting ESPN would attract more online viewers, the new Shanghai theme park would lure visitors and on its new movie releases.
Net income attributable to Disney dropped to $2.48 billion, or $1.55 per share, from $2.88 billion, or $1.73 per share, a year earlier.
Excluding items, the company earned $1.55 per share, beating analysts’ estimates of $1.49. – (Reuters)