Disney Returns to Growth Ahead of Streaming Expansion -- Update
February 06 2018 - 5:21PM
Dow Jones News
By Imani Moise
Walt Disney Co. returned to sales growth after two quarters of
declines but profitability was tempered as the media giant works to
bolster its television business against declines in cable-TV
subscribers.
Sales in Disney's media networks segment, its largest, rose
slightly in its first quarter, but profit plunged 12% as it booked
losses on investments in new streaming technologies at BAMTech and
Hulu. The segment was helped by a slight increase in cable network
revenue and that offset declines in the broadcasting business,
which includes ABC networks.
Disney's film-production and consumer-product businesses posted
a slight decline in sales as the success of the latest Star Wars
movie was not enough to offset a decrease in home entertainment and
video-on-demand sales. The company also said Tuesday that it plans
to double down on the Star Wars franchise by enlisting Game of
Thrones writers and producers to create a new series of movies.
Disney has been investing heavily to keep up with the different
ways viewers are consuming content. The company plans to launch its
ESPN direct-to-consumer offering, the company's first, later this
year. The new streaming sources are designed to provide a new
source of revenue and reduce its reliance on licensing fees from
third-party distributors.
The company had also agreed to buy most of 21st Century Fox
Inc.'s assets late last year for over $52.4 billion. The deal,
currently pending regulatory approval, would add Fox's television
and film studios, cable networks and regional sports networks to
Disney's arsenal of programming.
Disney's theme parks continued to be a bright spot for the
company. Parks and resorts revenue climbed 13% to $5.15 billion as
guests spent more money at the company's attractions.
Overall for the quarter, Disney reported a profit of $4.42
billion, or $2.91 a share, up from $2.48 billion, or $1.55 a share,
a year earlier. The most recent quarter was boosted by a $1.6
billion one-time benefit related to the recently enacted tax law.
Excluding certain items including the tax benefit, the company's
earnings grew 22% to $1.89 a share.
Revenue rose 3.8% to $15.35 billion.
Analysts polled by Thomson Reuters had forecast earnings of
$1.61 per share on $15.45 billion of revenue.
Shares rose 3% to $109.38 in after-hours trading, erasing the 3%
decline logged over the past year.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
February 06, 2018 18:06 ET (23:06 GMT)
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