Disney Beats Earnings

After the closing bell, Disney (DIS) reported very good earnings for their fiscal Q1. The company earned $1.84 per share which beat estimates by 29 cents per share. Revenue fell to $15.30 billion but that beat expectations of $15.14 billion.

Disney, whose assets include cable networks such as ESPN and film studios like Marvel, is making a push into streaming services as more consumers drop their pay-TV package in favor of cheaper options that can be watched through an internet connection. The company launched ESPN+ last year and plans to launch Disney+, a streaming service of its movies and original programming, later this year.

The company said that its direct-to-consumer and international segment posted revenue of $918 million and an operating loss of $136 million in its first quarter ended Dec. 29. due to increased costs related to ESPN+ and the upcoming launch of Disney+.

On the earnings call, Disney said that it expects investment in those ventures to negatively impact the segment’s year-over-year operating income by $200 million in the second quarter.

Revenue in Disney’s media networks business, which includes ESPN, rose 7 percent to $5.92 billion in the first quarter, compared to the year-earlier period, while its parks business was up 5 percent to $6.82 billion. Studio entertainment revenues fell 27 percent to $1.8 billion thanks to the strong performance of Star Wars: The Last Jedi and Thor: Ragnarok in the prior-year quarter compared to Mary Poppins Returns and The Nutcracker and the Four Realms this year.

The company expects its pending $71.3 billion acquisition of a majority of assets from Twenty-First Century Fox to aid its strategy in streaming. The deal is expected to provide Disney with additional media assets for its new streaming service and would also give Disney a larger stake in the streaming service Hulu.

But Disney’s direct-to-consumer push comes with risks: It’s hard to turn a profit on streaming services, which usually entail high content and technology costs but offer lower prices than traditional cable to attract consumers.

The stock rose a little bit in the after-hours session.

Posted by on February 5th, 2019 at 4:10 pm


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