Disney’s 1st Quarter Report Shows an Increase in Revenue, but Falls Short of Estimates

The Walt Disney Company released their earnings report for the first quarter of their fiscal year on Tuesday afternoon.

In the report Disney CEO Bob Iger stated,

“The strategic investments we’ve made have driven meaningful growth over the long term, and we remain confident in our ability to continue to deliver significant shareholder value. We’re excited about what lies ahead, with a robust film slate, the launch of our ESPN direct-to-consumer business, new investments in our theme parks, and our pending acquisition of Twenty-First Century Fox.”

Here is how Disney fared overall, as compared to its performance in 2017’s first quarter:

• Revenues for the quarter increased 4%, from $14.78 billion in 2016’s final quarter to $15.35 billion, but fall short of the expected $15.45 billion.
• Operating income increased from $3.95 billion from last year’s fourth quarter to $3.98 billion this year, a 1% increase.

Media Networks

Revenues for Disney’s media networks were “flat at $6.2 billion and segment operating income decreased 12% to $1.2 billion.”

• In an announcement from Lucasfilm, David Benioff and D.B. Weiss, the creators of the uber-popular HBO series Game of Thrones, will be writing and producing a new series of Star Wars films. For more information on this click HERE.
• It was announced that Once Upon a Time will not be returning for an 8^th season as ABC is canceling the series. For more information on this click HERE.
• Box office numbers are up, headlined by Star Wars: The Last Jedi and Coco, but home video sales are down.
• The online streaming sports service, ESPN Plus, will cost $4.99 per month. The service will be released in late 2019. ESPN Plus will include the full 30 for 30 library of documentaries. Complemented by ESPN Plus, the ESPN app will be revamped to be personalized for the user with specific live streams and scores.
• With the acquisition of 21st Century Fox, it was clarified by Disney CEO Bob Iger that Disney won’t be making any large acquisitions in the near future. He also believes Disney will be able to create more content, enable a stronger direct-to-consumer strategy, and diversify their international business plan.
• BAMTech, the internet video streaming technology subsidiary of Disney, has been integrated into Disney’s Media Networks division.
• Television network viewership is down, but fortunately for Disney, the advertising rates are up.

Parks and Resorts

Disney Parks and Resorts had revenues increase this quarter “13% to $5.2 billion and segment operating income increased 21% to $1.3 billion.” The domestic parks and resorts, cruise line and vacation club, and success at Disneyland Paris increased the operating income growth. The impact of Hurricane Matthew on the same quarter last year helped the domestic increase for this quarter.

• Disney has invested $32 million more into the domestic theme parks this quarter, as compared to the same quarter last year.
• Disneyland Paris will soon have a stronger integration of Disney intellectual properties (Marvel, Star Wars, Pixar, etc.) into the theme park.
• Disney’s Animal Kingdom hit record attendance numbers due largely to the success of Pandora: The World of Avatar.
• Shanghai Disneyland could potentially be expanding. Disney is apparently in conversations with their partners on the potential expansion.

Consumer Products and Interactive Media

Consumer Products and Interactive Media decreased 2% to $1.5 billion, largely due to a decrease in Frozen and Finding Dory merchandise. The numbers were slightly offset by Cars 3 and Star Wars. The operating income was lower “due to decreases in (Disney’s) merchandise licensing and retail businesses, partially offset by an increase at (Disney’s) games business.” Disney CEO Bob Iger stated in the earnings call that Star Wars was the number one toy franchise over the holiday season.

Next Quarter Announcements

• The one-time bonuses for Disney employees will impact the next quarterly report. The total cost for Disney will be about $55 million.

Source: The Walt Disney Company