The Walt Disney Co. 4th Quarter Earnings Report Shows Record Revenue


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This afternoon, The Walt Disney Company released their earnings report for the 4th fiscal quarter of 2018, delivering what CFO Christine McCarthy called “a strong finish” to 2018. The report showed record revenue over last year, including phenomenal growth in the Studio Entertainment division.

Chairman and CEO Bob Iger said in a statement,

We’re very pleased with our financial performance in fiscal 2018, delivering record revenue, net income and earnings per share. We remain focused on the successful completion and integration of our 21st Century Fox acquisition and the further development of our direct-to-consumer business, including the highly anticipated launch of our Disney-branded streaming service late next year.

Once again, this quarter’s earnings are broken down into the Walt Disney Company’s previous divisions, which were in place before a strategic reorganization in March that divided the company into the Parks, Experiences, and Consumer Products; Direct-to-Consumer and International; Media Networks; and Studio Entertainment divisions. Although already in place, Disney will not begin financial reporting under the new structure until next quarter.



Overall Earnings

Diluted earnings per share were up 38% from last year’s 3rd quarter, from $1.13 to $1.55. Revenues for the company showed a 12% increase from last year, raising from $12.779 billion to $14.307 billion; operating income grew from $2.812 billion to $3.290 billion, a 17% boost.

For fiscal 2018, which ended September 30, revenues rose 8%, operating income grew 6%, and diluted earnings per share increased a total of 47% over fiscal 2017.

  • Media Networks: 9% growth in revenues and 4% growth in operating income for the 4th quarter, 4% growth in revenues and 4% loss in operating income for the fiscal year.
  • Parks and Resorts: 9% growth in revenues and 11% growth in operating income for the 4th quarter, 10% growth in revenues and 18% growth in operating income for the fiscal year.
  • Studio Entertainment: 50% growth in revenues and 173% growth in operating income for the 4th quarter, 19% growth in revenues and 27% growth in operation income for the fiscal year.
  • Consumer Products & Interactive Media: 8% loss in revenues and 10% loss in operating income for the 4th quarter, 4% loss in revenues and 6% loss in operation income for the fiscal year.

Media Networks

The Media Networks division brought in $5.963 billion in revenues this quarter compared to 2017’s $5.465 billion, a 9% jump from 2017’s Q4. Their revenues for the entire fiscal year increased 4%, from 2017’s $23.510 billion to this year’s $24.500 billion.

Segment operating income for the division’s fourth quarter grew 4% over last year — $1.528 billion up from $1.475 billion. Income for the fiscal year dropped 4% from last year’s $6.902 billion, coming in at just $6.625 billion.



Gains were seen in the Cable Networks, including increases at Disney Channels, which were driven by lower programming costs, higher income from program sales, and decreased marketing costs.

The operating income is still feeling the affects of the BAMTech acquisition, but was somewhat offset by increases art Disney Channels at Freefrom.

The increases in program sales in the Broadcasting segment were primarily from two Marvel series and Black-ish.

Parks and Resorts

Compared to last year’s Q4, Parks and Resorts saw growth of 9% in revenues, from $4.667 billion to $5.070 billion, and 11% in segment operating income, from $746 million to $829 million. The division saw revenues increase from $18.415 billion for fiscal 2017 to $20,296 billion this year — 10% growth year-over-year. Segment operating income jumped 18% for the fiscal year, from $3.774 billion to $4.469 billion.



The growth in operating income was due to increased guest spending and attendance at the domestic parks. Operating income for the international parks was flat, with growth at Disneyland Paris and Hong Kong Disneyland Resort and decreases at Shanghai Disney Resort due to discounted ticket pricing.

Studio Entertainment

Studio Entertainment saw HUGE increase across the board. Quarterly revenues increased 50% from last year, jumping from $1.432 billion to $2.151 billion — operating income went from $218 million to $596 million, an 173% jump!

For the fiscal year, revenue raised 19% and operating income grew 27%. Revenue was $9.987 billion compared to 2017’s $8.379 billion — operating income was $2.980 billion compared to last year’s $2.355 billion.

The growth was due to the successes of Incredibles 2 and Ant-Man and the Wasp. 4Q 2017 only reflected the income from Cars 3, with no Marvel film that quarter.



Sales in home entertainment were higher as well, with Avengers: Infinity War and Solo: A Star Wars Story hitting shelves, compared to Guardians of the Galaxy: Vol. 2 and Beauty and the Beast in 2017.

Consumer Products & Interactive Media

Disappointing numbers were reported again by the Consumer Division where revenues dropped 8% for this quarter over last year, from $1.215 billion to $1.1.123 billion — revenues saw a decrease of 4% for the fiscal year, from $4.833 billion down to $4.651 billion.

Q4 operating income fell from $373million to $337 million, a 10% loss — it suffered a 6% loss for the fiscal year, from last year’s $1.744 billion to $1.632 billion.

The lackluster sales for Star Wars and Cars merchandise were partially offset by sales of Spider-Man products. Interactive Media continues to struggle with lower income partially offset by lower administrative costs.



Announcements and Quotes:

  • The new streaming app set to launch next fall will be called Disney+. New programming mentioned during the call include a Rogue One: A Star Wars Story prequel starring Diego Luna as Cassian Andor and a Loki series featuring Tom Hiddleston. Iger also raved about the live-action Star Wars series, The Mandalorian, which is being helmed by writer/producer Jon Favreau.
  • When asked about reducing the theatrical window when Disney+ launches, Iger replied, “If it ain’t broke.” He continued that given the successes of the Studio Entertainment division, they aren’t looking to encroach on the theatrical window.
  • When asked about Star Wars: Galaxy’s Edge  which opens next year at Disneyland Park and Disney’s Hollywood Studios, Iger commented that they are the “biggest lands we’ve ever built,” not just in size, but “huge in ambition.” He said that, “in both cases it will have a dramatic impact” on revenues.

Source: The Walt Disney Company

 


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