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The Walt Disney Company 1st Quarter Earnings Show Fiscal 2020 is Off to a Good Start

Disney Latest Earnings Show Year is Off to a Good Start The DIS TWDC-logo

Tuesday afternoon, The Walt Disney Company released their earnings report for the 1st fiscal quarter of 2020 (ending December 28, 2019), showing revenue up 36% and income up 9% over last year for the quarter. Diluted earnings per share, however, decreased 37%.

Chairman and Chief Executive Officer Bob Iger said in a written statement,

“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations. Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment”

Chief Financial Officer Christine McCarthy added that “fiscal 2020 is off to a good start.”

McCarthy also commented on the effect that the coronavirus could have in the 2nd quarter. Both Shanghai Disney Resort and Hong Kong Disneyland could be closed up to 2 months, causing an estimated $135 million loss in operating income at Shanghai and an additional $40 million loss at Hong Kong, added to an already over $100 million expected loss in operating income.

Overall Earnings

Diluted earnings per share were down 37% from last year’s 4th quarter, from $1.86 to $1.17. Revenues for the company were up 36% compared to last last year, from $15.303 billion to $20.858 billion for the quarter. Operating income increased 9% from $3.655 billion to $4.002 billion for the 1st quarter.

  • Parks, Experiences, and Consumer Products: 8% growth in revenues and 9% growth in operating income for the 1st quarter
  • Direct-to-Consumer and International: 334% growth in revenues and 410% decrease in operating income for the 1st quarter
  • Media Networks: 24% growth in revenues and 23% decrease in operating income for the 1st quarter
  • Studio Entertainment: 106% growth in revenues and 207% increase in operating income for the 1st quarter
  • 21st Century Fox: This is the third quarter numbers have been reported, so there is no comparison to last year

Parks, Experiences, and Consumer Products

Compared to last year’s 1Q, Parks, Experiences, and Consumer Products saw growth of 8% in revenues, from $6.824 billion to $7.396 billion. For the quarter there was a 9% growth in segment operating income, from $2.152 billion to $2.338 billion.

Attendance at domestic parks was up 2% and guest spending was up 10%, based on higher average ticket prices, plus increased spending on food and merchandise. Increases were offset by higher costs due to the opening of Star Wars: Galaxy’s Edge and wage increases for union Cast Members.

Iger said that Disney is thrilled by the overwhelming response to Star Wars: Rise of the Resistance and called Star Wars: Galaxy’s Edge “a great success.”

Loses at Hong Kong Disneyland were partially offset by growth at Shanghai Disney Resort due to increased attendance.

Direct-to-Consumer and International

The Direct-to-Consumer and International division saw revenue growth of 334% for this quarter over last year, from $918 million to $3.987 billion. Operating income loss increased 410%, from a loss of $136 million to a loss of $693 million.

Operating income losses continue due to costs associated with the launch of Disney+, more loses at ESPN+, and consolidation of Hulu. Programming costs at ESPN+ continue to grow, including the rights for EFC fights, but were partially offset by subscriber and pay-per-view fees.

At the end of the quarter (12/28/19), Disney+ had 26.5 million subscribers, ESPN+ had 6.6 million subscribers, and Hulu had 30.4 million subscribers.

Iger said that conversion rates (free to pay) were better than expected at Disney+. He also commented that the fact that The Child from The Mandalorian has taken the world by storm reflects Disney’s ability to connect with fans.

Media Networks

The Media Networks division brought in $7.361 billion in revenues this quarter compared to $5.921 billion, a gain of 24% over 2019’s first quarter. Segment operating income for the division’s Q1 increased 23% over last year — $1.630 billion up from $1.330 billion.

Cable networks were up 20%, offset by decreases at ESPN, however broadcast networks were up 34%. ESPN saw an increase in production costs and lower ad revenue. Both segments benefited from the Fox consolidation.

Broadcast networks were up 34% due to adjustments in accounting guidance and the consolidation of Fox.

Studio Entertainment

Studio Entertainment was up significantly compared to last year. Quarterly revenues increased 106% from last year, from $1.824 billion to $3.764 billion. Operating income jumped 207%, from $309 million to $948 million.

The increase over last year at Studios was due to the box office performance of Frozen II, Star Wars: The Rise of Skywalker, and Maleficent: Mistress of Evil, compared to Ralph Breaks the Internet, Mary Poppins Returns, and The Nutcracker and the Four Realms.

The segment also benefited from “selling” content to Disney+.


  • Disney+ had 26.5 million subscribers by the end 2019 (and is now over 28.6 million)
  • The Falcon and the Winter Soldier will debut on Disney+ in August; WandaVision will debut in December
  • The second season of The Mandalorian is scheduled for October on Disney+
  • Disney+ will be expanding to Western Europe and India in March.
  • Starting next month, Hulu will be the exclusive streaming service for FX original programming


  • In a question regarding what surprised Disney about the launch of Disney+, Iger reiterated his thoughts from last quarter in that he was heartened by the fact that consumption was broad based across brands, and across both original and legacy programming. Iger gave the example that people that watched The Mandalorian also watched 10 other things on the service. As far as any adjustments, Iger said that they haven’t changed the trajectory of their original programming and are still comfortable with quality over quantity. In a related question, Iger said that it validates their concept of putting the brands together.
  • When asked when Hulu would be available internationally, Iger said that they are working on a plan, but that Disney+ is the priority, then Hulu would follow once those markets are established.
  • Iger also commented about the popularity of Disney outside of the U.S. and how that would affect their Disney+ plans, to which he said that both Disney and Star Wars are global brands, so there won’t be much adjustment in international markets aside from quality dubbing. He also said that in markets, such as China, where the Skywalker saga was not as familiar, The Mandalorian will benefit from its original characters and story. He also said that the popularity of the Disney brand overseas has grown because of Disney+.
  • In a question about where the Disney+ subscribers came from, Iger said that 50% came directly from the Disney+ website, 20% from Verizon, and the rest from other partners.
  • Regarding the Studio Entertainment division, Iger commented that 2020 is not going to be the same as 2019 for the studios, but will still be a strong driver of operating income. McCarthy added that seven movies over $1 billion is hard to beat, but that they have confidence in the 2020 content.
  • McCarthy was asked about attendance at the domestic theme parks and how many of those guests came from international markets, specifically Asia. She said that 18-22% of domestic guests are from outside the U.S., but that Asian countries aren’t among the top markets on either coast.
  • Recent growth in the parks has come due to increased guests spending, so Iger was asked if Disney could maintain that growth of if there would be other ways of increasing revenue. Iger said that it would be a blend, and would include investing capital in new hotels, attractions, and more.

Source: The Walt Disney Company

Tom is the host and producer of the DIS Unplugged: Disneyland Edition podcast, plus Disneyland Editor of The DIS. He enjoys traveling with his wife and teenage son. At this point, their favorite destination is Alaska, with a FIFTH cruise there planned for the Summer of 2019. In his spare time he volunteers with Boy Scouts and Cub Scouts, and help found his son's former Cub Scout Pack. His favorite Disneyland attraction is Space Mountain.


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