Walt Disney Co. 1st Quarter Earnings Report Shows Flat Revenue and Lower Income

Disney 1st Quarter Report Shows Flat Revenue, Lower Income The DIS Walt-Disney-Company

This afternoon, The Walt Disney Company released their earnings report for the 1st fiscal quarter of 2019 (ending December 29, 2018), showing revenues nearly flat and income down 36%.

Chairman and CEO Bob Iger said in a statement,

After a solid first quarter, with diluted EPS of $1.86, we look forward to the transformative year ahead, including the successful completion of our 21st Century Fox acquisition and the launch of our Disney+ streaming service. Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional and innovative technology to drive our success in this space.

This earnings report is the first under a strategic reorganization plan that took place last March. Previous divisions Parks and Resorts is now Parks, Experiences and Consumer Products. The remaining portion of the Consumer Products & Interactive Media division is now Direct-to-Consumer and International. Media Networks and Studio Entertainment remain.

Overall Earnings

Diluted earnings per share were down 36% from last year’s 1st quarter, from $2.91 to $1.86. Revenues for the company were flat compared to last last year, decreasing slightly from $15.351 billion to $15.303 billion; operating income decreased from $3.986 billion to $3.655 billion, an 8% drop.

  • Parks, Experiences, and Consumer Products: 5% growth in revenues and 10% growth in operating income for the 1st quarter
  • Direct-to-Consumer and International: 1% decrease in revenues and 223% decrease in operating income for the 1st quarter
  • Media Networks: 7% growth in revenues and 7% growth in operating income for the 1st quarter
  • Studio Entertainment: 27% decrease in revenues and 63% decrease in operating income for the 1st quarter

Parks, Experiences, and Consumer Products

Compared to last year’s 1Q, Parks, Experiences, and Consumer Products saw growth of 5% in revenues, from $6.527 billion to $6.824 billion, and 10% in segment operating income, from $1.954 billion to $2.152 billion.

Growth was due to increased guest spending and higher hotel occupancy. Guests spent more on food, and merchandise, and average hotel room rates were up.

International parks were down slightly due to lower attendance and higher costs at Shanghai Disney, plus lower ticket prices and higher costs at Disneyland Paris.

Direct-to-Consumer and International

The Direct-to-Consumer and International division saw revenues drop 1% for this quarter over last year, from $931 million to $918 million. Operating income loss fell 223%. from a loss of $42 million to a loss of $136 million.

The loss is attributed to the investment in ESPN and the upcoming Disney+ streaming service.

Media Networks

The Media Networks division brought in $5.921 billion in revenues this quarter compared to $5.555 billion, a 7% jump from 2018’s first quarter. Segment operating income for the division’s Q1 grew 7% over last year — $1.330 billion up from $1.243 billion.

Cable was down partially due to a shift in the timing of College Football Playoff games, but was offset some by growth at the Disney Channels.

The broadcast side saw growth due to higher network rates, plus political advertising on Disney owned stations.

Studio Entertainment

Studio Entertainment was significantly down compared to last year. Quarterly revenues decreased 27% from last year, from $2.509 billion to $1.824 billion — operating income dropped from $825 million to $309 million.

Last year’s first quarter included Star Wars: The Last Jedi, Thor: Ragnarok, and Coco, while 1Q19 had Mary Poppins Returns, The Nutcracker and the Four Realms, and Ralph Breaks the Internet. The decrease at the box office was partially offset by video-on-demand performance.

Announcements and Quotes

  • Iger said the DTC (direct-to-consumer) remains their number one priority.
  • When asked about what Disney has learned so far following the launch of ESPN+, Iger commented about the reliability of the BAMTech platform, handling millions of transactions and viewers, and is looking forward to seeing it work for Disney+ late this year.
  • After being asked about how much money would be spent this year on marketing for Star Wars: Galaxy’s Edge, Iger joked that he would just send out a tweet that it’s open. He said of the new lands, “they’re large, they’re beautiful, and they’re extremely innovative.”
  • Iger was asked about managing the popularity of the parks, and Iger commented that Disney is trying to manage the guest experience, using increased pricing to spread demand. He also said that they are being strategic about pricing.

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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