Disney (DIS) surpassed expectations on the top and bottom lines in fiscal first-quarter 2019 results, sending shares higher in extended trading.
Disney reported quarterly adjusted earnings of $1.84 per share on revenue of $15.3 billion, exceeding consensus estimates of $1.54 per share on revenue of $15.15 billion, according to Bloomberg estimates.
In the year-ago quarter, Disney reported adjusted earnings of $1.89 per share and revenue of $15.35 billion. However, the year-over-year decline had widely been expected given last year’s timing of major, revenue-driving studio releases.
Studio Entertainment revenue came in at $1.8 billion for the reported quarter, ahead of estimates of $1.75 billion, according to Bloomberg data. This represented a decline over last year, when revenue in this segment was $2.5 billion. The decrease, however, had been anticipated given the year-ago quarter’s exceptionally strong studio lineup, which included the release of “Star Wars: The Last Jedi,” “Thor: Ragnarok” and “Coco.”
In the Media Networks unit, which includes Disney’s cable and broadcast divisions and ESPN, revenues totaled $5.9 billion, exceeding consensus estimates of $5.83 billion and growing 7% year-over-year.
Revenue from Disney’s Parks, Experiences and Consumer Products unit also came in ahead of expectations, with sales of $6.8 billion growing about 4.6% year-over-year. During a call with investors Tuesday, Disney management said strength in this segment was driven by guest expenditures at domestic theme parks, with per-capita spending up 7% on higher admissions, food and beverage and merchandise spend.
In Disney’s newly introduced Direct-to-Consumer & International segment, revenue fell 1% to $918 million for the quarter. The unit, which includes the media giant’s soon-to-be-launched Disney+ video streaming platform, was the only segment to post an operating loss, which totaled $136 million for the quarter.
“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,” Robert Iger, chairman and CEO of Disney, said in a statement. “Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space.”
Shares of Disney rose 1.9% to $114.70 each as of 4:10 p.m. ET.
Investors headed into Disney’s latest quarterly results seeking further clarity on the company’s streaming strategy. Disney executives announced during a conference call with investors in November that its video streaming service, Disney+, would launch in late 2019, bringing with it a host of new content including a Star Wars prequel series and Marvel series. Disney also said it would strip its content from Netflix (NFLX), a competitor to Disney+ along with the likes of Amazon Prime Video and HBO.
“We believe Disney is the only traditional media company with scale, brand recognition and (intellectual property) to join Netflix and Amazon (AMZN) as a leader in the retail marketplace of subscription video,” analysts from UBS said in mid-January. They added at the time that they expected Disney+ to drive “the fastest uptake” of any direct-to-consumer platform, with an estimated 5 million global subscribers in the first 12 months and 50 million subscribers in the first five years.
“Consumers look to brands they know to sort through the options and find what they actually want,” Iger said during a call with investors, adding that he was confident Disney’s “iconic brands and franchises” would allow them to “cut through the clutter” and drive users to their platforms.
Iger also said Tuesday that ESPN+, Disney’s sports streaming platform launched last year, now has two million paid subscribers, or double the amount from five months ago.
Disney at the time of its last earnings release had provided less clarity about how it intended to strategically orient Disney+ with the rest of its existing and newly acquired assets, including those of 21st Century Fox and Hulu. Disney CEO Bob Iger said the Fox deal was intended to help boost Disney’s content library as it moved into streaming. The Fox acquisition, when closed, will also double Disney’s stake in streaming service Hulu to 60%, and management said in November that Disney would be interested in taking up the remaining 40% if Comcast or Warner Media considered divesting their stakes.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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