Disney shares fall after earnings from their third quarter and nine months earnings for fiscal 2019. The document in-depth and full of figures but here at Chipandco.com, we are providing the key points! For those interested in the document, click here!
Key Points
- Disney missed expectations for earnings and revenue in its fiscal third-quarter results released on Tuesday.
- The stock fell as much as 3.7% in after-hours trading.
- The company showed increased losses in its streaming segment due to its investments in streaming services Hulu, ESPN+ and Disney+.
Here are the key numbers:
- Earnings per share: $1.35 vs. $1.75 per share, according to Refinitiv estimates
- Revenue: $20.25 billion vs. $21.47 billion, per Refinitiv
What Did Disney Have to Say?
In response to shares fall after earnings, Disney blamed the earnings miss on the ongoing integration with Fox which was finalised back in March for $71 billion.
The Walt Disney Company’s Studio Entertainment reported revenues of $3.8 billion during this quarter, which is a 33% increase a year on!
Likewise, Disney’s Media Networks unit reported revenues of $6.7 billion, which is a 21% increase a year on. Furthermore, the Parks reported revenues of $6.6 billion during this quarter which is a 7% increase in revenues a year on!
The direct-to-consumer segment reported revenues of $3.86 billion during this period and the operating losses increasing to $553 million from $168 million. The Walt Disney Company attributed the losses on Hulu, increased investments in ESPN+ and the new Disney+ streaming services. Disney+ is slated to launch in November at a cost of $6.99 per month, or $69.99 per year. The service will feature content from Disney, Pixar, Marvel, Star Wars, and more. Hulu, ESPN + and Disney + bundle will be $13.99 a month, which is a similar cost to Netflix’s standard subscription plan.
Whilst Disney + will not have as much content as Netflix, Iger believes that the strength of Disney, Marvel and Star Wars will lure loyal customers. Iger also said that Disney + will launch in two international markets when it lands in November and is set to expand to additional markets over the next two to three years!
Furthermore, the Walt Disney Company also said they expect direct-to-consumer losses to rise to $900 million in the fiscal fourth quarter, as it continues to invest in content for Disney+.
Iger said Disney hopes to re-imagine popular Fox titles like “Home Alone,” “Night at the Museum,” “Cheaper by the Dozen” and “Diary of a Whimpy Kid” on Disney+ to attract more customers, with other programmes such as Loki, Lady & the Tramp and Star Wars in the works!
Alternatively, Cable Networks revenues have increased to 24% year-over-year to $4.5 billion during the quarter, whilst operating income increased 15% to $1.6 billion. The company attributed the income to the consolidation of Fox’s FX and National Geographic networks, as well as higher advertising revenues at ESPN, driven by two additional NBA finals games. It should also be noted that there has been an increase in programming and production costs, as a result of contractual rate increases for MLB and NBA programming and new rights for boxing and mixed martial arts.
Last month, Disney’s “Avengers: Endgame” became the highest-grossing film of all time, raking in $2.79 billion at the global box office and surpassing previous chart-topper “Avatar’s” record. The success of “Endgame,” as well as other titles like “Captain Marvel,” “The Lion King,” “Toy Story 4″ and “Aladdin,” could help Disney earn more than $9 billion at the global box office this year.
What do you think about Disney shares fall after earnings? Do you think the streaming services will be successful?
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