Fox purchase takes a toll on Disney's third-quarter earnings

LOS ANGELES, Ryan Faughnder, Los Angeles Times (tca/dpa)- Walt Disney Co's profits fell well short of Wall Street estimates in the third quarter, dropping 28 per cent from a year ago due in part to the poor performance of newly-acquired Fox assets, such as the box office flop "Dark Phoenix."
The Burbank [California] company also continued to spend big on streaming services, further eroding profits.

Disney earned 1.35 dollars a share on revenue of 20.25 billion dollars during the quarter that ended June 29, the company said Tuesday. That compared with 1.87 dollars a share on revenue of 15.23 billion dollars during the same period of time last year.
The estimates were substantially below projections. Analysts had predicted earnings of 1.72 dollars a share and sales of 21.45 billion dollars in the third quarter.
"Our third-quarter results reflect our efforts to effectively integrate the 21st Century Fox assets to enhance and advance our strategic transformation," Disney chairman and Chief Executive Bob Iger, said in a statement.
Operating income at Disney's movie studio grew 13 per cent to 792 million dollars as the company enjoyed an extraordinary run of success at the box office.
"Avengers: Endgame," released in April, grossed 2.795 billion dollars in worldwide ticket sales, making it the highest grossing movie ever, not adjusting for inflation. The superhero film unseated James Cameron's "Avatar," which generated 2.79 billion dollars in receipts and held the record for nearly 10 years. Disney's live action remake of "Aladdin" collected 1.03 billion dollars, while Pixar's "Toy Story 4" grossed 959 million dollars.
However, the company also recorded a impairment charge for "Dark Phoenix," the recent X-Men movie from 20th Century Fox that tanked at the box office.
The quarter did not include results from "The Lion King," which hit theaters in July and has collected 1.2 billion dollars in ticket sales.
Disney's media networks business, which now includes Fox channels such as FX, saw its operating income grow 7 per cent to 2.1 billion dollars in the quarter.
The parks and consumer products segment posted a 4 per cent increase in operating income to 1.72 billion dollars.
The company's direct-to-consumer segment posted an operating loss of 553 million dollars on revenues of 3.86 billion dollars.
The widening loss came as Disney absorbed Fox's Hulu stake into its business and continued to invest in streaming services ESPN+ and Disney+, which is expected to launch in November.

Thursday, August 8th 2019
Ryan Faughnder, Los Angeles Times (tca/dpa)

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