Disney Tops Wall Street’s Q4 Estimates On Eve Of Streaming Debut

Dade Hayes

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Disney delivered a strong batch of financial results for its fourth quarter, with diluted earnings per share of $1.07 beating Wall Street analysts’ consensus forecast of 95 cents.

The results marked an improvement from the previous quarterly report, last August, which were far more mixed and were blamed by management on the integration of 21st Century Fox assets, especially the film studio. Disney’s $71.3 billion deal to acquire most of Fox closed in March.

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Total revenue of $19.1 billion in the quarter exceeded the analysts’ estimate for $19.04 billion. That revenue figure rose a robust 34% over the same period a year ago, with the studio division leading the charge thanks to hits like the new take on The Lion King.

Studio revenue surged 52% in the period, and operating income increased by 79% to $1.08 billion. Along with Lion King, money-making titles in the quarter included Toy Story 4 and Aladdin, which compared favorably to the year-earlier period’s Incredibles 2 and Ant-Man And The Wasp. Losses on Fox titles inherited in the acquisition of Fox, including Ad Astra, Art of Racing In The Rain and Dark Phoenix were partially offset by income from TV and streaming.

Media Networks registered a 22% upswing, but operating income dipped 3% to $1.8 billion.

Parks and Resorts, often a mainstay that keeps the company on track, experienced a wobbly quarter, with revenue up just 8%. Growth at Disneyland, the company said in its earnings release, was “primarily due to higher guest spending, partially offset by the cost of Star Wars: Galaxy’s Edge, which opened May 31.” The company also blamed “to a lesser extent, lower attendance.”

Direct-to-Consumer & International, the division that houses the streaming initiatives, reported a massive spike in revenue, from $800 million to $3.4 billion and a wider segment operating loss, to $740 million from $340 million in the year-earlier period. The consolidation of Hulu, of which Disney announced in May it was taking operational control, was the reason behind the large swing.

Investors have expressed optimism about Disney’s prospects in streaming, given that it controls Marvel, Pixar and Lucasfilm as well as its own pedigreed film and TV library. The company’s stock closed at $133.13 on Thursday, up more than 1%. It has gained more than 20% in 2019 to date.

Disney is preparing for its biggest “opening” of the 21st century: the launch of Disney+ on November 12. The subscription service, which costs $7 a month, is entering an increasingly crowded streaming arena, with Apple, WarnerMedia and NBCUniversal all mounting major challenges to Netflix in late 2019 and the first half of 2020.

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