Date
18 November 2019
Disney CEO Bob Iger is transforming the company from a cable TV leader into a powerhouse in the crowded streaming video market. Photo: Bloomberg
Disney CEO Bob Iger is transforming the company from a cable TV leader into a powerhouse in the crowded streaming video market. Photo: Bloomberg

Lion King lifts Disney earnings, streaming costs under budget

Walt Disney Co.’s popular theme parks and a remake of The Lion King pushed earnings past Wall Street targets, and the company spent less than it had projected on its big plunge into streaming entertainment, Reuters reports.

Shares of Disney rose more than 5 percent to US$140.77 in after-hours trading.

Disney is trying to transition from a cable TV leader to a powerhouse in the crowded streaming video market dominated by Netflix Inc. The family-friendly digital entertainment service, Disney+, is set to debut on Tuesday.

Excluding certain items, Disney earned US$1.07 per share for the quarter that ended in September, above average analyst estimates of 95 US cents per share, according to IBES data from Refinitiv.

Disney+ will initially stream in the United States, Canada and the Netherlands. On Nov. 19, it will debut in Australia and New Zealand, followed by several countries in western Europe on March 31, chief executive Bob Iger said.

“We’re making a huge statement about the future of media and entertainment and our continued ability to thrive in this new era,” Iger told analysts on a conference call.

The Disney+ app will be accessible via a wide range of smart TVs, mobile phones and streaming devices, including Amazon.com Inc.’s Fire TV devices and Samsung Electronics Co. Ltd. and LG Electronics Inc. products, Iger said.

The company is spending heavily to compete for digital viewers.

Disney’s direct-to-consumer and international unit, which also includes ESPN+ and Hulu, reported an operating loss of US$740 million from July through September, up from US$340 million the previous year, but less than the US$900 million that Disney had forecast.

Seeking a broad audience of all ages, Disney+ will offer a deep library of TV shows and movies from Disney, Pixar Animation, Marvel Studios, the Star Wars franchise and the National Geographic Channel, plus original programming such as a new High School Musical series and a remake of Lady and the Tramp. It will cost US$7 per month, less than the US$13 for Netflix’s most popular plan.

Edgier adult programming will go to Hulu, including shows from FX Networks starting in March, Iger said. FX on Hulu will feature every season of more than 40 FX original series spanning the past 17 years, such as Fargo and American Horror Story.

Disney faces several competitors, including a just-launched service from Apple Inc. and offerings from AT&T Inc.’s WarnerMedia and Comcast Corp. next year.

Distribution agreements with Apple, Samsung and others “show they understand this is an ecosystem, and even with all their market power, they can’t go it alone”, said Forrester analyst Jim Nail.

For the just-ended quarter, the theme parks and consumer products unit reported a 17 percent rise in operating income to US$1.4 billion, driven by sales of Frozen and Toy Story merchandise and higher guest spending at Disneyland in California.

The movie studio benefited from remakes of The Lion King and Aladdin plus Pixar sequel Toy Story 4. Profit at the division jumped 79 percent to nearly US$1.1 billion.

The company’s media networks division posted a 3 percent decrease in operating income to US$1.8 billion, Disney said. Sports network ESPN experienced higher programming, production and marketing costs and now has 3.5 million subscribers.

Overall revenue rose 34 percent to US$19.10 billion, edging past analysts’ average estimate of US$19.05 billion.

– Contact us at [email protected]

CG