Disney Earnings Surge on 'Star Wars'; Shares Fall on ESPN--Update
February 09 2016 - 5:31PM
Dow Jones News
By Tess Stynes
Walt Disney Co. reported the highest quarterly earnings in its
history as the success of the latest installment of "Star Wars"
offset continued woes at its ESPN sports network.
Shares, down 21% over the past three months, fell 4.7% to $88 in
recent after-hours trading amid concerns about the company's
cable-sports network.
Disney's results were "driven by the phenomenal success of 'Star
Wars,'" Chairman and Chief Executive Robert Iger said. The company
said revenue at its movie business jumped 46% to $2.72 billion,
while operating income surged 86% to $1 billion.
Disney cited not only the strong theatrical success of the
latest "Star Wars" but also home-entertainment sales of the
previous movies in the series.
The Burbank, Calif., company started selling items like toys and
T-shirts related to the movie beginning in September; however, for
accounting reasons, Disney couldn't recognize revenue from such
sales until the quarter in which the movie was released. The
company recognized certain licensing and merchandising sales in its
movie and consumer-products segments.
For the company's first quarter, Disney's consumer-products
division reported sales rose 8% to $1.91 billion, while operating
income increased 23% to $860 million.
On Monday, Hasbro Inc. reported strong revenue during the
holiday period, helped by a surge in demand for lightsabers, action
figures and other toys tied to "Star Wars."
Disney is looking to build on the success of "Star Wars: The
Force Awakens" with years of sequels, toys, videogames and
theme-park attractions.
The theme-park segment's revenue grew 9% to $4.28 billion, while
operating earnings increased 22% to $981 million. A key catalyst
this year for Disney will be the company's planned opening of its
theme park in China, expected in June.
An important focus for investors has been the effect of
"cord-cutting" on Disney's cable business, particularly sports
giant ESPN. A shift toward streaming video and rising cable TV
costs have prompted more consumers to either cut the cord entirely
or move to "skinny" bundles of channels that sometimes exclude
ESPN.
For the latest quarter, the cable-television business posted
revenue growth of 8% to $6.33 billion. The segment's operating
income fell 6% to $1.41 billion, hurt by higher programming costs
at ESPN.
Over all, for the three months ended Jan. 2, Walt Disney
reported a profit of $2.88 billion, or $1.73 a share, up from $2.18
billion, or $1.27 a share, a year earlier. Excluding certain items,
per-share earnings rose 28% to $1.63.
Revenue increased to $15.24 billion from $13.39 billion.
Analysts polled by Thomson Reuters expected per-share profit of
$1.45 and revenue of $14.75 billion.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
February 09, 2016 17:16 ET (22:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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