Disney delights The Street with Q1 earnings | Major Businesses | Business
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As it gets ready for what could be a tumultuous year with the integration of its 21st Century Fox acquisition and the launch of new direct-to-consumer services, The Walt Disney Company has reported better than expected results in its first quarter.

waltdisney 9august2017For the three-month period ended 29 December 2108, the House of Mouse posted overall revenues of $15.3 billion flat compared with the same period a year earlier. However, even though net income sank 37% to $2.788 billion, this was considerably less than analysts had expected given this current quarter did not have the boost from blockbuster releases that the company benefitted from a year ago.

Entertainment segments worked well for the company. Revenue at Media Networks was $5.921 billion, up 7% on an annual basis and segment operating income increased 7% to $1.3 billion. Of these, Cable Networks revenues for the quarter increased 4% to $4.0 billion yet operating income slid 6% to $743 million. Lower operating income was due to a decrease at ESPN and Freeform, partially offset by an increase at the Disney Channels. The decrease at ESPN was due to higher programming costs, partially offset by affiliate revenue growth and an increase in advertising revenue.

Disney Broadcasting line revenues for the quarter increased 12% to $1.9 billion and operating income increased 40% to $408 million. The increase was said to be due to affiliate revenue growth, increased advertising revenue and higher programme sales, partially offset by higher programming costs.

While much is expected from Disney’s Direct-to-Consumer & International business in 2019, for Q1 revenues for decreased 1% on an annual basis to $918 million and segment operating loss increased from $42 million to $136 million. The company said that revenues reflected a 4% decrease from an unfavourable foreign currency impact. The increase in operating loss was attributed to the investment ramp-up in ESPN+, which was launched in April 2018, a loss from streaming technology services and costs associated with the upcoming launch of Disney+, partially offset by an increase at International Channels and a lower equity loss from its investment in the Hulu OTT service. Disney added that Hulu results reflected increases in subscription and advertising revenue, partially offset by higher programming costs.

The Q1 results also showed that Studio Entertainment revenues for the quarter decreased 27% to $1.8 billion and segment operating income decreased 63% to $309 million. Lower operating income was due to a decrease in theatrical distribution results, partially offset by growth in TV/SVOD distribution. Growth in TV/SVOD distribution results was due to the performance of Incredibles 2 and Avengers: Infinity War.