Expenses Eat into Disney Earnings

Walt Disney Co. missed Wall Street estimates on adjusted earnings and fell short on revenue for the fiscal third quarter. The Burbank entertainment and media giant reported on Tuesday adjusted net income of $2.9 billion ($1.87 a share) on revenue of $15.2 billion for the quarter ending June 30. That compares with net income of $2.4 billion ($1.58) in the same period a year earlier. Analysts on average expected earnings of $1.95 on revenue of $15.3 billion, according to Thomson Financial Network. Three of the company’s four divisions reported revenue increases during the quarter, with studio entertainment leading with a 20 percent increase to $2.9 billion based primarily on the strong theatrical showing of “The Avengers: Infinity War” and “The Incredibles 2.” Parks and resorts went up by 6 percent to $5.2 billion and media networks increased by 5 percent to $6.2 billion. Consumer products and interactive media decreased by 8 percent to $1 billion. Disney, however, had fewer subscribers for its ESPN cable channel and increases in programming expenses and technology as it prepares to launch its own streaming service next year. Chief Executive Robert Iger said he was pleased with the quarterly results and excited about opportunities for continued growth. “Having earned the overwhelming support of shareholders, we are more enthusiastic about the 21st Century Fox acquisition than ever, and confident in our ability to fully leverage these assets along with our own incredible brands, franchises and businesses to drive significant value across the entire company,” Iger said in a statement. On July 27, Disney shareholders approved the company’s acquisition for $71.3 billion in stock and cash for Fox’s movie and television studios, cable channels and Sky television service in Europe along with a controlling stake in streaming service Hulu. Disney released its earnings after the market closed. Shares of Disney (DIS) closed up 66 cents, or less than a percent, to $116.56 on the New York Stock Exchange.