ESPN continued to lose subscribers in the fourth quarter while shelling out even more for its programming – unnerving investors, who drove the price of Disney shares down as much as 6.4 percent in after-hours trading.
Advertisement
“Star Wars: The Force Awakens” just crossed $2 billion at the box office globally and the company hopes to sustain the film’s obsessive fandom with “Rogue One: A Star Wars Story” hitting theaters in December. “Sports is too popular”.
Today, Disney (DIS) blew away EPS expectations for the company’s fiscal first quarter earnings.
On an adjusted basis, the company earned $1.63 per share, that handily beat analysts’ average estimate of $1.45 per share, according to Thomson Reuters I/B/E/S.
“This notion that… ESPN is cratering in any way from a [subscriptions] perspective is just ridiculous”, Iger said.
Higher programming costs at ESPN, unfavorable currency translation, and a decline in total subscribers in the Disney media networks universe offset and increase advertising and affiliate fees. Morgan Stanley analyst Benjamin Swinburne told the Associated Press that major media companies have invested $130 billion in sports rights over the next several years (with ESPN accounting for 29 per cent of that), but those costs are increasing faster than revenues from those broadcasts.
However, since August, when Disney first announced that it had seen a slight downturn in ESPN subscribers, Iger said the network’s fortunes have improved.
“Driven by the phenomenal success of Star Wars, we delivered the highest quarterly earnings in the history of our company”, said Disney CEO Robert Iger. Its revenue rose 14% to $15.24 billion. The stellar launch of the movie helped the studio business nearly double its operating income to $1.01 billion.
“Well, we had great performance across the board, really”.
While all its networks gained 8% to $6.3 billion in revenue overall, it suffered with declining operating income down 6% to $1.4 billion – the only Disney business unit to see declining operating incomes.
Advertisement
The company as a whole reported record quarterly earnings of $2.9 billion, compared to $2.2 billion for the prior-year quarter. Subscribers have fallen by about 7.2 million over the last three years, according to Nielsen, and it’s coming off a round of layoffs in the latest quarter. Disney World ticket prices and resort prices increased slightly previous year, and Bob Iger was quick to blame an increase in guest spending as the reason for the gain.
