Operating income in the consumer products segment gained by 27 percent to $348 million on revenues of $954 million, 6 percent higher than Q3 past year.
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Disney may have had a flop with George Clooney’s “Tomotrrowland”, but the studio division had a most profitable quarter. Excluding items, the company earned USD1.45 (HKD11.24) per share.
Cord-cutting loomed over Disney’s quarterly earnings, as a loss of ESPN subscribers caused Disney to taper its TV profit outlook.
Iger said that Disney is now placing its bets on MVPDs rather than OTT services, and “we look at the television business and look at it as a consumer offering”. Diluted earnings per share (EPS) for the third quarter increased 13% to $1.45 from $1.28 in the prior-year quarter. “Overall though we believe the expanded basic package will remain the dominant package of choice for some years to come, because to the quality and variety it represents for a price that is generally considered fair and appropriate…”
ESPN remains a massive profit generator for Disney, but the company now seems to be tempering its expectations. Management also continued to defend the value of the multichannel bundles. He added that ESPN had embraced technology “better than anyone else” in the traditional media and that cable and satellite TV was still the dominant way of viewing.
Disney said: “Higher operating income at our domestic operations was primarily due to volume and guest spending growth, partially offset by higher costs”. But advertising sales at ESPN fell from a year ago, reflecting “lower ratings and rates”, it said.
Disney bought the studio in 2009 for what is now thought to have been a bargain $4bn. “Avengers: Age of Ultron“, the superhero flick produced by Walt Disney Co. was the biggest profit puller.
“We fully expect the success for this film to reverberate throughout the company this year and beyond”.
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