Disney Revenue, Profit Drop
November 09 2017 - 5:33PM
Dow Jones News
By Imani Moise
Walt Disney Co. reported falling sales in the most recent
quarter as the company continued to grapple with a decline in cable
network subscribers and a weaker year at the box office.
The media industry has been grappling with a decline in
traditional cable subscribers and the rising popularity of
on-demand viewing. The shift has turned Disney's TV business, which
includes cable and broadcast properties, into more of a burden than
a growth driver.
Revenue from the cable networks segment, which houses ESPN,
dropped 3% to $5.47 billion; analysts had been expecting slight
sales growth. Operating income slid 12%, contracting for the fifth
time in the last six quarters.
Shares fell 3% to $99.62 in after-hours trading, erasing the
1.48% gain logged during the day Thursday.
ESPN has struggled with declining viewership more than other
networks, as it also contends with high costs for sports
broadcasting rights.
Disney has outlined plans to sell its sports and entertainment
programming directly to consumers, sidestepping traditional cable
providers and streaming services such as Netflix Inc. For Disney,
streaming services would provide a new source of revenue and help
it reduce reliance on licensing fees from third-party
distributors.
The company has already bet billions of dollars on this pivot.
Earlier this year, Disney purchased a majority stake in BamTech for
$2.58 billion to bolster its streaming initiatives. Disney has also
held talks with 21st Century Fox to acquire its entertainment
assets to strengthen its content library against rivals. The talks
are no longer active and it isn't clear whether they will
resume.
Sales in Disney's film-production and consumer-product
businesses also fell in the latest quarter, suffering from
comparison with a year-earlier period bolstered by the sale of Star
Wars distribution rights and merchandise, and the "Finding Dory"
animated film. Production-related operating profit plunged 43%
compared with last year.
The company's theme-park segment, where sales grew 6%, was the
only business to post a sales increase.
In all, for the fourth quarter the California company reported a
profit of $1.75 billion, or $1.13 per share, down from earnings of
$1.77 billion, or $1.10 per share a year earlier. On an adjusted
basis, earnings fell to $1.07 per share from $1.10.
Revenue dropped 2.8% to $12.78 billion.
Analysts polled by Thomson Reuters had forecast earnings of
$1.12 on $13.23 billion in revenue.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
November 09, 2017 17:18 ET (22:18 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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