DIS Walt Disney Co

By Maria Armental 

Walt Disney Co.'s profit nearly doubled in the latest period as it acquired a controlling stake in streaming service Hulu with the closing of a roughly $71 billion deal with 21st Century Fox.

The results for the March quarter, which included 11 days of operating results from Hulu and former Fox properties, showed expenses outpaced revenue growth as Disney continued to ramp up investments in content and technology. Some of that spending is part of a high-stakes bet on streaming that will essentially give Disney control over three services: ESPN+, Disney+, and Hulu.

Shares in Disney, which beat Wall Street targets on sales and profit in the latest period, rose 1.4% in after-hours trading.

CNBC reported last month that Comcast Corp. was negotiating a possible sale of its Hulu stake to Disney, which would shift the streaming service's full ownership to Disney. Disney didn't comment Wednesday on the reported deal talks.

The Fox deal -- which put under one roof lucrative properties such as "The Simpsons" and "Avatar" alongside Disney's "Star Wars" and Marvel Studios -- still has some moving parts.

Disney agreed to sell Fox's regional sports networks as a condition of the government's deal approval. Last week, the company stuck a roughly $10 billion deal with Sinclair Broadcast Group Inc. over 21 regional sports networks

The YES Network, the television home of the New York Yankees, wasn't included in that deal; but Disney is negotiating a sale of the network to a group that includes Sinclair, the New York Yankees and Amazon.com Inc., The Wall Street Journal reported.

Disney's fiscal second-quarter profit rose to $5.45 billion, or $3.55 a share, from $2.94 billion, or $1.95 a share, a year earlier. Excluding a gain tied to acquiring a controlling stake in Hulu, a $353 million impairment charge on its Vice investment and other one-time items, profit fell to $1.61 a share from $1.84 a share.

Revenue rose 3% to $14.92 billion.

Analysts surveyed by FactSet expected profit excluding special items of $1.58 a share on $14.49 billion in revenue.

The direct-to-consumer division -- which includes Disney- and ESPN-branded international cable networks as well as investments in Hulu and Vice -- reported $955 million in revenue, up 15% from the year earlier, and an operating loss of $393 million in the March quarter.

Expenses rose about 10% to $11.53 billion.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

May 08, 2019 17:02 ET (21:02 GMT)

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