Amid declining TV advertising revenues at its top TV networks, Walt Disney posted stronger-than-expected overall results in its fiscal first-quarter earnings period.
Revenue grew 4% to $15.4 billion, largely helped by major gains at its parks and resorts units, which soared 13% to $5.2 billion. Analysts were expecting a 1% rise in overall revenue.
ESPN witnessed an 11% decrease in advertising revenue, resulting from the shift of two College Football Playoff (CFP) games into its second-quarter period. Excluding those games, ESPN ad revenue was still down 7%.
Disney says its cable networks -- including its closely watched ESPN -- witnessed another modest decline in subscribers, to 3%. This was partially offset by new deals from virtual (digital) pay TV providers.
During the analyst phone call, Bob Iger, chairman/CEO of Disney, said the forthcoming redesigned ESPN app, scheduled to launch this spring, would be priced at $4.99 a month. “It will provide countless scores and highlights, as well as podcasts and other sports information with a more user-friendly mobile interface. It will enable access to live streams of all ESPN's networks,” Iger noted.
All Disney cable networks' revenues inched up 1% to $4.5 billion in total revenue, while broadcast revenue was down 3% to $1.75 billion. Total media networks' affiliate revenue was up 4% for both cable and broadcasting.
At its TV stations, advertising was lower, largely due to unfavorable comparisons to a year ago, when the presidential election season netted high political ad dollars.
Although the ABC Network also witnessed declines in advertising revenues, Disney executives say quarter-to-date, prime-time scatter pricing at ABC is pacing 30% above upfront levels.
Disney saw improved business from all its domestic parks and resorts, cruise line and vacation club businesses, as well as Disneyland Paris.
Theatrical distribution revenue was higher due to three big movies: “Star Wars: The Last Jedi,” “Thor: Ragnarok” and “Coco,” which generated over $4.4 billion in global box office. All this was more than offset by decreases in home entertainment and TV/subscription video-on-demand distribution. All studio business revenue at Disney was flat at $2.5 billion.
Net income soared 78% to $4.4 billion -- largely as a result of the one-time benefit from the new federal tax laws. Segment operating income was virtually flat, up 1% to $3.99 billion, which exceeded analysts' expectations.