Disney Posts Q3 Revenue Gains, Takes Hulu-Disney+ Losses

Disney’s third-quarter period -- the first to include Fox TV and movies assets, as well as full control of Hulu -- witnessed sharply higher revenue. But this came with some profit pullback.

Overall revenues grew 34% to $19.1 billion with net income half that of the year-ago quarterly period, to $1.2 billion from $2.4 billion. Revenues/income numbers were roughly in line with analysts expectations.

Contributing to this was Disney’s direct-to-consumer and international unit, which includes its streaming business. The D2C unit has seen growing revenues, now at $3.4 billion, up from $800 million. Revenue was boosted from the acquisition of Fox’s businesses and the Star India TV platform.

At the same time, due to higher expenses, the unit expanded its operating loss from $340 million to $740 million. The losses came from Disney’s consolidation of Hulu, as well as costs associated with the upcoming launch of Disney+ and its investment in ESPN+, which launched in April 2018.



“Their $800 million operating loss on Disney+, and the consolidation of Hulu is unfortunate,” says Jim Nail, principal analyst, B2C marketing of Forrester. “They wouldn't accept this kind of loss unless they felt it was critical to the company's future.”

The company’s $6.99 Disney+ streaming service is set to launch November 12.

With its earnings released, Disney also announced that Disney+ would be carried by the Amazon Fire TV platform. In a CNBC interview, Bob Iger, chairman-CEO of Disney, said this adds to distribution deals made with Apple, Samsung, Microsoft, LG, and Google.

Revenue at Disney media networks -- which now include FX Networks and Nat Geo -- rose 22% to $6.5 billion; parks/resorts were 8% more to $6.7 billion; studio entertainment (now adding the Fox TV/movie studio) was up 52% to $3.3 billion.

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