Disney Earnings Show Strength in Both TV and Film Ahead of Streaming Launch

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The conglomerate earned an adjusted $1.07 per share in its fiscal fourth quarter on revenue of $19.1 billion.

The Walt Disney Co., reporting financial results five days ahead of the launch of Disney+, a streaming service that is meant to rival that of Netflix, said Thursday that its quarterly earnings and revenue exceeded the expectations of analysts largely on the strength of its film business with titles like Toy Story 4, Aladdin and The Lion King.

With costs associated with the creation of Disney+ mounting, the conglomerate saw net income fall to $1.1 billion in the quarter from $2.3 billion a year earlier. For the entire fiscal year, net income fell to $11.1 billion from $12.6 billion a year ago.

Disney earned an adjusted $1.07 per share in its fiscal fourth quarter on revenue of $19.1 billion, with its giant media networks segment showing well despite challenges faced by the traditional TV industry.

Disney was expected to earn an adjusted 97 cents a share on $19.03 billion in revenue. Three months ago, the company disappointed Wall Street with its quarterly report and its shares have slightly underperformed since then, though they were 4 percent higher after the closing bell on Thursday.

Disney's streaming service is set for its debut on Tuesday, while Apple TV recently launched one of its own and WarnerMedia is set to bow its HBO Max in May. The repercussions of the streaming wars will not only impact Netflix but also the legacy TV industry as consumers cut their cable and satellite cords.

Along those lines, ESPN has been shedding subscribers for years, Nevertheless, Disney reported 20 percent year-over-year revenue growth in its cable networks unit and 26 percent growth in broadcasting.

Studio entertainment revenue surged 52 percent, while parks, experiences and products showed 8 percent growth. Direct-to-consumer and international, where results from Disney+ will show up, saw a surge in revenue, but the segment lost $740 million after losing $340 million in the same quarter a year ago.

"We've spent the last few years completely transforming the Walt Disney Co. to focus the resources and immense creativity across the entire company on delivering an extraordinary direct-to-consumer experience, and we're excited for the launch of Disney+ on November 12," CEO Bob Iger said Thursday.

The exec said Thursday that within five years, Disney+ will contain 620 movies and 10,000 television episodes. By then, Disney will also be adding 60 original pieces of content annually to the platform.

Previously, Verizon said it would offer Disney+ free to its customers for a trial period, and Iger on Thursday announced distribution deals have also been struck with Amazon Fire, Samsung and LG. He also announced that in March, Hulu will become the official streaming home for FX Networks, a strategy that became possible when Disney closed its $71 billion purchase of many of the assets of 21st Century Fox, including FX and additional equity in Hulu.

The CEO acknowledged "continued erosion" for legacy cable TV and added: "I don't know what the floor is, nor do I think the floor is anything close to being in sight."

Iger also announced that ESPN+, the streaming service launched last year, now boasts 3.5 million subscribers, though he declined to predict how many subs Disney+ might attract on Day 1, joking that if there is an office pool he is not aware of it, nor would he participate. A launch in the Netherlands to test the product was "very, very positive," said Iger.

"The demographics were far broader than a lot of people expect them to be. This is well beyond kids and family," he said.

In the future, Disney intends to report the subscribers at each of its streaming platforms.

Concerning theme parks, Iger acknowledged there were delayed visits to Star Wars: Galaxy's Edge at Disneyland in California and Disney World in Florida. "Those two lands have been far more successful than has been reported," he said. Iger added that the E-ticket Millennium Falcon attraction has carried 5 million riders thus far, which he called a "crazy stat."