Disney Quarterly Earnings Unimpressive, Stock Falls

Bob Iger Serious - Getty - H 2017
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Shares of Disney rose prior to the closing bell on Thursday but are roughly flat for the year, even as Wall Street in general has been in rally mode.

The Walt Disney Company earned $1.13 per share in the most recent quarter on $12.8 billion revenue, it was reported Thursday, but the conglomerate was expected to post $13.2 billion in sales, and the smaller number is knocking the stock down 4 percent in after-hours trading.

Of Disney's four operating segments, only parks and resorts posted rising revenue and operating income.

Media networks, the largest segment, showed a 3 percent decline in revenue and 12 percent fall in operating income as broadcast ad sales dropped due in part to a lack of political advertising.

Studio entertainment dropped 21 percent in revenue as Cars 3 didn't perform as well as Finding Dory did a year ago. Disney CEO Bob Iger said Thursday during a conference call with analysts that a new Star Wars trilogy is in the works to be directed by Star Wars: The Last Jedi helmer Rian Johnson.

With certain adjustments, Disney earned $1.07 per share, which is about a nickel shy of what some analysts had expected.

Iger said during the conference call to discuss earnings that he would not answer "any questions on press speculation," meaning he wouldn't talk about Disney's desire to purchase many of the assets of 21st Century Fox.

Earnings come as cable-cutters are harming ESPN's business, as well as the businesses of most cable channels. In fact, ESPN is reportedly set to lay off another 100 employees after Thanksgiving, the latest in a series of cuts.

Shares of Disney rose prior to the closing bell on Thursday but are roughly flat for the year, even as Wall Street in general has been in rally mode. 

To counter competition from digital powerhouses, Iger said Thursday that Disney is creating an ESPN streaming channel, called ESPN Plus, that is set to bow in the spring.

Disney is also creating a service that will deliver Disney- and Pixar-branded TV shows and movies, along with some Marvel and Star Wars content, to subscribers. The latter service is considered a direct threat to Netflix.

Iger said Thursday that some of the original content on the service, set to launch in 2019, will be a live-action Star Wars show, a High School Musical series and a show based on the Monsters Inc. franchise.

Iger said the service will have "Disney" in its name but a full name hasn't been decided. He ruled out R-rated material, but said the service could include content licensed from third parties. The exec said it will be priced "substantially below" Netflix.

Disney's earnings also come following a highly publicized battle with the Los Angeles Times over a negative story the outlet published about Disneyland. Disney banned the newspaper's journalists from advanced screenings of its movies but backtracked after negative backlash.