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On the heels of a disappointing box-office haul for Solo: A Star Wars Story and in the midst of trying to close a blockbuster deal to acquire most of 21st Century Fox, the Walt Disney Co. on Tuesday posted earnings per share of $1.87 on revenue of $15.2 billion, which disappointed Wall Street.
Disney was expected to earn $1.95 per share after certain items on revenue of $15.4 billion. Shares were up 1 percent in the regular session Tuesday, but dropped 3 percent after the closing bell.
The U.S. Justice Department has already approved Disney’s hard-fought plan to pay $71.3 billion for Fox’s film and TV studio, along with some of its cable channels and international assets, most prominently its 39 percent stake in Europe’s Sky satellite service.
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When Disney CEO Bob Iger spoke to Wall Street after the earnings were released Tuesday, he focused not only on the Fox deal but also the upcoming Netflix-like service that is in the works.
Meanwhile, investors who were hoping the ESPN+ digital streaming service would shore up ESPN might have been disappointed, since the leader in televised sports again lost TV subscribers, though it managed to grow revenue in the fiscal third quarter because of affiliate fee increases.
While the latest Star Wars film earned $391 million worldwide, it’s an underachiever compared to others in the franchise, but Disney’s recent film slate also includes Black Panther, Avengers: Infinity War and Incredibles 2, which helped the studio post $2.9 billion in revenue, up 20 percent from a year ago.
On the Sky front, Fox is still bidding against Comcast to acquire all of the asset. Disney already had to raise its bid to acquire much of Fox in order to fend off Comcast in a previous bidding war.
Disney media networks grew revenue 5 percent to $6.2 billion; parks and resorts grew revenue 6 percent to $5.2 billion; and consumer products and interactive media saw revenue decline 8 percent to $1 billion.
Broadcast television was strong due to higher sales for Designated Survivor, How to Get Away With Murder and Grey’s Anatomy.
“Having earned the overwhelming support of shareholders, we are more enthusiastic about the 21st Century Fox acquisition than ever,” Iger said.
The exec said he looks forward to integrating Fox assets like FX, Nat Geo and Fox Searchlight into Disney’s direct-to-consumer products. He spoke of an “era of unparalleled consumer choice,” with half of all U.S. households subscribing to at least one streaming service.
Iger said the Disney streaming service will launch before the end of 2019, though it won’t have anything “close to the volume of Netflix” in terms of content because Disney is “going to walk instead of run.”
He said the upcoming product “is the biggest priority of the company during calendar 2019.” Iger said he’s reaching out to “Disney consumers, Disney aficionados all over the world” seeking their input.
“The first priority is reaching the core Disney fan and we certainly have a number of different company touch-points to do that,” Iger said of the yet-to-launch streaming service.
The exec acknowledged that much of the past content is “encumbered” via deals with Netflix, Starz and others, so it won’t appear on the Disney service until much later, but none of 2019’s slate of movies are similarly encumbered. Plus, there will be lots of original programming related to Star Wars, Pixar and Marvel that will go there.
“We want to make sure we’re managing expectations. The price of the service will reflect that — the volume of the product that’s on,” Iger said.
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