Disney is getting the year off to a strong start, beating Wall Street’s expectations for the quarter that encompassed the company’s giant leap into the new era of direct-to-consumer business operations.
Disney Plus delivered an impressive 26.5 million subscribers, starting from Nov. 12 through year’s end. The Mouse’s earnings per share and revenue numbers for its fiscal first quarter (ended Dec. 28) met or topped analysts consensus opinions, indicating that the company is on strong footing even as it pours billions of dollars to support the growing suite of streaming platforms.
The Disney Plus launch is a giant feather in the cap of Disney chairman-CEO Bob Iger.
“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations,” Iger said. “Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment.”
Disney’s adjusted earnings per share came in at $1.53, above the consensus estimate of around $1.44. Revenue was squarely in the consensus zone of $20.9 billion. Disney shares shot up 3% in trading on Thursday and have added nearly $10 in the past week as anticipation built for the reveal of the initial Disney Plus subscriber numbers.
Revenue was up 36% over the year-ago period, a gain that reflects Disney’s acquisition of 21st Century Fox last March. Net income for the quarter sank 23% to $2.1 billion. Disney had prepared Wall Streeters for a hit to earnings as it invests big in products that the company is banking as growth drivers for the future.
The loss in the direct-to-consumer unit that houses Disney Plus, Hulu and ESPN Plus expanded to $693 million, from $136 million in the year ago-quarter. Revenue climbed to $4 billion, from $900 million in the year-ago frame.
Disney’s studio arm was buoyed by strong performances at the box office by “Star Wars: The Rise of Skywalker” and “Frozen II.” Studio operating income grew to $948 million, and that included offsets from losses racked up by the 20th Century Studios unit.
On the TV side, Disney also posted big gains although mostly driven by the consolidation of 21st Century Fox cable networks and production units. Media networks revenue climbed 24% to $7.36 billion, driven by the cable networks unit ($4.76 billion). Operating income was up 23% to $1.63 billion. Disney noted that improved results at A+E Network (which it co-owns with Hearst) raised its income from equity investments to $193 million for the quarter, up from $179 million in the year-ago quarter.
Disney’s parks division at present is wrapped up in the crisis in China over the coronavirus outbreak. But for the quarter ended Dec. 28, revenue for the unit climbed 8% to $7.4 billion while operating income was up 9% to $2.3 billion.