The box office success of "Incredibles 2” and "Ant-Man and the Wasp,” combined with the popularity of the Walt Disney Company's theme parks, bolstered quarterly earnings at the Hollywood conglomerate.
Diluted earnings per share for the fourth quarter increased 37% to $1.55, while revenues climbed 12% to $14.3 billion. Net income also improved, jumping 33% to $2.3 billion and smashing Wall Street's projections.
Analysts had predicted that Disney would post revenues of $13.7 billion and earnings of $1.33 cents per share. It's a momentous time for the company behind Pixar, Lucasfilm, and Marvel. Disney is wrapping up its $71.3 billion purchase of much of 21st Century Fox's film and television assets a pact that is expected to transform the media company into an entertainment leviathan with few equals. At the same time, Disney is preparing to launch a streaming service in late 2019, which it hopes will one day rival Netflix and enable it to connect to cord-cutting consumers who are ditching cable for digital video. To that end, Disney has been winding down its licensing deals as it prepares to debut its service with some of the biggest franchises in its film and television arsenal.
On a call with analysts, Disney chairman Bob Iger didn't say how the company would integrate Fox, but praised its various divisions and pledged to invest in bolstering properties such as FX and Fox Searchlight. The Disney chief also said he was excited about bringing signature Fox franchises such as "Planet of the Apes,” "Avatar,” and "Kingsman” into the fold.
Iger said the new streaming service will be dubbed Disney+.
"In this era of unprecedented consumer choice, brands matter more than ever,” he said.
Disney's cable and broadcast arm saw sales climb 9% to nearly $6 billion, while operating income increased 4% to $1.5 billion. Disney's parks and resorts revenue hit $5.1 billion for the quarter, a 9% improvement that it ascribed to stronger attendance at its Hong Kong and Paris locations. Operating income for the segment jumped 11% to $829 million. Disney's film studio put up revenue of $2.1 billion, nearly doubling the prior-year quarter, while operating income rose $378 million to $596 million. The studio benefited from summer blockbusters such as "Incredibles 2” and "Ant-Man and the Wasp,” two of the bigger hits of popcorn season.
It wasn't all good news for Disney. The company invested $400 million in Vice Media, with the hope of reaching its millennial-skewing audience. Instead, buried in the fine print was the news that Disney is writing off $157 million of its investment.