Disney Profit Disappoints With Cable TV Woes, Hurricanes Taking a Toll – tech2.org

Disney Profit Disappoints With Cable TV Woes, Hurricanes Taking a Toll


Walt Disney Co. goes to spend its manner out of its issues.

The world’s largest leisure firm, which reported decrease revenue Thursday, is already engaged on a brand new sequence of “Star Wars” movies, films that may value $250 million every. The firm will spend $1 billion extra on its theme parks within the new fiscal 12 months and plans to start out making films and TV reveals for a brand new streaming service that can launch in 2018.

Burbank, California-based Disney is attempting to adapt to upheaval within the TV and movie industries triggered by new leisure choices just like the Netflix streaming service. Viewers are spending much less time with typical media, whether or not it’s televised sports activities, DVDs or function movies on the large display screen, and that’s forcing firms like Disney to achieve out to them straight. All these prices will weigh on revenue, the corporate mentioned.

“They reminded investors that they have these great brands and they’re putting their resources behind them, they’re addressing this head on,” mentioned Robin Diedrich, an badyst at Edward Jones & Co. “The longer-term investor will be comfortable with a couple of years of investing, and a flatish type of earnings.”

A depraved hurricane season, falling promoting gross sales and a canceled film sapped fourth-quarter revenue at Disney, the corporate mentioned, resulting in the primary drop in annual outcomes for the reason that monetary disaster virtually a decade in the past. The downdraft from unhealthy climate, decrease advert gross sales and a tricky 12 months for films was too highly effective even for Disney, which counts on TV, theme parks, client merchandise and its well-known studio to gas progress. 

Chief Executive Officer Bob Iger warned a 12 months in the past that fiscal 2017 could be an “anomaly” and adopted up by saying earnings could be “roughly in line” with final 12 months. His forecast was virtually spot on.

Fourth-quarter revenue at Disney’s cable TV unit, the corporate’s single largest revenue contributor, slumped 1.2 % to $1.24 billion, harm by weak promoting gross sales and better programming prices for baseball and soccer at ESPN. Affiliate charges rose whilst subscribers declined. ESPN plans to fireplace about 100 workers in a brand new spherical of job cuts, in response to an individual with information of the matter who requested to not be named.

In current quarters, the corporate’s theme-park division got here to the rescue with robust earnings, pushed by larger ticket costs and visitor spending, together with new points of interest that boosted attendance. Although revenue rose, Hurricane Irma compelled Disney to shut its 4 Orlando, Florida, parks for 2 days and cancel three cruises. Domestic resort income fell.

Capital spending within the present 12 months will rise by about $1 billion, pushed significantly by parks and resorts, Iger mentioned. The firm has Star Wars lands below development in each California and Florida, and Toy Story Lands being inbuilt Orlando and Shanghai. Capital spending totaled $three.63 billion within the 12 months simply ended.

“No other company in entertainment today is better equipped to meet the challenges of a changing world or better positioned for continued growth thanks to our collection of brands,” Iger mentioned on the decision.

Shares of Disney rose 1.three % in prolonged buying and selling, reversing an preliminary decline. The inventory as soon as a high-flier, is down 1.5 % this 12 months after a flat 2016, the worst back-to-back years since 2007-2008.

Burbank, California-based Disney confronted different headwinds this 12 months, together with a lightweight launch schedule of simply eight movies from its film division, a drop from previous years, and the continuing problem of discovering client merchandise to match the bonanzas generated by “Frozen” and “Star Wars: The Force Awakens.” The firm final quarter took a write-off on an unreleased animated movie, “Gigantic.”

Disney mentioned Thursday it’s already engaged on a brand new “Star Wars” trilogy to comply with the sequence that’s scheduled to wrap up in December 2019. Rian Johnson, director of “The Last Jedi” installment that opens subsequent month, is already at work on the venture. The firm additionally plans to create a “Star Wars” TV present for its new streaming service.

The first image in Disney’s “Star Wars” revival, “The Force Awakens,” value $245 million to supply and went on to ship $2.07 billion in box-office gross sales, in response to Box Office Mojo.

For the quarter ended Sept. 30, Disney reported earnings of $1.07 a share, excluding some objects, lacking the $1.14 common of badysts’ estimates. Sales slipped to $12.eight billion, in contrast with projections of $13.three billion. For the 12 months, revenue and income each slumped 1 %.

To adapt to shrinking cable-TV audiences, Iger is introducing direct-to-consumer subscription providers primarily based on ESPN and the corporate’s wealthy library of kids’s programming. But start-up prices, together with the potential lack of gross sales to 3rd events corresponding to Netflix Inc., have added to investor worries.

The firm reported a $140 million drop in revenue from investments, citing larger losses at BAMTech, its streaming unit, and Hulu, in addition to decrease earnings from A+E Television.

That might clarify Disney’s curiosity in buying giant elements of 21st Century Fox Inc., together with its movie studio, some cable channels and stake in client TV providers corresponding to Sky Plc and Hulu LLC. Iger is because of retire in July 2019, probably making a deal for the $54 billion Fox a crowning achievement in his lengthy, profitable profession.

On the decision Thursday, executives declined to touch upon the Fox experiences.

— With help by Anousha Sakoui, and Brandon Kochkodin

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