Walt Disney Company Shares Fall After Mixed Q3 Earnings Results

Entertainment giant beats earnings per share estimates for the quarter, but reports lower-than-anticipated revenues

The Walt Disney Company today reported record quarterly revenue of $13.1 billion for its third fiscal quarter compared to $12.2 billion for the prior-year quarter, missing analysts estimates of $13.2 billion.

Shares for the entertainment giant fell 4 percent in after-hours trading, to $116.80.

Diluted earnings per share (EPS) for the third quarter increased 13 percent to $1.45, beating analysts estimates of $1.42, according to Yahoo Finance. The company reported earnings per share of $1.28 in the prior-year quarter.

Studio entertainment revenues in the quarter increased 13 percent to $2 billion, while operating income increased 15 percent to $472 million. Higher operating income was due to an increase in theatrical revenue from big-screen hits like “Cinderella” and “Marvel’s Avengers: Age of Ultron” as well as growth in international TV distribution from “Star Wars” titles and consumer products revenue still strong thanks to “Frozen.”

These increases were partially offset by the disappointing returns for “Tomorrowland,” the rise in film costs and a decrease in home entertainment revenue since “Big Hero 6” posted lower unit sales compared to “Frozen” the previous year.

“We’re very pleased with our performance in the third quarter,” Chairman and CEO Robert A. Iger said. “The strong results across our many diverse lines of business demonstrate the power of our unparalleled brands, franchises and creative content.”

Consumer products revenues for the quarter increased 6 percent to $954 million and segment operating income increased 27 percent to $348 million. Higher operating income was due to an increase in merchandise licensing revenues and lower third-party royalty expense.

Merchandise Licensing revenue growth reflected the performance of “Frozen,” “The Avengers” and “Star Wars” merchandise, and partially offset by lower revenues from “Spider-Man” merchandise.

Interactive revenues for the quarter decreased by $58 million to $208 million and segment operating income decreased by $29 million to break-even; while Parks and Resorts revenues for the quarter increased 4 percent to $4.1 billion and segment operating income increased 9 percent to $922 million.

On an earnings call after the  announcement, executives perpetuated reports that “Star Wars” will see a physical presence in their parks and attractions — though the company wouldn’t confirm if this would translate to rides, interactive experiences or retail offerings.

“We’re excited about Star Wars across the company and that includes parks, so stay tuned for more specifics about our plans there,” said Bob Chapek, chairman of Walt Disney Parks and Resorts.

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