Disney Q4 Revenue Misses by $400 Million as ESPN Subscribers Plummet

waltdisney earnings

The Walt Disney Company reported fourth-quarter revenue of $13.1 billion and earnings of $1.10 a share after the close of markets Thursday, falling short of analyst estimates as its TV business continues to face headwinds, especially lower ad sales at ESPN and a drop in subscribers.

Analysts had forecast $13.5 billion in revenue and earnings of $1.16 a share on average.

While Disney’s superior box office performance helped outweigh some of its cable struggles in the previous quarter — helped by global smash hits like “Finding Dory” and “The Jungle Book” — its third quarter slowdown at the multiplex didn’t facilitate that happening again. Disney’s highest-grossing movie released between July and September was “Pete’s Dragon,” which made $141 million worldwide.

Also Read: Disney Q4 Earnings Preview: 3 Things to Watch

That’s why Disney failed to beat expectations for just the second time in five years — and second time in three quarters. Disney classifies the three months ending Oct. 1 as its fiscal fourth quarter.

“We’re very pleased with our performance for the year, delivering the highest revenue, net income and earnings per share in Disney’s history,” Disney Chairman and CEO Bob Iger said in a statement accompanying the earnings. “Fiscal 2016 was our sixth consecutive year of record results, highlighted by the opening of Shanghai Disney Resort, the phenomenally successful return of Star Wars, and our studio’s record-breaking $7.5 billion in total box office. We remain confident that Disney will continue to deliver strong growth over the long-term as we further strengthen our brands and franchises, our technological capabilities, and our international presence.”

Even though the Mouse House has already become just the second studio ever to earn more than $6 billion worldwide in a calendar year and is on pace to set a record for market share, Disney’s books rely a lot more on the small screen.

Also Read: Inside Disney's Reboot Fever: 14 Animated Classics Set for Live-Action Treatment

And its sports network, ESPN, is coming off its worst month ever, shedding 621,000 subscribers who opted not to pay their cable provider an estimated $7 for the network for the month of November, according to a Nielsen report, which Disney initially disputed – and Nielsen subsequently confirmed.

Disney’s cable networks are its key profit driver: that division — of which ESPN is the dominant entity — accounted for 29 percent of its revenue and 47 percent of its profits last quarter.

However, ESPN has shed 11.3 million subscribers over the last five years, including 4.2 million in the past year alone. The network peaked at 100.1 million subscribers in 2011 and now has 88.8 million, which equates to hundreds of millions of revenue per year. For the fourth quarter, cable network revenue fell 7 percent year-over-year, while operating income plunged 13 percent.

Also Read: 'Finding Dory' Crosses $1 Billion at Box Office

At the same time, rights fees for the live sports ESPN specializes in broadcasting continue to go up, as there’s plenty of competition for one of the few pieces of programmed television that still delivers monster ratings. ESPN will pay $7.3 billion for content next year – the biggest price tag among all media companies.

In the earnings release, Disney cited a drop in advertising revenue and higher programming costs as major contributors to ESPN’s struggles.

And although Disney’s film studio and theme parks are thriving, ESPN concerns have dragged down Disney’s stock price. While the S&P 500 is up 6.2 percent year-to-date, Disney’s shares have dropped 9.2 percent over the same time period.

Disney will discuss the earnings on a conference call at 5 p.m. ET.

16 Live-Action Disney Movies in the Works After 'Mulan' (Photos)

Disney will be pumping out live-action versions of its animated classics for a long time to come. Here's a list of titles in the works, including the release date of the original.
"Cruella"
Extracted from the famous villainess of 1961’s “One Hundred and One Dalmatians,” this origin story of a woman who declares open season on purebred puppies -- Cruella de Vil -- stars Emma Stone. The reigning live-action Cruella is Glenn Close, who herself starred in two live-action adaptations. It's due in theaters May 28, 2021.
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"Jungle Cruise"

OK, OK, "Jungle Cruise" might not count as live-action film based on a previously animated classic, but it is based on a ride at Disneyland, so we're going to include it. Plus, we'll take any chance to talk about Dwayne Johnson and Emily Blunt in the same sentence. It will hit theaters July 30, 2021.
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"The Little Mermaid"
So now we're getting into films that are in some stage of development but haven't necessarily been slated for release. After all, Disney has so many untitled films slated, it's hard to count. But a live-action version of "The Little Mermaid" has been long discussed, as it is arguably one of the most popular and profitable movies in Disney's vault. Rob Marshall is on board direct, with newcomer Halle Bailey set to star as Ariel and Melissa McCarthy as Ursula and Daveed Diggs as the voice of Sebastian the crab.
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"Pinocchio"

"Pinocchio" is also in the works, with Tom Hanks playing Geppetto.
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"The Jungle Book 2"
This is a no-brainer follow-up to Favreau's hit from spring 2016, based on the animated classic released in 1967.
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"Rose Red"
This one is trippy (no pun over producer Tripp Vinson), but promising creatively. In the German fairy tale, Rose Red is Snow White's sister. Disney and Vinson are collaborating on introducing the world to the sibling of the famous apple-loving princess. Disney released the original "Snow White" in 1937.
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"Snow White"
Forget her sister -- the original baddest chick in the Disney animated kingdom is coming back for her own standalone film. It was announced at the end of October 2016.
Disney
"Aladdin 2"

After the $1 billion-plus box office success of 2019's Will Smith-led "Aladdin," the studio announced in February 2020 that John Gatins and Andrea Berloff would write a sequel.
"Hercules"

Talk about going from zero to hero. The original 1997 retelling of Greek myths was a box office underachiever, but developed a big enough cult following that the studio announced plans for a live-action remake in April 2020, with "Avengers: Endgame" directors Joe and Anthony Russo producing.
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"Peter Pan"
Neverland will get a practical set if Disney has its way updating the 1953 animated film.
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"James and the Giant Peach"
In one of the more interesting adaptations, this beloved Roald Dahl book became a quirky claymation hit for Disney in 1996 with director Henry Selick. Heavy dramatist director Sam Mendes was attached to take a stab at it, but he has since dropped out.
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"Hunchback"

In early 2019, a live-action film based on 1996's "The Hunchback of Notre Dame" was announced. Tony-winning playwright David Henry Hwang was tapped to pen the script, with Alan Menken and Stephen Schwartz handling the music.
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"Tinker Bell"

This movie has also been in the works for quite some time, with Reese Witherspoon attached as the cute little fairy from "Peter Pan."
Disney
"Bambi"

In January 2020, Disney hired Geneva Robertson-Dworet (“Captain Marvel") and Lindsey Beer (“Sierra Burgess Is a Loser,”) to write the script for the live-action remake of the 1942 animated classic.
"Oliver Twist"
While Disney never formally made a direct animated take on Charles Dickens' beloved orphan, the studio did release the adorable 1988 "Oliver and Company," inspired by Dickens' tale but told with animals. The studio also made a small-screen live-action version in 1997 with Richard Dreyfuss.
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"Lilo & Stitch"

And another film that is supposed to get the live-action treatment and some point. This project was announced in October 2018 with Mike Van Waes attached to pen the script. Dan Lin and Jonathan Eirich of Rideback are producing.
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The studio is raiding its vault to remake classics including “The Little Mermaid”

Disney will be pumping out live-action versions of its animated classics for a long time to come. Here's a list of titles in the works, including the release date of the original.

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