Disney Smashes Earnings Expectations Ahead of Fox Acquisition

Company easily surpasses Wall Street predictions on earnings and revenue

Last Updated: November 8, 2018 @ 1:28 PM

In what is likely to be its last earnings report before it completes its acquisition of 21st Century Fox’s film and TV assets, The Walt Disney Company comfortably beat its fourth-quarter earnings expectations on Thursday.

After the bell, the entertainment giant posted revenue of $14.31 billion and earnings of $1.48 a share for the three months that ended Sept. 30. That compares with $12.78 billion and earnings of $1.07 cents a share for the same time period in 2017. On average, analysts anticipated Disney would report $13.72 billion in sales and earnings of $1.33 cents a share.

“We’re very pleased with our financial performance in fiscal 2018, delivering record revenue, net income and earnings per share,” said Bob Iger, Disney’s chairman and CEO. “We remain focused on the successful completion and integration of our 21st Century Fox acquisition and the further development of our direct-to-consumer business, including the highly anticipated launch of our Disney-branded streaming service late next year.”

Media networks revenues for the quarter increased 9 percent to $6.0 billion. Cable networks revenues for the quarter increased 5 percent to $4.1 billion, but operating income decreased $77 million to $1.2 billion. Lower operating income was due to the consolidation of BAMTech, partially offset by increases at the Disney Channels and Freeform. Broadcasting revenues for the quarter increased 21 percent to $1.8 billion and operating income increased from $150 million to $379 million. The increase in operating income was due to higher program sales and affiliate revenue growth driven by contractual rate increases.

Studio entertainment revenues for the quarter increased 50 percent to $2.2 billion. The increase theatrical distribution revenues was due to the performance of “Incredibles 2” and “Ant-Man and the Wasp,” compared to the same quarter in 2017, which only had “Cars 3.”

Parks and resorts revenues for the quarter increased 9 percent to $5.1 billion, and segment operating income increased 11 percent to $829 million. Domestic results reflected the comparison to the adverse impact of Hurricane Irma, which occurred in the prior-year quarter.

For the full fiscal year, Disney reported $59.4 billion in revenue, which was above analysts’ expected $58.85 billion.

Disney is expected to finalize its acquisition of Fox assets in the early part of 2019, which include 20th Century Fox film and TV studios, cable networks FX, FXX and Nat Geo, and Fox’s stake in streaming service Hulu. In the fourth quarter of next year, Disney will launch its own streaming offering.

Disney’s stock price was up as much as 2 percent in after-hours trading, currently at $117.86 per share at 4:15 p.m. ET.

Disney will discuss the earnings on a conference call at 4:30 p.m. ET.