Walt Disney Co (NYSE: DIS), regularly outpacing profit forecast and being the investors’ favorite, has not met expectations on Tuesday due to the reduction in revenue from advertising and subscriptions to ESPN sports channel, as well as weaker-than-expected proceeds from the theme parks.
Disney and other media companies have suffered due to the fact that young viewers switch to streaming services from cable and satellite TV channels. The investors are particularly waiting how this storm will affect ESPN, one of the strongest brands of cable TV.
Disney profit, except for certain balance sheet items, was $ 1.36 a share, short of the average forecast of $ 1.40 per share. Revenue increased to $ 12.97 billion from $ 12.46 billion, below the target level of Wall Street at $ 13.19 billion, according to Reuters data.
In the quarter ended on April 2, there were recorded revenues below forecasts on the part of networks divisions, theme parks and consumer products, according to FactSet StreetAccount.
The revenue of cable division fell 1.86 % to $ 3.96 billion.
The operating margin increased by 12.34 %, mainly due to lower costs of programming and an increase of payments from the distributors of pay-TV.
The number of subscriptions on ESPN declined, revenue from advertising also fell.
The studio's revenue in the quarter rose 22 % to $ 2.1 billion due to the box office success of the film "Star Wars: The Force Awakens" and cartoon "Zootopia", which brought nearly $ 1 billion in worldwide box office.
The revenue of theme parks division has increased by 4.5 % to $ 3.9 billion. The visits were "weaker than expected, which was a big surprise for investors," said Richard Greenfield, an analyst at BTIG.
The company's net income rose to $ 2.14 billion, or $ 1.30 per share, in the second quarter, compared with $ 2.11 billion, or $ 1.23 per share, a year earlier.