Monday 18 November 2019

Disney posts record profit but stock falls on revenue worries

Revenue was boosted by the success of ‘Avengers: Age of Ultron’.
Revenue was boosted by the success of ‘Avengers: Age of Ultron’.
Disney chief financial officer Christine McCarthy

Walt Disney lowered profit guidance for its cable networks unit and reported quarterly revenue slightly below Wall Street forecasts, sending its shares down 6pc yesterday.

The media company now expects annual operating income growth at the unit in the mid-single digits for fiscal years 2013 to 2016, chief financial officer Christine McCarthy said on a conference call.

It previously had forecast growth in the high single digits.

The company cut its forecast because it expects lower revenue from a decline in subscribers and the impact of foreign exchange rates, Ms McCarthy said.

Sports network ESPN has experienced "modest" subscriber losses as viewing habits have shifted to digital platforms, Disney chief executive Bob Iger said.

Walt Disney shares dropped 6pc to $114.10 in after-hours trading. The reduced guidance and revenue miss likely sparked the decline, said Edward Jones analyst Robin Diedrich.

"That's where some of the concern lies," Mr Diedrich said of the cable outlook. Overall, the company produced "a good solid quarter".

Disney posted record profit in the June quarter, but its revenue missed Wall Street expectations for the first time in two years. It had net income of $2.48bn, up 11pc from a year earlier, and revenue of $13.1bn, just shy of the $13.23bn projected by industry analysts.

The weaker euro cut revenue at the Disneyland Paris theme park by about $100m, Ms McCarthy said.

Operating profit at theme parks rose 9pc to $922m in the third quarter as attendance and spending rose at US parks.

Operating income at media networks rose 4pc to $2.38bn in the quarter as cable channels brought in higher fees from distributors. The media networks segment includes ESPN, the Disney Channels and ABC broadcast network. Mr Iger said he has "enormous confidence in ESPN's future no matter how technology disrupts the media business".

Disney's movie studio recorded a profit of $472m, up from $411m a year earlier, helped by the success of 'Avengers: Age of Ultron'. The company's overall net income climbed to $2.48bn, or $1.45 per share, from $2.25bn, or $1.28 per share last year.

Revenue rose to $13.10bn from $12.47bn. Analysts on average expected a profit of $1.42 per share on revenue of $13.23bn, Disney's shares had risen 29pc this year, making it the best performer among the 30-member Dow Jones industrial average. (Reuters)

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