Net earnings at $2.14 billion were up 1.7% vs the first three months of 2015 on revenues of $12.97 billion, up 4.1%. The top line missed expectations for $13.19 billion. Adjusted earnings at $1.36 a share were about 4 cents short of Wall Street’s forecasts.
CEO Bob Iger says he’s “very pleased with our overall results.” In a quarter with hits including Zootopia, the studio’s on an “unprecedented winning streak at the box office.” And he’s “thrilled” by the studio’s strong slate and the June 16 opening of the Shanghai Disney Resort.
The company earnings release says in a footnote that Disney took a $147 million charge as it scrapped its self-published console games business, which mostly consists of the Disney Infinity line of toys and games.
At the Cable Networks, which include ESPN, revenues fell 2% to $3.96 billion while operating income rose 12% to $2.02 billion. The sports network benefited from lower programming costs and rising payments from distributors. But the number of subscribers fell, as did ad sales — driven partly by the fact that ESPN just aired one College Football Playoff game compared with seven games in the period last year.
Disney also saw declining equity income from A&E which it attributes to a drop in ad revenue, rising programming costs, and costs to convert H2 to Viceland.
The Broadcasting unit, with ABC, revenues increased 3% to $1.84 billion with operating income down 8% to $278 million. Last year’s numbers included “a significant SVOD sale” while this year included higher average costs for scripted programming as well as some write-offs.
The Studio Entertainment operation told a cheerier story with revenues up 22% to $2.06 billion and operating income up 27% to $542 million. Star Wars: The Force Awakens and Zootopia led the way for theatrical. But home entertainment was down as The Good Dinosaur, Inside Out and Ant-Man couldn’t match last year’s Big Hero 6, Frozen, and Guardians Of The Galaxy.
Results at Parks and Resorts were up, but not as much as the Street expected. Revenues were up 4% to $3.93 billion with operating income up 10% to $624 million. Attendance at the domestic parks was flat. Although guests throughout the global enterprise spent more than they did last year, due in part to rising ticket prices, costs also rose.
Consumer Products and Interactive Media results were surprisingly soft with revenues down 2% to $1.19 billion and operating income dropping 8% to $357 million. Disney says that it was helped by sales of merchandise tied to Star Wars. Even so, the company was hurt by “the timing of minimum guarantee shortfall recognition” as well as the loss of sales from Frozen-related goods, which helped last year.