Shares in Disney were up 1.8% in after-hours trading after investors liked what they heard at the iconic company's Q1 earnings call.

By Daniel Herborn


Posted on February 6, 2019

Analysts had pegged the adjusted earnings per share at US$1.55 but Disney announced it at US$1.84. Per financial data provider Refinitiv, revenue was expected to be around $US15.14 billion but it outperformed expectations and was announced at US$15.3 billion.

The strong results were driven by its thriving theme park arm and sales increases across its various media networks, most notably ESPN, ABC and the Disney channels. It has also seen healthy subscriber growth for its ESPN+ streaming service, which was only launched in April. It offers live Major League baseball, UFC, NCAA football and basketball and tennis, among other live sports and original programming. It now has more than 2 million paid subscribers.

Growth in these areas offset declining revenue from its film studios.

Disney’s own streaming service will be a major focus for the company in 2019

This year, the company will launch its Disney+ streaming service and Iger suggested that it could be bundled with ESPN+.

Disney has been pivoting towards digital entertainment in recent years and is increasingly in competition with Netflix and direct to consumer video outlets. It has already started withdrawing its content for Netflix in preparation for having its own platform. It also completed a restructuring last year in order to better organise its divisions for a future based in streaming.

CEO Bob Iger confirmed the entertainment giant would continue moving in this direction. “Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space,” he said.

“This is a bet on the future of this business,” Iger said, before predicting that the streaming service “will become an important part of Disney’s bottom line” in the long-term.

The new direction is expected to lead in a short-term loss in operating income. On the earnings call, Disney CFO Christine McCarthy said the company anticipates that licensing revenue will be down US$150 million downturn year-over-year as it increasingly keeps its content for its own platforms rather than licensing it to others.

Disney’s acquisition of 21st Century Fox assets will be completed this year

One major narrative at Disney this year will be how it incorporates assets from its massive acquisition of a suite of 21st Century Fox businesses. That landscape-changing deal is expected to be completed by June 2019.

Disney originally announced it was acquiring a number of 21st Century Fox assets back in December 2017. These assets included the 20th Century Fox film and Tv studios, Fox Television Group and a number of international networks. A number of other businesses were slated to spin-off from 21st Century Fox to Fox Corporation.

Comcast then entered the fray and engaged in a bidding war with Disney, eventually won by the latter, who agreed to pay US$71.3 billion for the group of assets.