Disney Profits Jump Because of Tax Benefit
The Walt Disney Co. reported higher profits because of benefit from the recently passed corporate tax law, but income was down at ESPN and Hulu suffered bigger losses.
For the company's first fiscal quarter, net income jumped 78% to $4.4 billion, or $2.91 per share, from $2.5 billion, or $1.55 a share a year ago.
Disney got a $1.6 billion benefit from the passage of last year’s tax act. Without that benefit, segment operating income was up 1% and earnings per share rose 22%.
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Revenues rose 4% to $15.4 billion.
“The strategic investments we’ve made have driven meaningful growth over the long term, and we remain confident in our ability to continue to deliver significant shareholder value,” said CEO Bob Iger. “We’re excited about what lies ahead, with a robust film slate, the launch of our ESPN direct-to-consumer business, new investments in our theme parks, and our pending acquisition of 21st Century Fox.”
Disney’s media network group’s operating income fell 12% to $1.19 billion on flat revenue at $6.24 billion.
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Operating income from media businesses Disney has equity in fell 58% to $50 million because of growing losses from Hulu and lower results from A+E Networks, including lower ad sales.
Hulu’s loss was caused by higher programming and labor costs, partly offset by subscription and advertising revenue growth.
Cable network operating income was down 1% to $858 million as revenue rose 1% to $4.49 billion.
The company said BAMtech, part of the cable network group, had an operating loss. Disney now owns a controlling interest in BAMtech; previously its losses were recorded as part of the equity group.
ESPN’s operating income was down because of an 11% drop in ad revenue, partially offset by higher affiliate revenue and lower programming costs. Ad revenues were down partly because of one fewer big college football bowl game due to a shift in the schedule. Excluding the effects of the college football schedule shift, Disney estimates as revenue was down 7%. So far in the January quarter, ad sales were on a comparable pace to last year.
Income was higher at Disney Channels and Freeform, which recorded higher ad and program sale revenue.
Broadcast operating income was down 25% to $258 million as revenue dropped 3% to $1.75 billion. Advertising revenue was lower, despite an increase in ad units delivered. There was also a production writedown.
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.