The Walt Disney Co. reported revenue of $14.28 billion in the quarter ending July 2, paced by a 40% jump in studio revenue on continued strength in family animation (Finding Dory, Zootopia) and live-action hits (Captain America: Civil War). Operating income gained 8% to $4.46 billion.
The company also announced a groundbreaking plan for taking its ESPN crown jewel over-the-top via a $1 billion investment in BAMtech, the video streaming unit of Major League Baseball. Disney will have the option to take majority control of the entity in the coming years.
Cable and broadcast networks held fairly steady in the quarter and while the company did not report alarming signs of subscriber losses as in past quarters, there was some erosion. Revenue in the networks unit inched up 2% to $5.9 billion (a bit below Wall Street's consensus forecast for $6 billion) while operating income was flat at $2.37 billion.
ESPN lost subscribers but also gained higher subscription fees in the period, while the company took a hit for the cost of launch of Viceland (via co-owned A+E Networks) and lower ad sales at Disney Channel and Freeform.
Broadcast revenue rose 5% to $1.7 billion, while operating income dipped 6% to $282 million due to lower ad revenues and ratings at ABC, higher equity losses from Hulu (whose programming and marketing costs are on the rise) and increased writedowns for network programming. Pluses for broadcast included affiliate revenue growth and higher operating income from program sales plus a hefty price fetched from Netflix for rights to How to Get Away with Murder.
Iger said there were no new developments on the company's succession plan, which has been a focus of shareholder scrutiny since anointed CEO-in-waiting Tom Staggs was forced out of Disney last spring.
The company's board and succession committee are on the case, Iger said. "We are all confident that it will result in a good decision."
Disney shares closed the Tuesday session at $96.67, up 1%, before falling again in after-hours trading due in part to the media networks earnings miss.
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