UPDATE 3-Disney parks, films outperform as streaming costs stay under budget
Walt Disney+ Co's theme parks and a remake of "The Lion King" boosted quarterly earnings past Wall Street targets on Thursday as costs came in lower than expected for its big plunge into streaming entertainment. Shares of Disney+ rose more than 5% to $140.77 in after-hours trading.
Disney is trying to transition from a cable TV leader to a powerhouse in the streaming video market dominated by Netflix Inc. Its family-friendly digital entertainment service, Disney+, is set to debut on Tuesday. Subscribers can access the programming through Apple Inc, Alphabet Inc's Google, Microsoft Corp, Sony Corp and Roku Inc . Disney+ will launch in western Europe, including the United Kingdom, on March 31.
Excluding certain items, Disney+ earned $1.07 per share for the quarter that ended in September, above average analyst estimates of 95 cents per share, according to IBES data from Refinitiv. Disney+ Chief Executive Bob Iger said the company had reached a deal to have Disney+ distributed on Amazon.com Inc's Fire TV devices as well as Samsung Electronics Co Ltd and LG Electronics Inc devices.
Investments to build streaming media services increased form a year earlier. The direct-to-consumer and international unit reported an operating loss of $740 million from July through September, up from $340 million the previous year, but less than the $900 million that Disney+ had forecast. Disney+ will offer a deep library of TV shows and movies from Disney+, Pixar Animation, Marvel Studios, the "Star Wars" franchise and the National Geographic Channel, plus original programming such as a new "High School Musical" series and a remake of "Lady and the Tramp." It will cost $7 per month, less than the $13 for Netflix's most popular plan.
The offering is a cornerstone of a major shift in Disney's strategy to capture audiences that have ditched cable and migrated online. The company also offers ESPN+, which streams sports not seen on the ESPN cable channel, and recently took full control of online video service Hulu. Hulu will become the official streaming home for Disney's FX Networks starting in March, the company said.
At the same time, Disney+ is integrating film and TV businesses it purchased from 21st Century Fox to feed its digital ambition. At the theme parks and consumer products unit, operating income rose 17% to $1.4 billion. Disney+ opened a costly "Star Wars"-themed land at Walt Disney+ World in Florida during the quarter. A nearly identical section debuted at Disneyland in California in May.
The movie studio benefited from remakes of "The Lion King" and "Aladdin" plus Pixar sequel "Toy Story 4." Profit at the division jumped 79% to nearly $1.1 billion. The company's media networks division posted a 3% decrease in operating income to $1.8 billion, Disney+ said. Sports network ESPN experienced higher programming, production and marketing costs and now has 3.5 million subscribers.
Overall revenue rose 34% to $19.10 billion, edging past analysts' average estimate of $19.05 billion.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)