Disney shares edge larger after earnings prime expectations

Disney shares edge larger after earnings prime expectations

Troy Powers
February 9, 2018

Shares of Disney rose 2.7 percent in after-hours trading to $108.99.

Disney's Studio Entertainment revenue for the quarter was flat at US$2.5 billion. For the full year, consensus estimates call for EPS of $6.54 and revenues of $58.58 billion.

ESPN has faced declining subscriber numbers and ad revenue.

Profit at the media networks division fell 12 percent, mostly due to a decline at ABC, which saw lower advertising revenue and income from program sales, plus higher production cost write-downs.

ESPN Plus will be powered by BamTech, the US-based and Disney-owned streaming media company that recently opened a major new European headquarters in Amsterdam.

In conjunction with the company's earnings release today, Disney chairman and CEO Bob Iger announced that ESPN's upcoming streaming service will cost $4.99 per month.

Higher losses from streaming service Hulu, in which Disney will become a majority stakeholder pending the close of its Fox acquisition, were partially attributed to an equity decrease in investee income from US$119 million in the prior-year quarter to US$50 million.

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According to Iger, the new redesigned ESPN app will feature "countless scores and highlights, as well as podcasts and other sports information". Within the same app, consumers would need to be pay TV subscribers to access ESPN television networks on an authenticated basis.

Disney wants even more control over its content, including ESPN.

I, like many other comic book/Marvel fans hope the deal goes through and Disney is able to bring home The X-Men along with The Fantastic Four and Deadpool.

Iger's overriding theme was that the future is all about Disney's direct-to-consumer products, and creating content on the film and TV side to feed those channels.

The fact that ESPN Plus doesn't provide access to the media company's main sports channels is a huge miss - at least until ESPN can prove that the "incremental live programming" will actually be good enough for people to shell out an extra $4.99 per month. All of this extra live action will be events that won't appear on ESPN's linear networks.

It will also include a full library of ESPN Films, for the example 30 for 30 documentary series, with a "robust slate" of original content exclusively for this platform also in the works.

Yet, the show-stealer of the evening from the analyst's perspective points to a revealed ESPN Plus- the company's first $4.99 per month direct to consumer offering.