Here are the key numbers:
- Earnings per share: $1.35 vs. $1.75 per share, according to Refinitiv estimates
- Revenue: $20.25 billion vs. $21.47 billion, per Refinitiv
Disney blamed the earnings miss on the ongoing integration of Fox’s entertainment assets, which it acquired in a $71 billion deal that closed in March.
The company’s Studio Entertainment segment reported revenues of $3.8 billion during the quarter, representing a 33% increase from the same period one year ago.
Disney’s Media Networks unit reported revenue of $6.7 billion, which is a 21% rise from the same quarter one year earlier. The company’s Parks unit posted revenue of $6.6 billion during the quarter, marking a 7% rise from the third quarter of 2018.
The direct-to-consumer segment saw revenue of $3.86 billion during the period, with operating losses increasing to $553 million from $168 million. The company blamed the increased losses on Hulu and increased investments in ESPN+ and Disney+ streaming services.
Disney+ is slated to launch in November at a cost of $6.99 per month, or $69.99 per year. The service will feature content from Disney, Pixar, Marvel, Star Wars, and more.
On the company’s earnings call, Disney CEO Bob Iger said the company will offer U.S. consumers a bundle of Disney+, ESPN+ and an ad-supported Hulu subscription for $12.99 per month, or the same cost as Netflix‘s standard subscription plan. The bundle will launch alongside Disney+ on Nov. 12.
Iger acknowledged on the call that Disney+ won’t have as much content as Netflix, but he believes the strength of the Disney, Marvel and Star Wars brands should help the streaming service lure consumers.
Disney+ will launch in two international markets when the service arrives in November, Iger said. The streaming service will expand to additional markets over the next two to three years, he added.
The company also said on the call that it expects direct-to-consumer losses to rise to $900 million in the fiscal fourth quarter, as it continues to invest in content for Disney+.
Iger said Disney hopes to re-imagine popular Fox titles like “Home Alone,” “Night at the Museum,” “Cheaper by the Dozen” and “Diary of a Whimpy Kid” on Disney+.
Cable Networks revenues jumped 24% year-over-year to $4.5 billion during the quarter, while operating income increased 15% to $1.6 billion. The company said the higher operating income was due to the consolidation of Fox’s FX and National Geographic networks, as well as higher advertising revenues at ESPN, driven by two additional NBA finals games. It also noted an increase in programming and production costs, as a result of contractual rate increases for MLB and NBA programming and new rights for boxing and mixed martial arts.
Last month, Disney’s “Avengers: Endgame” became the highest-grossing film of all time, raking in $2.79 billion at the global box office and surpassing previous chart-topper “Avatar’s” record. The success of “Endgame,” as well as other titles like “Captain Marvel,” “The Lion King,” “Toy Story 4” and “Aladdin,” could help Disney earn more than $9 billion at the global box office this year.