Disney beats on earnings, misses on revenue
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Disney beats on earnings, misses on revenue

The Walt Disney Company reported second quarter earnings for 2017 on Tuesday, demonstrating a solid business weathering the oft-talked about storm of cord-cutting. Disney reported a revenue increase of 3% from the year-ago quarter to $13.34 billion, against analysts’ expectations of $13.44 billion. Meanwhile, net income increased by 11% over the same period, resulting in diluted earnings per share of $1.50 – a beat of the consensus estimates of $1.41.

ESPN represents a big chunk of Disney’s business, and it’s one that analysts are worried about: with the rise of cord-cutting, as streaming video on demand (SVOD) providers move into the world of premium content creation, subscription TV services are under threat. However, Disney’s second quarter earnings demonstrated that the business isn’t failing yet. Its Media Networks (which includes ESPN) saw revenue increase by 3% against the previous year, even as operating income fell by 3%. Amongst the reasons for this drop in income are higher programming costs at ESPN.

If Disney’s Media Networks segment is closely watched for signs of weakness, its remaining three businesses – parks and resorts, studios, and merchandising – are consistently strong. This was reiterated in the last quarter, and Disney’s overall revenue rose by 3% from the second quarter of 2016, while its operating income was up 5% in the same time frame.

On the company’s earnings call, Disney’s CEO Bob Iger talked the quarter up, saying:

“We're extremely pleased with our results in Q2, and our continued strong performance both creatively and financially reflects what a profoundly productive and exciting era this is for the Walt Disney Company. And that's a direct result of our long-term strategic focus on creating the most compelling branded content, fully leveraging innovative technology and expanding our global presence.”

Disclosure

Dominion holds The Walt Disney Company in its Global Trends Luxury Fund.


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