Walt Disney Co- executives promised earnings growth for the next two years, easing investor concerns over a quarterly drop in ad sales and subscribers at its ESPN sports network, sending the media company’s shares up in after-hours trading. Executives said they expected modest earnings per share growth in fiscal 2017 and “more robust growth” in fiscal 2018 and beyond, as ESPN attracts more online viewers, the new Shanghai theme park lures visitors and the movie studio releases more “Star Wars” installments and other films.
Watch What Else Is Making News
The company’s stock rose 2.7 percent to $97.25 after hours.
Disney and media rivals face challenges from “cord cutters” who are dropping TV subscriptions for cheaper and more convenient online services, and the issue is especially important for ESPN, one of Disney’s most important brands.
- Here’s Why Delhi-NCR Gets Pollution Code On Lines Of Beijing
- PM Modi Is More Interested In TRP Politics Rahul Gandhi At Congress Parliamentary Meet
- Bigg Boss 10 December 1 Review: Priyanka Jagga Succeeds In Her Divide And Rule Strategy
- Kahaani 2 Audience Reaction: Vidya Balan Starrer Thriller Gets Mixed Reviews
- Find Out What PM Modi Said About Demonetisation On LinkedIn
- Row Over West Bengal ”Military Coup” Issue Escalates: Who Said What
- Here’s How Mohammad Kaif Replied To Virender Sehwag’s Birthday Wish On Twitter
- West Bengal CM Mamata Banerjee’s Flight Reportedly Had Low Fuel: Here’s What Happened
- Reliance Jio Welcome Offer Extended Till March 31, JioMoney Launched
- Uri Attackers Came From Pakistan, Establishes Digital Data
- Bigg Boss 10 Nov 30 Episode Review: Captaincy Brings Differences In Manoj Punjabi & Manveer Gurjar
- Congress Vice President Rahul Gandhi’s Official Twitter Handle Hacked
- After Rahul Gandhi’s Twitter Handle, Congress Official Twitter Account Hacked
- 3 Dead As Army Helicopter Crashes In Sukna In West Bengal
- BJP, Congress Engage In War Of Words Over Nagrota Attack: Find Out More
Excluding items, the company earned $1.10 per share in the latest quarter, missing the $1.16 consensus forecast of analysts polled by Thomson Reuters I/B/E/S.
Shares dropped immediately after the report, but revived after executives’ comments on growth in a call to analysts. “We are extremely confident that we’ll continue to deliver significant long-term growth,” Chief Executive Bob Iger said.
The future of ESPN has been in focus since August 2015 when Iger acknowledged “modest” subscriber losses at the sports network.
On Thursday, Iger said the company had taken “a more bullish position on the future of ESPN’s (subscriber) base.”
“To some extent, the causes of those losses have abated, notably the migration to smaller packages” that do not include ESPN, Iger said. New digital services “are going to offer ESPN opportunities they haven’t had to reach more people,” he said.
The strength of ESPN has been a concern on Wall Street, said BTIG analyst Richard Greenfield.
“There is nothing in the release that changes investor views that ESPN is the struggling division,” Greenfield said. The company has been investing in share buybacks rather than addressing the problem at ESPN, he added.
Disney expects to repurchase between $7 billion and $8 billion worth of shares in fiscal 2017, Chief Financial Officer Christine McCarthy said.
Asked about the impact of the election of Donald Trump as U.S. president, Iger said it was possible it could speed up work in Washington to lower the corporate tax rate, which Disney has advocated.
For the September quarter, revenue in Disney’s cable networks business, which includes ESPN and the youth-focused Disney Channel, fell 6.8 percent to $3.96 billion in the fiscal fourth quarter. Analysts were expecting $4.13 billion, according to FactSet StreetAccount.
Nielsen data estimated that ESPN lost 621,000 subscribers in November – a figure Disney has contested.
Disney’s movie business generated revenue of $1.81 billion in the quarter, up 1.57 percent, missing the average FactSet estimate of $1.84 billion. New releases including “Pete’s Dragon” could not match last year’s success with “Inside Out,” “Ant-Man” and “Avengers: Age of Ultron.”
Revenue from Disney’s theme parks, resorts and cruise line business rose 0.6 percent to $4.39 billion. Four million people visited the new Shanghai Disneyland in the first four months, executives said. Operations should be “very close to breakeven” in fiscal 2017, McCarthy said.
Attendance declined at Disney’s parks in Paris, Hong Kong and California during the September quarter, the company said.
Net income attributable to the company, which also owns the ABC TV network, rose to $1.77 billion, or $1.10 per share, in the fiscal fourth quarter ended Oct. 1, from $1.61 billion, or 95 cents per share, a year earlier.
Disney’s revenue fell to $13.14 billion from $13.51 billion.