Disney Earnings Flat as Film Studio Weighs Down ESPN, Theme Parks
Disney reported little change in its third quarter earnings, as the strong performance of ESPN and the company's theme parks division were stymied by the weaker performance of the company's film studio.
Disney reported quarterly revenue of $11.58 billion, a slight increase from a year ago but below what analysts projected, and earnings per share of $1.01, flat from a year ago and precisely what analysts expected.
The Media Networks Division (ESPN, A&E, Disney channel) and theme parks remained the primary drivers of growth, as they contributed more than 75 percent of both revenue and profits. Theme parks in particular exhibited growth, as revenue rose 7 percent to $3.68 billion and net income rose 9 percent ot $689 million.
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Yet the film studio stunted the company's growth, as it reported a two percent drop in revenue and a 36 percent drop in profits. Last year, Disney was reaping the rewards of "The Avengers," one of the most successful films in film history.
Disney released two massive hits in the quarter -- "Iron Man 3" and "Monsters University" -- but its numbers also suffered due to marketing costs for "The Lone Ranger," one of the summer's bigger flops. "The Lone Ranger" has grossed just $175.5 million at the global box office, a pittance for a movie that cost more than $200 million to produce – and millions more to market.
Analysts have projected Disney will take a write-down of at least $100 million because of the film, but its full cost of that film did not count against Disney this quarter, and the company did not take a write-down -- yet.
"We are pleased with the results we delivered in the third quarter," Bob Iger, Chairman and CEO of The Walt Disney Company, said in a statement. "We are confident that our strategy of creating high-quality branded content positions us well for the future."
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