Disney (NYSE: DIS) released its best quarterly earnings report ever on Tuesday, driven by the success of “Star Wars.” But investors still have concerns on the declining profits at ESPN sports cable network.
The company posted a record quarterly earnings of $2.9 billion, compared to $2.2 billion a year ago. Excluding certain items, earning per share for the quarter rose 28% to $1.63, beating the analysts’ estimate of $1.45 per share. Revenue rose 14 percent to $15.2 billion in the first quarter, compared with analysts’ estimate of $14.7 billion.
The record number thanks to the success of “Star Wars: The Force Awakens.” The film was the first ever to cross $900 million in ticket sales domestically, beating Avatar. The movie also helped boost the film studio and consumer-products business. It brought $2 billion at the box office and $3 billion in merchandise sales, such as Star Wars toys and games.
“Driven by the phenomenal success of Star Wars, we delivered the highest quarterly earnings in the history of our company,” said Bob Iger, the chairman and chief executive officer of Disney. “We’re very pleased with our results, which continue to validate our strategic focus and investments in brands and franchises.”
However, Disney is still struggling in its cable networks. ESPN, Disney’s biggest profit contributor, still lost subscribers in the first quarter while the programming costs rose. The increasing cost is due to the costly deals for sports such as NFL and college football games. Operating income for Disney’s television business fell 6% in the quarter to $1.41 billion.
“The notion that the [cable] bundle is experiencing its demise or that ESPN is cratering in any way from a subscriber perspective is just ridiculous,” Mr. Iger said. “We feel great about the product and we believe the predictions many have made are more dire than they should be.”
Disney shares slumped 4.63% to $88.09 at 12:20 p.m. in New York. The shares had already fallen 12 percent this year.