The Walt Disney Company (NYSE: DIS) reported its third quarter financial results after the closing bell on Tuesday. Disney missed analysts’ estimates for both revenue and earnings, causing shares to fall by 5% during Wednesday’s pre-market hours.
For the third quarter, Disney reported earnings of USD 1.35 per share on revenue of USD 20.25 Billion. Refinitiv analysts expected earnings of USD 1.75 per share on revenue of USD 21.47 Billion.
Disney mentioned that its weaker-than-expected quarter was primarily because of its effort to integrate 21st Century Fox assets into its transformation.
Despite the revenue miss, Disney reported a 33% growth in revenue year-over-year. Media networks reported revenues of USD 6.7 Billion, increasing by 21% year-over-year. Parks, Experiences, and Products revenue rose by 7% to USD 6.57 Billion. Studio Entertainment revenue witnessed a 33% growth, reaching USD 3.83 Billion. Meanwhile, Direct-to-Consumer and International revenue surged from USD 827 Million the same quarter last year to USD 3.85 Billion.
Disney’s Media Network segment saw an increase in both its Cable Network and Broadcasting units. Cable Network revenues increased by 24% to USD 4.46 Billion, while Broadcasting revenue rose by 16% to USD 2.24 Billion. The higher revenue and operating income was primarily driven by the consolidation of 21st Century Fox’s businesses units, mainly from FX and National Geographic. Additionally, ESPN revenues contributed to the segment’s growth.
Disney’s Parks, Experiences, and Products segment was driven by its consumer product business and Disneyland Paris, but was partially offset by decreases at its domestic parks and resorts.
Direct-to-Consumer revenue reported operating losses of USD 553 Million, increasing from USD 168 Million. Disney mainly blamed the increased losses on Hulu and increased investments in ESPN+ and Disney+ streaming services.
Disney+ is expected to launch in November this year at a cost of USD 6.99 per month and will feature services such as Disney, Pixar, Marvel and Star Wars.
Aside from Disney’s streaming services and network studios, the Company is expected to report USD 9 Billion in box office revenues, primarily driven by “Avengers: Endgame.” Endgame grossed USD 2.79 Billion at the box offices, topping the previous record of “Avatar.”
Despite the decline on Wednesday, Disney shares are still up 29.38% this year.