LOS ANGELES — Disney reported mixed quarterly results on Tuesday, with per-share profit declining by 17 percent and revenue climbing by 36 percent. Costs associated with building its Disney Plus streaming service occupied much of the gap.
But investors and Disney’s Hollywood competitors were interested in only one number: Disney Plus subscribers. There were 28.6 million as of Monday, the company said, an astounding number for a service that is less than three months old. Robert A. Iger, Disney’s chief executive, told analysts on a conference call that the response to Disney Plus had “exceeded even our greatest expectations.”
Disney unveiled its flagship streaming platform on Nov. 12 amid a thundering marketing campaign and found immediate success with “The Mandalorian,” a live-action “Star Wars” series that introduced a blockbuster character known as Baby Yoda. Within a day of its introduction, Disney Plus had 10 million subscribers, including an unspecified number of accounts for customers who signed up free under a promotion with Verizon, blowing past analysts’ estimates. Disney Plus costs $7 a month for those paying the sticker price.
Average monthly revenue per paid subscriber in the quarter was $5.56. Mr. Iger said popular offerings included the 2016 musical “Moana” and old episodes of “Hannah Montana” and “The Simpsons.” And, of course, “The Mandalorian,” which Mr. Iger said would return for a second season in October.
“It’s often challenging for a company to pivot in a new strategic direction, particularly when it involved navigating between established and emerging business models,” Mr. Iger said. “We have made an extraordinary amount of progress.”
Another focus of the call was the coronavirus outbreak in China, which has sickened more than 20,000 people in the country and killed at least 425. As a result, the Shanghai Disney Resort and Hong Kong Disneyland have been closed for more than a week.
Christine M. McCarthy, Disney’s chief financial officer, told analysts that “the precise magnitude of the financial impact is highly dependent on the duration of the closures and how quickly we can resume normal operations.” She estimated that the closing of the Shanghai Disney Resort could drag down second-quarter operating income by $135 million, “assuming the park is closed for two months.” Hong Kong losses could add up to $145 million over a similar period.
For the most recent quarter, Disney’s theme park division had operating income of $2.3 billion, a 9 percent increase from the same period a year earlier. The results were dented by costs associated with the introduction of new “Star Wars” rides and higher wages for union employees.
Attendance at Disney’s domestic parks increased by 2 percent in the quarter.
Walt Disney Studios delivered $948 million in operating profit, an increase of more than 100 percent from a year earlier. Contributing were “Frozen II,” which has taken in $1.4 billion, and “Star Wars: The Rise of Skywalker,” which has taken in $1.1 billion. Those films, which are still playing, and “Toy Story 4” boosted Disney’s consumer products business by 25 percent, Ms. McCarthy said.
Media Networks, a vast part of Disney that includes ESPN and ABC, reported operating income of about $1.6 billion, a 23 percent increase. Disney credited its recently purchased National Geographic and FX networks for that rise. Profit declined at ESPN because of an increase in programming costs and lower advertising revenue as a result of lower viewership.
Disney’s streaming division, which includes Hulu and the sports-oriented ESPN Plus, posted an operating loss of roughly $693 million, which was not as bad as most analysts had anticipated. (Ms. McCarthy said losses could total $900 million in the current quarter.) Disney said that Hulu had 30.6 million paying subscribers as of Monday, a 33 percent increase from a year ago. ESPN Plus had about 7.6 million, up from 1.4 million.
The successful introduction of Disney Plus in North America has prompted Disney to accelerate the service’s rollout overseas. It will arrive in Britain, France, Germany, Spain, Italy and a handful of other European countries starting on March 24. Disney Plus will become available in India on March 29.
Mr. Iger told analysts that he was pleased with Disney’s ongoing efforts to digest the entertainment assets it bought from Rupert Murdoch last year for $71.3 billion. Those efforts have included dropping the word Fox from the 20th Century Fox and Fox Searchlight movie divisions. (Mr. Murdoch retained ownership of Fox News and the Fox broadcast network.) Emma Watts, the top executive at 20th Century, quit last week. She was primarily responsible for shepherding James Cameron’s four upcoming “Avatar” sequels. Hulu’s chief executive, Randy Freer, also resigned.
Source: Television - nytimes.com
