Disney (DIS) Q4 Earnings Miss; Stock Up On Optimistic View
Zacks Investment Research | Nov 10, 2016 08:28PM ET
Media behemoth – The Walt Disney Company (NYSE:DIS) – reported weaker-than-expected earnings and revenues in fourth-quarter fiscal 2016 after beating estimates in the previous quarter. The company’s earnings in the reported quarter came in at $1.10 per share, missing the Zacks Consensus Estimate of $1.15 and declining 8.3% year over year.
Revenues declined 3% year over year to $13,142 million and missed the Zacks Consensus Estimate of $13,469 million. The results in the quarter were negatively affected by dismal performance of Media Networks and Consumer Products as well as Interactive Media.
Despite dismal quarterly performance, the company’s shares increased 2.5% in after-hour trading session on Nov 10, following Chief Executive Robert Iger’s optimistic view on the company’s future. He is bullish on ESPN’s future, which has come under a lot of pressure as the Pay TV landscape continues to alter owing to the migration of subscribers to online TV. Further, it anticipates reporting modest earnings growth in fiscal 2017 but a "more robust growth" in fiscal 2018.
The company has an impressive lineup of movies in fiscal 2018. The company is expected to release four new Marvel movies, two Star Wars movies, which includes Episode VIII and three animated films from Pixar and Disney Animation. Moreover, the success of its movies will mean great business for its Consumer Products division as demand for merchandise associated with successful movies usually skyrockets.
Falling subscriber base and higher programming costs of these businesses have been worrying investors for quite some time now. Subscribers of ESPN declined in the reported quarter too. Most of the media companies are failing to cope with "cord cutting" as consumers do not want to pay for large bundles of channels. Disney is striving to bring back ESPN’s golden days. In an effort to attract online viewers, it has inked a deal with video streaming, data analytics as well as commerce management company BAMTech. Addititionally, it has the option to acquire the majority of the stake in BAMTech in the future. Disney intends to come up with a fresh “direct-to-consumer ESPN-branded, multi-sports subscription streaming service.”
Coming back to the results, the company’s total operating income came in at $3,176 million during the quarter, down 10% year over year. The downside was primarily due to 8% and 28% fall in operating income at Media Networks and Studio Entertainment, respectively.
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