Disney misses revenue expectation

Disney posted a 5% increase in revenue for the three months to 27 June - but missed expectations for the first time in eight quarters, BBC News reported

Analysts expected the entertainment group's revenues to be $13.2bn (£8.5bn), but the total was $100m less.

Operating income fell at Disney's theme parks and resorts outside North America due to higher operating costs at Disneyland in both Paris and Hong Kong.

The Asian park also had fewer visitors in the period.

Operating profit at its theme parks rose 9% to $922m, with a 4% increase in revenue to $4.1bn.

Profits at the company's largest unit, media networks, was up 4% to $2.38bn as cable channels brought in higher fees from TV distributors.

The division includes sports channel ESPN, the Disney channels and the ABC broadcast network.

Bob Iger, chairman and chief executive, said the company was very pleased with the third quarter results. Overall, net profit rose 11% to a record $2.48bn.

"The strong results across our many diverse lines of business demonstrate the power of our unparalleled brands, franchises and creative content," he said.

Profits at Disney's movie studio business jumped 15% to $472m, helped by the success of Avengers: Age of Ultron, starring Scarlett Johansson and Robert Downey Jr.


The Marvel film has taken more than $450m in the US and $940m in foreign markets.

Disney bought the studio in 2009 for what is now thought to have been a bargain $4bn.

The company's consumer products division recorded the biggest rise in profits for the quarter - up 27% to $348m - as merchandise based on Frozen, the Avengers and Star Wars continued to prove popular.

Shares in Disney fell 6.5% to $113.85 in after-hours trading on Tuesday. The stock has risen 29% this year, making it the best performer among the 30-member Dow Jones average.

The slide accelerated after chief financial officer Christine McCarthy told analysts on a conference call that Disney had scaled back forecasts for profit growth at its media networks unit.

She said the company now expected annual growth in the mid-single digits, rather than high single digits, because of lower revenue from fewer cable subscribers and the impact of foreign exchange rates.

ESPN had suffered "modest" subscriber losses as some viewers switch to digital platforms, Mr Iger said.
Robin Diedrich, an analyst at Edward Jones, said the lowered guidance for the TV unit and the overall revenue miss sparked the share price fall.

However, he said that overall Disney had "a good solid quarter".