Disney Earnings Get Quick Boost From Adding Fox Units

Operating income down at media unit, DTC loss doubles
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The Walt Disney Co. reported higher profits in its second quarter as it added assets from 21st Century Fox.

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Net income rose to $5.5 billion, or $3.55 a share, from $2.9 billion or $1.95 a share, a year ago.

Excluding items affecting comparability, most prominently a $4.9 billion gain in connection with the acquisition of controlling interest in Hulu, earnings per share dropped 13% to $1.61 a share from $1.84 cents a share.

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Losses doubled at Disney’s Direct-to-Consumer segment.

Revenues rose 3% to $14.9 million.

21st Century Fox generated $25 million in operating income during the 11 days Disney owned it during the quarter. It produced revenue of $373 million during that same period.

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“We’re very pleased with our Q2 results and thrilled with the record-breaking success of Avengers: Endgame, which is now the second-highest grossing film of all time and will stream exclusively on Disney+ starting December 11th,” said CEO Bob Iger. “The positive response to our direct-to-consumer strategy has been gratifying, and the integration of the businesses we acquired from 21st Century Fox only increases our confidence in our ability to leverage decades of iconic storytelling and the powerful creative engines across the entire company to deliver an extraordinary value proposition to consumers.”

Operating income at Disney’s media networks was down 3% to $2.185 billion on $5.5 billion in revenue, little changed from a year ago.

Operating income for Disney’s cable networks was up 2% to $1.8 billion on a 2% gain in revenue to $3.7 billion. ESPN had higher operating income because of higher affiliate revenue, partly offset by higher programming and production costs and lower ad revenue. Ad revenue was affected by a shift in College Football Playoff games.

Broadcast operating income was down 29% to $247 million as revenue fell 2%. Programming costs were up and advertising revenue was down 3%

Disney’s Direct-to-Consumer & International division more than doubled its operating loss to $393 million, with revenue growing 15% to $955 million. The bigger loss was the result of ongoing investment in ESPN+, costs associated with the upcoming launch of Disney+ and losses from the consolidation of Hulu. 

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