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Disney makes direct-to-consumer biz top priority after strong Q1 earnings

Disney's sports streaming service ESPN+ now has 2 million paid subscribers

MUMBAI: The Walt Disney Company (Disney) started the financial year 2019 on a strong note by smashing Wall Street expectations. Sales increases in media networks and theme parks businesses helped the giant media conglomerate to post total revenue of $15.30 billion. However, the revenue came in slightly lower than the first quarter of 2018.

In its first quarter earnings report, Disney reported $1.86 EPS against a consensus estimate of $1.55. Total revenue of $15.3 billion also beat consensus estimates of $15.18 billion. Media Networks revenues for the quarter increased 7 per cent to $5.9 billion and segment operating income rose 7 per cent to $1.3 billion.

“After a solid first quarter, with diluted EPS of $1.86, we look forward to the transformative year ahead, including the successful completion of our 21st Century Fox acquisition and the launch of our Disney+ streaming service,” Disney chairman and CEO Robert A Iger said.

At a time when Netflix and Amazon are getting more aggressive in the entertainment sector, Iger went to state that direct-to-consumer business is the top priority for his company. Interestingly, he also mentioned in a post-earnings call that its sports streaming service ESPN+ has doubled paid subscribers in the past five months reaching 2 million in total.

However, Direct-to-Consumer & International revenues for the quarter decreased 1 per cent to $918 million and segment operating loss increased from $42 million to $136 million.

“The increase in operating loss was due to the investment ramp-up in ESPN+, which was launched in April 2018, a loss from streaming technology services and costs associated with the upcoming launch of Disney+, partially offset by an increase at our international channels and a lower equity loss from our investment in Hulu,” the company said.

Notably, this earnings report could be the last full quarter of results before Disney closes its acquisition of most of 21st Century Fox. While Disney’s upcoming streaming platform Disney+ is making a grand entrance this year, the company expects 21st Century Fox’s assets will aid in its streaming strategy.

The media powerhouse is gradually changing the core of its business to take on services like Netflix as well as to cope with changing content consumption trends. In the earnings call, Iger also said that that departments across all of Disney are working on creating high-quality content specifically for Disney+.

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