Walt Disney Co. reported earnings and revenue for the 2019 first-quarter on Tuesday that were above Wall Street’s expectations, even as the studio’s revenue dropped 27 percent in the quarter.
The media and entertainment giant reported adjusted earnings per share of $1.84 for the quarter, ending in December, which was down slightly compared with the company’s earnings of $1.89 per share during the same quarter a year ago. Disney’s first-quarter earnings, however, were above analysts’ expectations via Yahoo Finance of $1.55 per share.
Revenue for the quarter hit $15.30 billion, which was a decrease compared with the $15.34 billion in revenue the company reported a year ago during the same period. Analysts tracked by Yahoo Finance expected, on average, revenue of $15.18 billion for the quarter.
Disney shares were up 2 percent in after-hours trade on Tuesday.
“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,” said Disney CEO Bob Iger in a statement. “Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space.”
Disney said that revenue in the studio division decreased 27 percent in the quarter to $1.8 billion. The decline was due, in part, to a decrease in theatrical distribution, which lacked the strong performance of “Star Wars: The Last Jedi” ($1.3 billion) and “Thor: Ragnarok” ($854.0 million) in the prior-year quarter compared to “Mary Poppins Returns” ($329.0 million) and “The Nutcracker and the Four Realms” ($173.8 million) in the current year.
Revenue at Disney’s media networks increased 7 percent to $5.9 billion in the quarter. ESPN, however, suffered in the quarter due to higher programming costs, which was partially offset by affiliate revenue growth and an increase in advertising revenue. The increase in programming costs was due to contractual rate increases for key sports programming and a shift in the mix of College Football Playoff (CFP) games.
The parks, experiences and consumer products division saw revenue increase 5 percent to $6.8 billion.
Disney said that direct-to-consumer and international revenue in the first quarter declined 1 percent to $918 million, which the company said reflected a 4 percent decrease from foreign currency impact. The direct-to-consumer streaming business saw an increase in its operating loss, due to increased investment in ESPN+ and a loss from streaming technology services and costs associated with the upcoming launch of Disney+, though that was partially offset by an increase at its International Channels and a lower equity loss from Disney’s investment in Hulu.