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Disney posts upbeat Q2 results

Entertainment company Walt Disney (DIS) reported a 23% jump in earnings for the second quarter, helped by double-digit revenue growth in parks and resorts, as well as studio entertainment. Net favorable impact of the tax act lowered effective income tax rate, in turn lifting the bottom-line. Earnings and revenue came in above street expectations.

With revenue increasing 9% to $14.55 billion during the quarter, the company’s earnings climbed 23% to $2.94 billion or $1.95 per share. Excluding certain items affecting comparability, EPS rose 23% to $1.84.

Revenue benefited from an increase in the number of visitors to its domestic and international parks and resorts, a shift in the timing of the Easter holiday, attendance growth at Walt Disney World Resort and at Disneyland Paris.

Disney second quarter 2018 earnings
Walt Disney Q2 earnings

Segment operating income at Media Networks declined 6% due to a loss at BAMTech and decreases at Freeform and ESPN. A decrease in average viewership dragged Freeform advertising revenue during the second quarter.

Meanwhile, a shift in the timing of College Football Playoff (CFP) bowl games and contractual rate increases for college sports and NBA programming lifted ESPN’s programming costs. At ESPN, higher advertising revenue was due to an increase in rates, partially offset by lower impressions and a decrease in average viewership.

Segment operating income at Parks and Resorts jumped 27% helped by increased guest spending, attendance growth at Walt Disney World Resort and higher sponsorship revenue. The benefit from a shift in the timing of the Easter holiday too benefited the results. The increases at Disneyland Paris and higher occupied room nights and attendance at Hong Kong Disneyland Resort drove international parks and resorts higher.

Studio Entertainment segment operating income climbed 29% on rises in theatrical, home entertainment and TV/SVOD distribution results. The success of Black Panther drove theatrical distribution results higher, and the successful release of Star Wars: The Last Jedi drove Home Entertainment growth up.

A decline in comparable retail store sales and unfavorable foreign currency impact hurt Consumer Products & Interactive Media operating income, which declined 4%.

In a new twist in the tale, Comcast (CMCSA) said today that it is planning to counter Disney’s offer for 21st Century Fox’s (FOXA) film and TV assets. Comcast is offering a better price than Disney, but regulatory approval remains a major hurdle. If the AT&T (T) and Time Warner (TWX) merger succeed, then Comcast too hopes to follow their footsteps.

For the first half of 2018, lower pension plan contributions, a decline in income tax payments and higher operating results at Parks and Resorts segment drove cash provided by operations higher. At the same time, capital expenditures rose by 6.3% due to higher spending on new attractions at domestic parks and resorts and on technology at BAMTech.

Shares of Disney ended Tuesday’s regular trading session down 0.67% at $101.79 on the NYSE. The stock had been trading between $96.20 and $113.19 for the past 52 weeks. Following the results, the stock inched up 0.70% in aftermarket hours.

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