Categories Earnings, Technology

Key comments from the Walt Disney earnings conference call

Walt Disney Company (DIS) reported strong revenue and earnings growth for the fourth quarter of 2018, which surpassed market expectations. Revenue grew 12%, helped by contributions from all major business divisions. Adjusted EPS grew 38% year-over-year to $1.48.

With the exception of Consumer Products & Interactive Media, all other segments delivered growth in revenues. Disney also has plans to launch its new streaming service next year. For the full earnings call transcript, click here.

Let’s take a look at some of the key comments made during the conference call:

# Disney’s biggest priorities for fiscal year 2019 are the completion and integration of the acquisition of 21st Century Fox (FOXA), and the further development of its direct-to-consumer (DTC) business, which includes adding new content and subscribers to ESPN +, gaining majority stake in Hulu and launching its Disney-branded service next year.

# With regards to the Fox acquisition, Disney received EU regulatory approval and is optimistic about securing the necessary approvals from the remaining territories. Disney believes the acquisition will close earlier than anticipated.

# More than 1 million users have subscribed to ESPN +, which was launched six months ago, and the service continues to see growth.

# The Disney-branded service, which is officially called Disney +, will be in the US market late next year, offering a rich array of original Disney, Pixar, Marvel, Star Wars and National Geographic content, along with access to a vast library of film and television content, including all the theatrical releases starting with the 2019 slate.

Broad-based revenue growth lifts Disney’s Q4 earnings; stock gains

# At the end of Q1 2019, Disney will begin reporting financial results under a new structure made up of four business segments – Media Networks, Park Experiences and Consumer Products, Studio Entertainment, and Direct-To-Consumer and International.

# Disney plans to host an Investor Day in April to discuss the DTC business in detail and to provide updates on the Fox acquisition.

# Disney’s 2019 slate includes Ralph Breaks the Internet, Mary Poppins Returns, Captain Marvel, Dumbo, the next Avengers films, Aladdin, Toy Story 4 and The Lion King.

# For full-year 2019, Disney expects cable programming expenses to be up mid-single digit, driven primarily by contractual rate increases for sports rights at ESPN. The company expects Q1 2019 cable programming expenses to be up 9%.

# Disney will continue to invest in ESPN + and the Disney + service. The continued ramp-up of ESPN +, which includes investments in sports rights, will have an adverse impact on operating income of about $100 million for the first quarter of 2019.

# Given the success of Hulu so far in terms of subscriber growth, the relative brand strength and other things like demographics, Disney believes there is opportunity to increase investment in Hulu notably on the programming side.

Disney’s shares were up 1.8% as of 2:00 pm ET on Friday.


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