ESPN Costs Weigh Down Disney Q1 Revenue

February 8, 2017 Kristin Brzoznowski
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BURBANK: The Walt Disney Company’s revenue for the first quarter slipped 3 percent to $14.8 billion, with a decline in profit at ESPN impacting results in the cable networks segment.

Net income for the first fiscal quarter of 2017 was $2.5 billion, down 14 percent year-on-year.

Parks and resorts was a bright spot, with revenues up 6 percent to $4.6 billion and operating income up 13 percent to $1.1 billion.

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Media networks saw its revenues dip 2 percent to $6.2 billion and segment operating income was down by 4 percent to $1.4 billion. Within the segment, cable networks delivered $4.4 billion in revenues, a 2-percent drop, and $900 million in operating income, down 11 percent. This was mainly due to a decrease at ESPN, which had higher programming costs and lower ad revenues. Broadcasting revenues were essentially flat at $1.8 billion, while operating income was up 28 percent to $379 million.

Revenues were also down within the studio entertainment unit, with a 7-percent dip taking the total to $2.5 billion. Segment operating income decreased 17 percent to $842 million, with growth in TV/SVOD distribution failing to offset lower home entertainment and theatrical distribution and a lower revenue share from the consumer products and interactive media segment. The decrease in theatrical distribution reflected the comparison of Rogue One: A Star Wars Story in the current quarter to the exceptional performance of Star Wars: The Force Awakens in the prior-year quarter.

“We’re very pleased with our financial performance in the first quarter,” said Robert A. Iger, the chairman and CEO of The Walt Disney Company. “Our parks and resorts delivered excellent results and, coming off a record year, our studio had three global hits, including our first billion-dollar film of fiscal 2017, Rogue One: A Star Wars Story. With our proven strategy and unparalleled collection of brands and franchises, we are extremely confident in our ability to continue to drive significant value over the long term.”