(Reuters) - Walt Disney Co (DIS.N) results beat Wall Street estimates on Thursday thanks to summer crowds that swarmed into its theme parks and filled theaters showing Marvel movie “Ant-Man and the Wasp.”
The family entertainment company also revealed plans for a new “Star Wars” video series for its forthcoming streaming service, that it has named Disney+ and plans to launch late next year, aiming to make up for the continuing loss of subscribers from ESPN and other cable networks.
Disney is trying to transform itself into a broad-based digital entertainment company as audiences move to Netflix Inc (NFLX.O), Alphabet Inc’s (GOOGL.O) YouTube and other digital options. It is on the verge of gaining new film and television properties in a $71.3 billion purchase of assets from Twenty-First Century Fox Inc (FOXA.O).
Overall revenue in the quarter rose 12 percent to $14.3 billion, above analysts’ average estimate of $13.73 billion (10.48 billion pounds).
Net income climbed 33 percent to $2.3 billion and adjusted earnings per share of $1.48 for beat analysts' consensus of $1.34, according to IBES data from Refinitiv. (Graphic: tmsnrt.rs/2Pgi3EG)
Shares of Disney, which have gained nearly 8 percent this year, rose 1.7 percent in after-hours trading to $118.
Chairman and Chief Executive Bob Iger announced here that Disney's Lucasfilm is developing a second Star Wars live-action series for Disney+, a prequel to "Rogue One" starring Diego Luna.
The company also is working on a live-action Marvel series for the new service about Thor’s devious brother Loki, starring Tom Hiddleston.
Iger said Disney will give a first look at the Disney+ app and its programming at an investor conference in April.
The CEO also was upbeat about the prospects for Hulu, an on-demand and live TV service. Disney will own 60 percent of the streaming service after the Fox purchase, and Iger told CNBC that Disney would be interested in buying the remaining stakes from Comcast Corp (CMCSA.O) and AT&T Inc (T.N) if they were willing to sell.
Iger said he saw “an opportunity to increase investment in Hulu, notably on the programming side,” and he believed there was room to raise prices.For the just-ended quarter, the media networks unit, Disney’s largest, reported a 4 percent year-over-year rise in operating income of $1.5 billion as broadcaster ABC saw higher program sales and fees from channel distributors.
The ESPN cable network continued to shed subscribers, the company said, as viewing moves to digital platforms.
To counter that ongoing shift, Disney this year released a streaming service called ESPN+ with live college sports, documentaries and other programming that does not run on television. Disney+, by comparison, will include movies and TV shows aimed at family audiences, and Hulu will reach broader with edgier programming for adults.
Disney+ could lift the company’s stock if the streaming service can challenge Netflix and Amazon.com Inc (AMZN.O), said Haris Anwar, senior analyst at global financial platform, Investing.com.
“Disney’s big beat on expectations is great news for the company which is getting ready to take on competitors in the video-streaming business who are taking away ad dollars and consumers,” Anwar said.
In the just-ended quarter, the theme parks division reported operating income of $829 million, an 11 percent increase from a year earlier, as guest attendance and spending at Disney’s U.S. locations rose during the busy summer months.
Profit at Disney’s movie studio more than doubled to $596 million thanks to hits such as “Ant-Man and the Wasp” and “Incredibles 2.”
Reporting by Lisa Richwine in Los Angeles and Vibhuti Sharma in Bengaluru; Editing by Peter Henderson and Lisa Shumaker