Disney 4Q results allay concerns about cord-cutting

This May 12, 2015, photo shows Mickey Mouse balloons at Disneyland Paris, in Chessy, France, east of Paris.

This was reassuring after Disney signaled in August that profit from ESPN and other cable channels would not be as robust next year as initially expected because fewer consumers are subscribing to full pay-TV packages. Ad sales are pacing up “significantly” so far in the current quarter, added Christine M. McCarthy, Disney’s chief financial officer. The sports network recently laid off 300 workers, or about 4% of its workforce, and last week shuttered its respected Grantland online magazine.

Walt Disney reported adjusted earnings of $1.20 per share, a 35% increase from last year, and revenue of $13.5 billion, a 9% increase year over year. The entertainment giant reported $1.20 earnings per share for the quarter, topping the Zacks’ consensus estimate of $1.14 by $0.06. A few analysts were expecting slightly higher revenue from the company’s parks business. The business earned $13.51 billion during the quarter, compared to analyst estimates of $13.50 billion. Like other American media owners, Disney is exploring how to recalibrate itself for the live streaming market and more direct-to-consumer initiatives could help retain customers.

At the same time, Mr. Iger also emphasized the value of “multichannel” cable and satellite companies to Disney.

And while a Disney Life-like product is possible in other markets, Iger said the company would not be “rushing into that right now”.

Meanwhile, 21st Century Fox missed expectations for quarterly revenues.

In August, Iger’s comment that ESPN was faced with “some subscriber losses” triggered fears that “cord cutters” were weakening the cable industry. Three months earlier, Disney set off a wave of selling in media stocks after trimming its future guidance due to a modest decrease in ESPN subscribers. “It’s a permanent, fundamental change to the way the business is approached”.

The film arm of Disney came in flat bringing in $1.8bn in revenue during the quarter. You can also stream PlayStation Vue content on Apple Inc. Lower costs and merchandise sales related to the film “Frozen” also contributed to the improved results.

The CEO touted a new digital service launching in the United Kingdom called DisneyLife that offers a few of the company’s movies, television shows, music and books through the Internet for about $15 a month. “There is a lot more competition for people’s time”, said Iger on a conference call with analysts.

Iger said that Disney was looking for new ways to get its content to viewers and that it was uniquely positioned to go direct to consumers.

The theme park and resort segment’s revenue climbed 10%.

Interactive was the only segment to fall in revenue, notching $347 million, 4 percent less than a year ago, but it managed a 72 percent increase in operating income to $31 million.