Disney’s ESPN streaming service set for U.S. spring launch

Adjusted EPS does not include a $1.6 billion benefit related to recent changes in USA tax law and certain other one-time items.

The media and entertainment conglomerate reported adjusted earnings per share of US$1.89 for October through December, ahead of the US$1.61 analysts expected, according to Thomson Reuters I/B/E/S.

In conjunction with the company’s earnings release today, Disney chairman and CEO Bob Iger announced that ESPN’s upcoming streaming service will cost $4.99 per month. To that end, Iger was asked why Game of Thrones creators David Benioff and D.B. Weiss had not been attached to a similar multi-season series.

Disney reported higher attendance and guest spending at its domestic theme parks for the quarter, driven by higher prices on tickets and room rates and more spending on food, beverages, and merchandise.

Shares of Disney climbed after-hours on Tuesday and are up over 0.50% through mid-morning trading.

Consumer products and interactive media fell 2% to $1.45 billion.

This means that ESPN Plus won’t offer streaming access to ESPN channels, but rather to additional games and events that wouldn’t otherwise be broadcast. Compared with Netflix’s increasingly hefty outlays ($8 billion this year and headed upward), Disney “will not necessarily go in the volume direction that Netflix has gone”, Iger said.

Disney was largely impacted by lower advertising revenues at ESPN, which more than offset growth in its affiliate revenues and lower programming expenses. The unit benefited by higher theatrical distribution results of Star Wars: The Last Jedi and Thor: Ragnarok in Q1 versus Rogue One: A Star Wars Story and Doctor Strange in the prior-year quarter. The analyst believes it was “somewhat expected”, so he remains unfazed that Studio revenue of $2.50 billion and Consumer/Interactive of $1.45 billion came up a bit short of consensus expectations. It’s broader, direct-to-consumer streaming service, meanwhile, is set to be available some time in 2019.

Five years ago, when ESPN reached 98.8 million subs and charged operators $5.13 per head each month, the network generated around $6.1 billion in affiliate revenue.

“Our ultimate intention is to create and to ultimately grow a global, direct-to-consumer business that will take advantage of the production output that the combined companies will have”, Iger said.