Disney’s 2019 Q1 Earnings Call: Disney Beats Quarterly Estimates, Discuss Plans for Disney+, Marvel & More

Today, Disney held its first quarter shareholders meeting, in which they discussed a wide range of topics including 2018 revenue, the future of Disney+, Marvel and more.

While Wall Street expected the house of mouse to have an earnings per share of $1.55 on revenue of $15.18 billion, this was not the case. The entertainment powerhouse behind Pixar, Marvel, and Lucasfilm logged earnings per share of $1.84, a 3% drop from $1.89 in the prior-year quarter. Disney also reported revenue of $15.3 billion, essentially flat with the year-ago period.

Film revenues for the quarter decreased 27% to $1.8 billion and segment operating income decreased 63% to $309 million. Broadcasting revenues for the quarter climbed 12% to $1.9 billion and operating income increased 40% to $408 million, which Disney attributed to stronger ad sales and licensing fees it charged Hulu and Netflix.

Even with no Star Wars film released in December, Disney was able to make a splash in its first quarter. That being said, the lack of Star Wars in the holiday season impacted merchandise sales.

Moving on, CEO Bob Iger confirmed that they will showcase Disney+ content and demo the streaming service at their upcoming Investor Day on April 11th. Iger repeated his notion that the DTC service is the top priority at Disney, saying:

“Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space.”

Iger went on to say that Disney+ will rely on original content long-term, but there will be the odd occasion when they license series’ from third-party producers, especially ahead of the Fox sale’s official approval. The service already has several series’ in development, including Disney film remakes and shows from Star Wars and Marvel.

It was also mentioned that Disney+ will remain a (mostly) family friendly platform and that Hulu, once Disney takes control of the platform, will be used for their more adult-oriented programming such as FX series’.

It was also mentioned that, with the launch of Disney+, the studio will forgo $150M year-over-year in licensing revenue

Switching gears to Marvel, Iger said that Captain Marvel, which will be released in Disney’s Q2, will be the first film withheld from licensee partners. In other words, it will be the first Marvel film to premiere on Disney+ once its theatrical run concludes.

The biggest news arguably surrounds another Marvel property however, Deadpool. Iger made it clear that, once the Fox deal is finished, Deadpool will remain R-RATED at Disney. He also said that the door is open for future r-rated film brands. A hint at Black Widow potentially?

On the aspect of the Disney/Fox deal, Iger said that Disney is still waiting on regulatory approval from the “last few remaining markets” for the Disney-Fox deal. He also had this to say about the potential of Fox’s film library:

“We are not looking to compress the theatrical window. The purchase of Fox allows for Production capabilities that enable us to scale up in our output.”

Here are several other notes from the call:

– Bob Iger answers a question about the potential legalization of sports gambling (ABC + ESPN) – “I don’t see the Walt Disney Company, certainly in the near-term, getting into the business of gambling.”

– Bob Iger discussed publishing video games through Disney. They confirmed that they will instead focus on licensing their brands to outside game studios such as EA with their Star Wars license.

– Hulu reached 25M subscribers recently, but has been operating at a loss since its debut online. Disney did not disclose how long it’ll take to generate a profit as it takes a controlling ownership stake (60%) post-Fox purchase.

– Iger announced that ESPN+ now has over 2 million subscribers which is double the amount of subscribers from 5 months ago.

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