The Walt Disney Company released its third quarter financial results and as expected, the costs of building Disney+, gaining control over Hulu and purchasing 21st Century Fox all had an impact on the companies bottom line.
Direct-to-Consumer & International revenues for the quarter increased from $827 million to $3,858 million and segment operating loss increased from $168 million to $553 million. The increase in operating loss was due to the consolidation of Hulu, the ramp up of investment in ESPN+, which was launched in April 2018 and costs associated with the upcoming launch of Disney+. Results for the quarter also reflected a benefit from the inclusion of the 21CF businesses due to income at the Fox and National Geographic international channels, partially offset by a loss at Star India.
Disney CEO Bob Iger said:
“Our third-quarter results reflect our efforts to effectively integrate the 21st Century Fox assets to enhance and advance our strategic transformation. I’d like to congratulate The Walt Disney Studios for reaching $8 billion at the global box office so far this year–a new industry record–thanks to the stellar performance of our Marvel, Pixar and Disney films. The incredible popularity of Disney’s brands and franchises positions us well as we launch Disney+, and the addition of original and library content from Fox will only further strengthen our direct-to-consumer offerings.”
Sections such as their TV division are also being hit in the pocket, such as ABC, who sold shows such as Iron Fist and Daredevil to Netflix last year, but this year haven’t been able to do so, due to Disney’s streaming plans.
The Studios division had an amazing quarter with the release of movies like Avengers: Endgame, Aladdin and Toy Story 4, but X-Men: Dark Phoenix was a big strain on the division as the Fox movie division lost $130 million in this quarter.
The Direct To Consumer division, which Disney+ is part of, also lost money due to the Indian company, Star, not performing as well as expected. Which was due to increased cost of securing rights to cricket and soccer.
Losses from the launch of Disney+ will continue to cause problems for years to come and they are trying to get the message out why this is the case. Though other areas within the company such as the Theme Parks and Movie Studios are continuing to bring in money to the company.
However Disney is betting on Disney+ and Hulu being major components of their business, especially if the traditional television model continues to struggle, so they can easily pivot the company away from how they’ve previously sold shows and movies.
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