Media

Walt Disney posts record profit but cuts guidance

Despite record profit in June a lower profit guidance from media company sends shares down 6%

The weaker euro cut revenue at the Disneyland Paris theme park by about $100 million. (Photograph: Ian West/PA Wire)
The weaker euro cut revenue at the Disneyland Paris theme park by about $100 million. (Photograph: Ian West/PA Wire)
Wed Aug 05 2015 - 10:24

Walt Disney lowered profit guidance for its cable networks unit and reported quarterly revenue slightly below Wall Street forecasts, sending its shares down 6 per cent.

The media company now expects annual operating income growth at the unit in the mid-single digits for fiscal years 2013 to 2016, chief financial officer Christine McCarthy said. It previously had forecast growth in the high single digits. The company cut its forecast because it expects lower revenue from a decline in subscribers and the impact of foreign exchange rates, McCarthy said.

Sports network ESPN has experienced “modest” subscriber losses as viewing habits have shifted to digital platforms, Disney chief executive officer Bob Iger said. Disney’s movie studio recorded a profit of $472 million, up from $411 million a year earlier, helped by the success of “Avengers: Age of Ultron”.

Walt Disney shares dropped 6 per cent to $114.10 in after-hours trading.

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The reduced guidance and revenue miss likely sparked the decline, said Edward Jones analyst Robin Diedrich. “That’s where some of the concern lies,” Diedrich said of the cable outlook. Overall, the company produced “a good solid quarter.”

Disney posted record profit in the June quarter, but its revenue missed Wall Street expectations for the first time in two years. It had net income of $2.48 billion, up 11 per cent from a year earlier, and revenue of $13.1 billion, just shy of the $13.23 billion projected by industry analysts. The weaker euro cut revenue at the Disneyland Paris theme park by about $100 million, McCarthy said. Operating profit at theme parks rose 9 per cent to $922 billion in the third quarter as attendance and spending rose at US parks. Operating income at media networks rose 4 percent to $2.38 billion in the quarter as cable channels brought in higher fees from distributors. The media networks segment includes ESPN, the Disney Channels and the ABC broadcast network. Iger said he has “enormous confidence in ESPN’s future no matter how technology disrupts the media business.”

Reuters