Disney “beat The Street” with higher than expected EPS (earnings per share) of $1.50 vs. $1.41. Unfortunately, its overall revenue was slightly lower than expected, coming in at $13.34B vs $13.45B.
Many observers were concerned about recent issues with ESPN, one of the largest drivers of Disney’s business. Nevermind all that Star Wars/Marvel/Pixar nonsense, it’s all about sports! We’ll see how investors feel as they absorb the news and prepare for tomorrow morning’s opening bell. After-hours trading shows Disney shares dropping almost 2%.
Some background to the announcement can be found in this interesting article, which essentially lays out how Disney’s media networks division (led by ESPN) is responsible for 3 times the revenue generated by its film division (which includes Star Wars, Marvel, and Pixar). So despite an insane run at the box office (particularly the $1B worldwide gross by Beauty and the Beast), ESPN’s high operating costs (case in point: nearly $2B per year for their Monday Night Football package) weigh mightily on Disney’s bottom line.