Disney Rises Most Since April on Streaming Prospects, Results
The $7-a-month service featuring most of the company’s best films and TV shows debuts Nov. 12.
(Bloomberg) -- Walt Disney Co. shares had their biggest gain in seven months after the company reached an agreement to put its new streaming service on Amazon, Samsung and LG devices, ensuring access to tens of millions of online viewers when it launches Disney+ next week.
The $7-a-month service featuring most of the company’s best films and TV shows debuts Tuesday. Disney had already signed agreements to distribute the product on devices by Apple Inc. and Roku Inc. Amazon.com Inc., which sells the Fire TV product, had been a notable holdout as the companies argued over terms.
Agreements with those tech giants, along with a promotional tie-in with Verizon Communications Inc., mean Disney+ can get off to a fast start when it launches next week. Disney, the world’s largest entertainment company, is counting on the new service, along with Hulu and ESPN+, to deliver growth as consumers continue to abandon conventional TV.
The shares rose as much as 5.5%, the most since April 12, to $140.25 in New York trading Friday. Disney soared in April after the company outlined ambitious subscriber numbers for its streaming services by 2024, and the stock was up about 27% this year with Friday’s gain.
Earlier Thursday, Disney reported better-than-expected fourth-quarter results, sending its shares up as much as 4.5% in extended trading. Results for the quarter were led by the company’s storied film studio, which released hits such as the live-action “Lion King” during the period.
Park Profits
The company’s theme parks and consumer product division also registered a gain in profit, bolstered by sales of merchandise tied to its hit movies, improved results at the Disneyland Resort in Southern California and the Disney Vacation Club.
Fourth-quarter earnings, while down from a year earlier, came in at $1.07 a share, beating the 95-cent average of analysts’ estimates. Revenue soared 34% to $19.1 billion as result of the $71 billion acquisition of 21st Century Fox assets, which closed in March.
But the company’s results also underscore the shifting nature of the TV business and the urgency of Chief Executive Officer Bob Iger’s push into streaming.
Profit at the company’s ESPN network fell due to rising sports-programming costs and shrinking cable subscribers. Earnings at the ABC broadcast network also dropped, with fewer TV shows being sold to third parties.
Meanwhile, losses in the newly created direct-to-consumer division soared to $740 million. The Disney+ streaming businesses is part of that division, and costs are climbing as the company prepares to do battle with industry leader Netflix Inc.
Disney’s film studio continued its strong performance with a remarkable 79% leap in profit, thanks to hits that also included “Toy Story 4” and “Aladdin.” The company releases “Frozen 2” and a final chapter in the “Star Wars” saga this quarter.
To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III, Cécile Daurat
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