Disney Reports Earnings, but Focus Is on Its Streaming ServiceLOS ANGELES — Disney’s coming Netflix-style streaming service most definitely has Wall Street’s attention.
On an earnings-related conference call on Tuesday, analysts did not pepper Robert A. Iger, the Walt Disney Company’s chief executive, with questions about the entertainment company’s mixed quarterly results, which climbed but not as much as expected. Instead, the hourlong conversation focused almost entirely on what some people in Hollywood have started to call Disneyflix.
The still-unnamed service, which Disney plans to introduce late next year, represents a make-or-break plan to address threats to its vast television business. The TV division reported operating income in the third quarter of $1.82 billion, a 1 percent decline from a year earlier. Ad sales are under pressure, programming costs are rising and the number of traditional cable subscribers for Disney channels — ESPN among them — is declining.
Analysts had a lot of questions: How much is Disney planning to invest in original content for the service? Won’t people be confused about what Disney-branded content is where? What is the broader strategy?
Mr. Iger gave few specific answers, promising that more details would come at a future investor conference. He assured analysts that the successful introduction of the streaming service would be Disney’s “biggest priority” in 2019, which will also bring the integration of 21st Century Fox assets.
Mr. Iger indicated that he would seek subscription sales for the service from every corner of the Disney empire: theme park pass holders, holders of Disney-branded credit cards, the masses who own Disney time-share properties. He also confirmed that content from National Geographic, which Disney is buying from Fox, would appear on the service. He mentioned that Disney also sees promise for National Geographic in Disney’s vacation business as an “eco-tourism” offshoot.
But do not expect a high volume of new original series and movies on the Disney-branded service, at least initially. Mr. Iger said that he did not see Disney’s service as needing “anything close to the volume that Netflix has,” largely because Disney has strong brands like Pixar, Marvel and “Star Wars” at its disposal.
For the quarter, Disney’s major businesses largely performed as they had over the last year. Weakness continued at the cable division and in the consumer products unit, where the decline in shopping malls has hurt the Disney Store chain. But theme parks remained a reliable engine and Walt Disney Studios continued to deliver growth.
Walt Disney Studios had operating income of $708 million, an 11 percent increase from the same quarter a year earlier. “Avengers: Infinity War” and “Incredibles 2,” both runaway hits, were largely the reason. The studio would have had even better results had it not taken a $100 million write-down related to animated films in its pipeline that will no longer proceed, including a third “Planes” movie.
Operating income at Disney’s theme park division increased 15 percent, to $1.3 billion, because of higher ticket prices and hotel room rates at Walt Disney World in Florida and Disneyland in California.
Over all, Disney had a profit totaling $2.92 billion, or $1.95 a share, compared with $2.37 billion, or $1.51 a share, a year earlier. Disney had revenue of $15.24 billion in the quarter, a 7 percent increase.