Disney Profit Tops Estimates as Film Gains Overshadow TV

(Bloomberg) -- Walt Disney Co. reported third-quarter profit that beat analysts' profit projections, as strong performances from films including “Captain America: Civil War” and “Finding Dory” countered a challenging period for TV and consumer products.

Disney also said Tuesday it will buy a minority stake in BAMTech, a technology and streaming company formed by Major League Baseball, and will launch a new web-based ESPN network as part of that deal. The company will pay $1 billion in two installments, now and in January 2017.

Profit excluding some items rose to $1.62 a share, Burbank, California-based Disney said Tuesday in a statement. That topped the $1.61 a share average of analysts' estimates compiled by Bloomberg. Sales at the world's largest entertainment company increased 9 percent to $14.3 billion in the period ended July 2, compared with estimates of $14.2 billion.

The results underscore the benefit of Disney's diverse portfolio. Profit at the film division is rising amid slower growth in TV, the company's biggest business. Investors have been intently focused on the cable-TV business, home to ESPN and the Disney Channel, after Disney acknowledged subscriber losses last year. The company said Tuesday those declines continued in the latest period.

Disney is taking steps to adapt its TV business to the changing times. Along with the BAMTech deal, the company said it will also be part of a new over-the-top video service planned by AT&T's DirecTV unit.

The quarter also marked a tumultuous one for the company's theme parks. In June, Disney opened its $5.5 billion Shanghai Disney Resort, the company's largest foreign investment. The same month a child died in an alligator attack at Disney's Orlando, Florida, resort and a mass shooter killed 49 people at a nightclub in the city. SeaWorld Entertainment Inc. reported a 7.6 percent drop in attendance last quarter, in part due to weakness in Orlando, and Disney said its domestic attendance also declined.

Earlier Tuesday, Euro Disney SCA, the company's resort in France, reported a 9.2 percent drop in quarterly revenue, citing security concerns in Brussels and Paris, strikes and poor weather.

Disney fell 1.4 percent to $95.57 in extended trading after the announcement. The shares gained 1 percent to $96.97 at the close in New York. They are down 8 percent this year.

• Cable TV operating income rose 1 percent to $2.09 billion on stronger advertising and affiliated revenue at ESPN. Profit at the ABC network and affiliated TV stations fell 6 percent to $282 million.
  
• Parks profit climbed 8 percent to $994 million.
• Film studio earnings soared 62 percent to $766 million.
• Income from consumer products and interactive dropped 7 percent to $324 million.
  
  

Disney has four of the top five films this year, including three that came out last quarter. The May 6 release “Captain America: Civil War” is No. 1, with worldwide sales of $1.15 billion, according to researcher Box Office Mojo. The live-action remake, “The Jungle Book” has generated $941.2 million its since April debut and “Finding Dory,” the sequel to the 2003 hit “Finding Nemo,” has taken in $871.3 million since its mid June release.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net. To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum, Paul Barbagallo