(Bloomberg) -- If you want to know where the real growth is at Walt Disney Co., look to “Avatar” land, not “Star Wars.”
Teeming crowds at Disney theme parks helped the world's largest entertainment company deliver fiscal first-quarter earnings that beat analysts' estimates Tuesday. Profit at the company's once-mighty TV business remains in retreat, while the film studio's big comeback awaits a bigger slate of films, including “Black Panther” this month.
New attractions like the “Avatar” land, which opened in Orlando, Florida, last year, are carrying Disney through a tough stretch for its biggest business -- television and ESPN. Those units are losing viewers and advertising to new internet entertainment options. Chief Executive Officer Bob Iger is taking big steps to address those challenges ,with plans for new online services and a $52.4 billion deal to buy much of 21st Century Fox Inc.
Excluding a tax benefit, earnings rose to $1.89 a share, Burbank, California-based Disney said in a statement, beating the $1.61 a share average of analysts' estimates. Revenue grew to $15.35 billion in the quarter ended Dec. 30, missing projections of $15.44 billion.
Shares of Disney rose as much as 3.1 percent to $109.48 in extended trading. They gained 1.4 percent to $106.17 at the close in New York.
Crowd Control
Park attendance rose in the U.S., where Disney has implemented crowd-control measures and raised ticket prices to contend with the popularity of its resorts. The division also posted growth in Europe and at its cruise business, contributing to operating profit $1.35 billion, a gain of 21 percent.
Disney's cable TV unit was hurt by subscriber losses, a decline in ad revenue at the sports network ESPN and two fewer college bowl games. Losses from BamTech, the streaming service in which Disney bought majority control, also crimped results. The cable unit's profit slid 1 percent to $858 million.
On a conference call with investors Tuesday, Iger said a new ESPN-branded streaming service launching this spring will cost $4.99 per month.
Even though Disney had the top-grossing film of the year with “Star Wars: The Last Jedi” and was the top studio, the weaker performance of films earlier in the year hurt home entertainment sales. “Cars 3” was a clunker, and “Guardians of the Galaxy 2” couldn't top the strong performances of “Captain America” and “Jungle Book” in 2016.
‘Game of Clones?'
“The Last Jedi” was released on Dec. 15, so its performance is only partly reflected in Disney's first-quarter results. The film has generated about $1.32 billion in box-office revenue worldwide, compared with the $2.07 billion haul for its predecessor in the current trilogy, “The Force Awakens.”
Still, Disney's enthusiasm for the brand isn't waning. In addition to a new trilogy already under development, the company announced Tuesday that “Game of Thrones” creators David Benioff and D.B. Weiss will work on a new series of “Star Wars” films.
A down year for Disney's studio, which released fewer movies in 2017 than the year before, also led to lower first-quarter profit and sales in consumer products. “Star Wars” products failed to overcome lower revenue from “Frozen” and “Finding Dory.”
This is the first earnings report since the Burbank, California-based company announced plans to buy most of 21st Century Fox. That deal is still pending regulatory approval.
“The continued sluggishness of the media networks highlights the urgency for Disney to get the Fox deal done,” Paul Sweeney, a Bloomberg Intelligence analyst, said in an email. “Disney needs to go direct to the consumer and to do that successfully they need more content. Fox helps them get there.”
Disney said the tax reform resulted in a benefit of $1.6 billion due to a change in accounting for hard assets. Disney last month gave about 125,000 U.S. employees a one-time $1,000 bonus and announced plans to put $50 million toward helping hourly employees with tuition expenses.
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
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