Disney reassures investors streaming won’t break bank

Bloomberg

Walt Disney Co.’s quest to become a digital-streaming giant will be an expensive endeavour, but the company can handle it.
That’s the message of its latest earnings report, which exceeded Wall Street estimates and sent the shares up as much as 2.4% in late trading.
Though profit fell 13% in the fiscal second quarter, that was better than what analysts predicted. Sales also topped estimates in the period, which ended in March.
The company is launching Disney+ on November 12, marking its biggest strategy shift in decades. The $6.99-a-month streaming platform will compete with Netflix Inc. as a direct-to-consumer product, aiming to lure families with its Marvel, Pixar and Star Wars content. “Avengers: Endgame,” which hit theaters last month and is now the second-highest-grossing film of all time, will stream on Disney+ on December 11.
“The positive response to our direct-to-consumer strategy has been gratifying,” Chief Executive Officer and Chairman Bob Iger, 68, said in a statement. Disney’s $71 billion acquisition of 21st Century Fox Inc.’s entertainment assets also is helping the effort, he said.
Disney battled some tough comparisons in the quarter. Its movie studio released “Black Panther” — the biggest domestic hit of 2018 — in theaters during the year-earlier period.
Income at Disney’s most-profitable business, cable TV, rose 1.6% to $1.76 billion in the quarter, buoyed by rising fees charged to cable distributors, particularly for ESPN. But profit at the ABC network fell, hurt by lower sales of advertising and TV programs.
Disney also took a $353 million charge related to its stake in Vice Media, which targets millennial viewers through its cable TV network, HBO show and other media. It’s the latest writeoff for Disney’s holding in the media company. Disney acquired a 21% stake in the business, while 21st Century Fox had an additional 6% piece.