STORY: Walt Disney shares fell as much as 10% in morning trading Tuesday after the entertainment giant reported quarterly results that overwhelmed Wall Street.
The company posted a surprise profit in the entertainment division of its streaming business, while its traditional TV business slumped and box office revenue slumped.
The company’s streaming services Disney+ and Hulu reported modest profits in the January-March period, but when combined with sports streamer ESPN+, the company posted even more losses.
Chief Executive Officer Bob Iger, who came out of retirement to rebuild Disney, said the streaming business was on track to be profitable by the end of September.
Meanwhile, revenue from the traditional TV business fell 8% year-on-year, and operating profit fell 22%.
The decline reflects lower advertising revenues and the impact of Disney’s new television distribution agreement with Charter Communications, which eliminated eight of Disney’s cable networks.
While Disney continues to cut costs in some areas, it also announced a $60 billion investment in its theme parks over 10 years after reporting a 12% increase in operating profit for the division.
Disney said it expects full-year adjusted earnings per share to rise 25% from its previous estimate of 20%, citing strong performance at its theme parks and an improvement in its streaming business.
