Disney’s Q4 earnings fall short amid record-breaking year

Despite a drop in broadcast ad sales for Q4, Disney's record-breaking year at the box office continues with the help of recently released Doctor Strange and upcoming Moana (pictured).
November 11, 2016

For only the second time in the last five years, the House of Mouse’s quarterly revenue missed analysts’ projections, dropping 3% to US$13.14 billion for its fourth quarter ended October 1.

Lower network advertising revenue at ESPN and the Disney Channels was the largest contributor to the decline, followed by dips in the company’s international Parks and Resorts business and its Consumer Products and Interactive Media segments.

Within Media Networks, quarterly Cable Networks revenue fell by 7% to US$3.95 billion, and operating income dropped 13% (US$207 million) to US$1.44 billion.

The operating loss was partially offset by growth at rebranded network Freeform (formerly ABC Family), driven by lower programming and production costs and marketing expenses.

Disney reported an 8% increase to US$1.7 billion in broadcast revenue, while operating income saw a 37% jump (US$60 million) to US$224 million, thanks largely to higher affiliate revenue, program sales income and a decrease in compensation-related costs.

The rise in Broadcasting operating income was partially offset by an increase in equity losses from Hulu and higher programming costs.

Across Disney’s Parks and Resorts segment, quarterly revenue increased 1% to US$4.4 billion, while segment operating income fell 5% to US$699 million due to lower results at Disneyland Paris and Hong Kong Disneyland Resort. The drop was partially offset by a successful opening for Shanghai Disney Resort.

Domestically, Parks/Resorts revenue went up due to growth at Walt Disney World Resort, but the increase was partially offset by lower attendance at Disneyland Resort.

Looking at Consumer Products and Interactive Media, Q4 revenue decreased 17% to US$1.3 billion. Operating income also declined by 5% to US$424 million. The discontinuation of the Disney Infinity console game business was largely responsible for the dip.

Meanwhile, operating income fell due to decreases in merchandise licensing, namely lower revenue from products based on Frozen. It was partially offset by higher merchandise revenue from the Finding Dory/Nemo brands and other Disney properties.

Despite the Q4 decline, the Mouse House’s yearly revenue was up by 6%, hitting a record US$55.6 billion.

Its Studio Entertainment Group also delivered a record-breaking US$7.5 billion in total box office receipts with Star Wars: The Force Awakens alone accounting for more than US$2 billion.

The theatrical momentum is continuing, thanks to Disney’s fall Marvel release Doctor Strange, which to date, has earned US$340 million worldwide. Its next big release, CGI-animated Moana (pictured), will arrive in North America on November 23.

Rounding out the Q4 results, Studio Entertainment revenues rose 2% to US$1.8 billion, while operating income was down by US$149 million to US$381 million.

The drop was driven by the lower than expected performance of Pete’s Dragon and Queen of Katwe.

About The Author
Jeremy is the Features Editor of Kidscreen specializing in the content production, broadcasting and distribution aspects of the global children's entertainment industry. Contact Jeremy at



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