Disney reports mixed Q1 earnings

While Disney's Q1 2018 profit was up 78% to US$4.4 billion, the House of Mouse saw weaker results across its cable TV, studio entertainment and consumer products divisions.
February 7, 2018

Amid its pending acquisition of 21st Century Fox, Disney delivered stronger-than-expected first quarter profit, up 78% to US$4.4 billion. The House of Mouse, however, missed Wall Street estimates with a revenue increase of 4% to US$15.4 billion.

The company’s net income increase was partly due to a US$1.6 billion one-time tax benefit associated with new US federal income tax legislation.

As for Disney’s overall Q1, the mixed earnings were partly attributed to weaker results across the company’s cable television, studio entertainment and consumer products divisions.

Losses associated with Disney’s forthcoming streaming services helped drive down its Cable Networks operating income by 1% to US$858 million. The decline, however, was partially offset by increases within Disney Channels and Freeform. Coinciding with the growth at Disney Channels is the company’s announcement that casting has started on a live-action original TV movie version of Kim Possible, 16 years after the character’s debut in the hit animated comedy/adventure series.

Following a 3% decline in its Media Networks business in Q4, Disney’s Media Networks revenue was flat for Q1 at US$6.2 billion. Overall segment operating income for the business dropped 12% to US$1.2 billion.

Higher losses from streaming service Hulu, in which Disney will become a majority stakeholder pending the close of its Fox acquisition, were partially attributed to an equity decrease in investee income from US$119 million in the prior-year quarter to US$50 million.

On the film studio side, operating income fell by 2% to US$829 million. The unit benefited by higher theatrical distribution results of Star Wars: The Last Jedi and Thor: Ragnarok in Q1 versus Rogue One: A Star Wars Story and Doctor Strange in the prior-year quarter.¬†Prior to Disney’s Q1 earnings report, the company announced that Game of Thrones execs David Benioff and D.B. Weiss have been tapped to write and produce a new series of Star Wars films.¬† The films will be separate from the traditional “saga” movies and Rian Johnson’s recently announced new trilogy.

Disney’s Studio Entertainment revenue for the quarter was flat at US$2.5 billion. The result was offset by lower home entertainment and TV and SVOD distribution results, as well as income declines from the company’s consumer products and interactive media segment.

On the bright side, Disney’s Parks and Resorts revenue rose by 13% to US$5.2 billion. Segment operating income increased by 21% to US $1.3 billion on the strength of increases at the company’s domestic parks and resorts, cruise line and vacation club businesses, as well as at Disneyland Paris.

Looking at Disney’s Consumer Products and Interactive Media segment, revenue decreased by 2% to US$1.5 billion, while operating income fell by 4% to US$617 million. The loss in operating income was due to decrease in merchandise licensing and retail business. This was partially offset by an increase in games, which was driven by licensing revenue from Star Wars Battlefront II.


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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