Walt Disney Company

Walt Disney Company reported a slight revenue decline in its first fiscal quarter ended Dec. 29, 2018, posting $15.14 billion, versus $15.35 billion year over year. For Disney's media networks business, which includes ESPN, revenues ticked upward 7% to $5.92 billion in Q1, while the segment’s operating income increased 7% to $1.3 billion.

The entertainment company’s media networks segment, in total, operates cable programming businesses under the ESPN, Disney and Freeform brands; broadcast businesses, including ABC TV Network and eight owned television stations; and its ESPN radio businesses. There was no separate breakout in its report for the latter.

Disney reported $1.84 earnings per share for the quarter, topping Reuters’ estimate of $1.57 by $0.27, Bloomberg Earnings reports. The revenues of $15.35 billion also beat analyst estimates of $15.20 billion.

Cable networks revenues for the quarter increased 4% to $4.0 billion and operating income decreased 6% to $743 million, from higher advertising revenue, as well as higher overall affiliate fee revenue. Lower operating income was due to a decrease at ESPN and Freeform, partially offset by an increase at the Disney Channels, according to multiple news reports, including CNBC and AP.

Broadcasting revenues were up 12% to $1.9 billion as a result of improved affiliate revenue growth, increased advertising revenue and better program sales revenue. Disney says the higher ad revenue is partly attributable to high political advertising at ABC-owned television stations.

The decrease at ESPN was attributed to higher programming costs, somewhat balanced out by affiliate revenue growth and an increase in ad revenue. Programming costs rose because of contractual rate increases for sports programming and a shift in the mix of College Football Playoff (CFP) games (two semi-final games and one “host” game were aired in the current quarter, whereas three host games aired in the prior-year quarter).

Disney’s park business was up 5% to $6.82 billion; while studio entertainment revenues plummeted 27% to $1.8 billion, because of the massive success of last year’s "Star Wars: The Last Jedi" and "Thor: Ragnarok," compared with this quarter’s "Mary Poppins Returns" and "The Nutcracker and the Four Realms."

As Disney looks forward, like many companies, it has its eye on streaming. Bob Iger, chairman and CEO, told investors, “After a solid first quarter, we look forward to the transformative year ahead, including the successful completion of our 21st Century Fox acquisition and the launch of our Disney+ streaming service.” He added that building a robust “direct-to-consumer business is our top priority.”