Disney's profit surges in first quarter but revenue dips amid struggles in media networks

Daniel Miller, Los Angeles Times on

Published in Business News

LOS ANGELES -- Walt Disney Co. delivered stronger than expected profits in the first quarter -- thanks partly to a federal tax cut -- but its revenue dipped as the Burbank company saw continued declines at its ESPN cable channels and ABC broadcast network.

The Burbank company reported net income of $4.42 billion, up 78 percent from a year earlier, boosted by a $1.6 billion one-time tax benefit from the new federal income tax legislation.

Analysts had predicted earnings per share of $1.61 on revenue of $15.5 billion, according to FactSet, and Disney delivered adjusted per-share earnings of $1.89 on revenue of $15.4 billion.

Revenue rose 4 percent, but the company missed on analysts' expectations for sales.

Disney's earnings report comes amid a period of turbulence for global markets -- on Monday the Dow Jones industrial average plunged 1,175 points -- and the company's performance is sure to be scrutinized by anxious investors.

Shares of Disney rose 1.4 percent in regular trading to $106.17. In the after-hours session, the stock was up about 1 percent.

The media networks unit saw its operating income decline year-over-year for the seventh consecutive quarter.

The unit -- whose crown jewel is ESPN -- reported operating income of $1.2 billion, a drop of 12 percent from a year earlier.

Within the unit's cable networks group, segment operating income declined 1 percent to $858 million. Disney attributed the drop, in part, to declines at ESPN, which experienced a loss in subscribers.

The unit's broadcast group, which includes ABC, posted segment operating income of $285 million, a decrease of 25 percent. Disney has continued to face ratings struggles at the ABC television network, fewer syndication hits from its television studio and lower revenues at TV stations.


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