In the third quarter, Disney’s revenue was 20.245 billion US dollars and net profit was 1.76 billion US dollars, both of which were less than expected.
Editor’s note: This article is from WeChat public account “Sanwen Entertainment” (ID : hi3wyu), author: Dkphhh.
To compete with Netflix and Amazon, Disney expects to have 60-90 million subscribers of streaming media at the end of 2024, of which 1/3 are US users and 2/3 are from overseas.
After August 6th, US Eastern Time, Disney announced its third-quarter earnings report as of June 29, 2019.
The financial report shows that Disney’s third quarter revenue was 20.245 billion US dollars, up 33% from the same period last year, 15.229 billion US dollars, but this figure did not reach Wall Street’s 21.44 billion US dollars.
In terms of profit, Disney’s operating profit for the third quarter was $3.961 billion, down 5% from $4.189 billion in the same period last year. Net profit was $1.76 billion, down 39.6% from $2.916 billion in the same period last year, which was also less than expected.
According to Tiger Securities, Disney’s aftermarket value evaporated by $9.85 billion, as both third-quarter revenue and profit fell short of expectations.
In addition, Disney’s cash flow for the quarter was $2.925 billion. This is the first time that Disney’s cash flow has been negative for many years. Once again, streaming media is a very lucrative business.
Disney’s revenue is still composed of four major businesses: media network, paradise, film and television entertainment and DTCI. After DTCI’s revenue surge, Disney’s reliance on media networks and parks has declined, but they remain the backbone of Disney’s revenue.
It is worth noting that the third quarter included consumer and international business units (DTCI) revenue streams of ESPN+, Hulu and other streaming media platforms reached $3.858 billion, up 366.5% from $827 million in the same period last year. The new department, which was established only in March last year, has been a “brother” for the past few quarters, but it can be done on its own after the quarter.
The growth in DTCI’s revenue comes from the integration of Disney’s business unit, and integration is also the main theme of Disney’s third-quarter.
“Our earnings report reflects our efforts to integrate the acquired assets, businesses and people… The implementation of the integration is very good,” Disney chairman Bob Iger told analysts.
Disney completed the acquisition of Fox in March this year. In Disney’s second-quarter earnings report, we can see that Fox’s financial situation has been separately listed. But in the third-quarter earnings report, Fox has disappeared, and its business has been fully integrated into the huge empire of Disney.
In addition, in May of this year, Disney won Hulu. Full control, in the third quarter of the financial report, Hulu’s performance has also been integrated into the financial report.
Disney expects that by the end of 2024, streaming media subscribers will reach 60-90 million, of which one-third are US-based users and two-thirds are overseas users.
Behind the skyrocketing DTCI sector, Disney’s integration of Fox and Hulu
The Consumer and International Marketing Department (DTCI) shoulders the future of Disney. The revenue of this department mainly comes from four parts, namely, Hulu, ESPN+, and the upcoming Disney+, Disney and ESPN international channels, and BAMTech, which provides streaming technology services, to the youth group. Media Vice.
This quarter, the most outstanding performance is this department, revenue of 3.858 billion US dollars, higher than the film and television entertainment sector, compared with 827 million US dollars in the same period last year, surged 366.5%. Revenue share also rose from 6.3% in the previous quarter to 18.39% in this quarter.
The increase in revenue comes from Disney’s integration of Fox and Hulu. According to the earnings report, Disney merged Fox and National Geographic’s international channels into the DTCI division. At the same time, because Disney actually controlled Hulu, Hulu’s performance was not compromised and was included in the DTCI department.
However, DTCI is also the only loss-making department in the four business units. This quarter, DTCI lost 553 million US dollars, an increase from the loss of 168 million US dollars in the same period last year. DTCI’s losses are mainly due to Hulu’s business integration, as well as increased investment in ESPN+ and the costs associated with Disney+. Although not specified, but from the content plan published by Disney, it may be that the cost associated with content production is too large and causes losses.
At present, ESPN+ has 2.4 million subscribers, and Hulu has 28 million subscribers.
In addition to financially unified settlement, Disney is in business The integration does not stop for a moment.
In the second quarter, Disney spent about $400 million to dismiss Fox employees. Before the third-quarter earnings announcement, Disney continued to deal with Fox’s assets intensively through consolidation and selling. According to the earnings report, the third quarter spent $207 million on business integration.
According to Bloomberg News, Disney intends to sell most of Fox Sports’ local sports channels to Sinclair Broadcasting Group. These local sports channels mainly report on local sports teams and do not have anything to do with Disney’s main line business. And in terms of sports content, Disney already has ESPN and ESPN+ covering TV and streaming media.
On August 1st, there was news that the Fox production department and the visual effects department were laid off. The layoffs included three executive vice presidents and directors of the visual effects department. According to foreign media reports, the vice presidents of the three production departments originally reported to Emma Watts, who is now the vice chairman of the Fox production department, and has reported that she recently signed a new contract with Disney.
In addition, Fox Research Library, the archives department that preserves Fox’s history, is expected to close by January 6, 2020, and future Fox’s historical archives will be incorporated into Disney’s official archive Walt Disney Archives.
At the end of last month, there was a foreign media coverage of Hulu’s original team (scripted origThe inals team is being integrated into the Disney TV production department, and Craig Erwich, senior vice president of content at Hulu, will also report to Disney TV studio and ABC Entertainment Chairman Dana Walden. In the future, Hulu’s content team may be integrated into Disney’s content team.
Disney broke the box office record, and entertainment revenue increased by 33%
The revenue of the film and television entertainment sector is mainly derived from theater box office sub-accounts, home entertainment products (mainly DVD) and copyright sales of TV and streaming media.
In the third quarter, revenues from the film and television entertainment sector reached $3.836 billion, up 33% from $2.88 billion in the same period last year. Operating profit was $792 million, up 13% from $701 million in the same period last year.
A large part of the increase in revenue comes from the line-of-view. In the third quarter of April to June, Disney released “Amazing Captain”, “Reunification 4”, “Aladdin”, “Toy Story 4”, the box office of these films add up to nearly 6 billion US dollars , far beyond the lineup of the same period last year.
And, on July 28th, Disney officially announced that the global box office in the year of 2019 reached $7.67 billion, breaking the $7.6 billion annual global box office record maintained by itself.
However, Fox’s film department dragged down Disney’s strong box office performance and saw a $170 million operating loss. The reason is that “Black Phoenix” lost at the box office. The budget of 200 million US dollars ended with only 252 million US dollars in global box office.
In the face of Fox’s box office defeat, Disney Chairman Bob Iger told analysts at the conference call, “We are confident to reverse the status quo of Fox movies” and said that he is very optimistic about Fox’s upcoming film “The Madman”. .
At present, Alan Horn, the head of Disney studios, has taken over the Fox production department. He has cut down several established film projects and shut down some studios, including the famous “Fox 2000”. In the future, there will be only five to six movies each year launched by the Fox brand.
Disney’s acquisition of Fox is not for their productionThe team, more of the value of Fox’s hands. In addition to the “Avatar” and “X-Men” big IP, Fox and “Museum of the Museum”, “Little Ghosts”, “Little Kid Diary” such a young and old IP, very suitable for Disney + positioning.
Paradise and media network business continues to grow steadily
Disney’s Paradise, Experience and Products business generated revenues of $6.575 billion in the third quarter, up 7% from $6.136 billion in the same period last year, and operating profit of $1.719 billion, up 4% from $1,055 million in the same period last year.
Revenue from the paradise, experience and products business includes Disney’s resorts, parks, hotels and cruises around the world, as well as a variety of retail products licensed from Disney.
The third quarter of the Disney season coincided with the Easter holiday, and the number of holiday trips increased, which led to an increase in business revenue for this fiscal season. In addition, California Disneyland’s “Star Wars: Galaxy Edge” theme park was also put into trial operation on May 31, and is expected to be fully open by the end of the year.
The Disney park ticket revenue for the fiscal quarter was $1.956 billion, up 7% from $1.834 billion in the same period last year. The increase in ticket sales was mainly due to the increase in the average selling price of tickets. At the same time, per capita consumption in the park has also increased, and the revenue of various commodities and food and beverages rose from 5.44 billion US dollars in the same period last year to 1.515 billion US dollars, up 5%.
Disney American hotels accounted for 88% of the third quarter, compared to 86% in the same period last year. The hotel’s consumption per share rose to $366, an increase of $9 more than the $357 in the same period last year.
The release of “Toy Story 4” also led to the sales of related toys. The revenue of merchandise licensing and retail business rose from 918 million US dollars to 993 million US dollars, up 8%.
In the third quarter, Disney Media Network revenue was $6.713 billion, up 21% from $5.534 billion in the same period last year, and operating profit was $2.136 billion, up 7% from $1.995 billion in the same period last year.