DISNEY’S PROFITS FALL 28%, MISSING TARGETS
Newly acquired Fox assets damp results as company continues to invest in streaming.
Walt Disney Co.’s purchase of 21st Century Fox was meant to help the entertainment giant transform itself for the streaming future. But the newly acquired Fox businesses have caused some early challenges for the Mouse House.
Disney earnings fell well short of Wall Street estimates in the third quarter, dropping 28% from a year ago, partly because of the worse-than-expected performance of Fox assets, including the movie studio that produced the recent box office flop “Dark Phoenix.”
Burbank-based Disney also continued to spend big on streaming services such as Disney+, which the company believes is key to its ability to compete for years to come. The firm also took full operational control of money-losing streaming platform Hulu, which further eroded profit.
Disney is spending heavily on streaming services ESPN+ and Disney+, which is expected to launch in November. On a call with analysts, Disney Chief Executive Bob Iger said the company will offer consumers a bundle of Disney+, ESPN+ and a version of Hulu for $12.99 a month.
Disney earned $1.35 a share on revenue of $20.25 billion during the quarter that ended June 29, the company said Tuesday. That compared with $1.87 a share on revenue of $15.23 billion during the same period last year.
Analysts had predicted earnings of $1.72 a share and sales of $21.45 billion in the quarter.
Disney shares dropped as much as 5.8% in afterhours trading after the earnings report was released. The shares closed Tuesday at $141.87, up 3% for the day and about 30% this year.
The results reflected the first full quarter of earnings since Disney completed its
Manhattan Beach Studios, a 22-acre production facility for making movies and television shows, has been sold to Los Angeles real estate giant Hackman Capital Partners as part of a $650-million deal that includes an entertainment production services company.
The Manhattan Beach complex serves as the headquarters of Lightstorm Entertainment, the company of filmmakers James Cameron and Jon Landau, who are working there on sequels to their hit 2009 science fiction film “Avatar.”
Other current productions there include HBO’s Issa Rae-starring comedy “Insecure,” ABC’s “America’s Funniest Home Videos” and “Diary of a Female President,” an upcoming comedy from Disney+.
Hackman Capital said Wednesday that it bought the campus as well as studio-operating company MBS Services from Carlyle Group, an international investment firm based in Washington, D.C.
The deal expands Hackman Capital’s studio empire, which includes Culver Studios in Culver City, where Amazon Studios is based, and Television City, a historic studio complex built by CBS in the Fairfax district of Los Angeles.
It also moves Hackman Capital into the role of production services provider in addition to being a landlord and developer.
MBS Services provides resources for content creation such as lighting and grip equipment for the owners of 35 studios with 259 soundstages in top television and film production markets around the world.
“Studios are very operationally intensive,” said Michael Hackman, chief executive of Hackman Capital Partners. Acquiring MBS Services, he said, “was the next logical step for us in growing our studio platform.”
Hackman Capital is in the process of adding new production space to Culver Studios and is considering ways to modernize Television City as a studio campus. The company is studying options for improvements to Manhattan Beach Studios but has no specific plans, Hackman said.
Hackman Capital acquired Manhattan Beach Studios in a joint venture with New York investment firm Square Mile Capital Management. Hackman declined to say how much of the $650-million transaction was for the Manhattan Beach real estate and how much was for MBS Services.
Seller Carlyle Group bought Manhattan Beach Studios for $150 million in 2007 and launched MBS Services in 2013 to offer management services to other studio owners.
Manhattan Beach Studios is one of the newest studios in the region. It was built in 1999 by Shamrock Holdings of California Inc., the private investment vehicle for the Roy E. Disney family. The studio has 587,000 square feet of buildings including 15 soundstages, production offices and the OGN Super Arena for esports competition.