‘Star Wars’ fuels record Disney gains
The latest “Star Wars” blockbuster propelled the Walt Disney Co. to its highest quarterly earnings in history, the company announced Tuesday.
“Star Wars: The Force Awakens” has already hit $2 billion in global box-office revenues. It has generated big merchandise sales — $3 billion in the last quarter.
The purchase of “Star Wars” producer Lucasfilm in 2012 is part of a stable of movie franchises Disney has built during the past decade that can crosspollinate its merchandise and theme-park divisions.
“Of course, nothing reflects the impact of this strategy better than the phenomenal re-
surgence of the Star Wars franchise,” Disney Chief Executive Officer Bob Iger told analysts Tuesday. “It’s been absolutely thrilling to see the reaction” to the film.
Strong performance in theme parks and consumer products also helped boost Disney’s first-quarter revenues to $15.2 billion, up 14 percent from the previous year. Adjusted earnings per share increased 28 percent to $1.63. Both metrics beat analysts’ expectations. Still, Disney stock was down more than 3 percent in afterhours trading as the company reported operating-income losses in its media networks division, which includes cable and broadcasting.
S&P Global Market Intelligence analyst Tuna Amobi said the seventh installment in the Star Wars franchise was “almost the singular driver” for Disney’s film and consumer-product divisions during the last quarter.
“The Force Awakens” is the first in a trilogy that will come to theaters over the next three years.
“There’s still a lot to come in future quarters,” Amobi said. “Obviously a lot of the box-office receipts and home video, all those things are still ahead. This is a franchise that’s going to have a very, very long-term impact on the company for a very long time to come.”
For the past quarter, studio entertainment operating income soared 86 percent to $1 billion.
Disney’s parks and resorts also had a strong quarter. Revenue increased 9 percent from the previous year to $4.3 billion. Operating income rose 22 percent to $981 million.
Attendance for the quarter, which ended Jan. 2, was up 10 percent from the previous year at Disney’s domestic theme parks. Per-guest spending jumped 7 percent.
“U.S. demand seems insatiable year after year,” Jessica Reif Cohen, a Bank of America Merrill Lynch analyst, told Disney executives.
Disney Chief Operating Officer Tom Staggs said the company expects to keep up the momentum with “a cadence of new attractions here domestically we think guests will really embrace.”
New attractions opening at Walt Disney World include a “Frozen” ride in Epcot this year and an “Avatar” land at Disney’s Animal Kingdom in 2017. Disney World and Disneyland will both break ground this year on new Star Wars attractions, as well.
Domestic hotel occupancy rose 3 percent to 92 percent. Per-room spending increased 9 percent. The strong lodging performance is leading Disney to consider increasing its number of hotel rooms domestically, Staggs told analysts.
Disney Cruise Lines had its best first quarter ever, driven by higher ticket pricing and onboard spending, despite the three-week dry dock of the Disney Dream for enhancements.
The company’s media networks division’s operating income decreased 6 percent to $1.4 billion, driven by lower ratings and a loss of cable subscribers.
Iger spent several minutes discussing ESPN specifically, noting that so far this quarter the sports cable channel has seen an uptick in subscribers.
“We don’t know exactly what the drivers are or were,” Iger said. There may have been a benefit from the growth of “light packages” such as streaming service Sling TV that have included ESPN, he said.
Sports programming remains popular, he said, and “we believe the predictions that many have made are more dire than they should be.”