As Fox deal nears, Dis­ney thinks big

Fourth quar­ter rev­enue rose 12 per­cent to $14.3 bil­lion

The Norwalk Hour - - BUSINESS - By Alexan­der Soule; 203-842-2545; @ca­soul­man

With the re­lease this month of its first trailer for “Spies in Dis­guise,” Blue Sky Stu­dios pre­viewed the plot de­vice for its next an­i­mated film — a se­cret agent who is changed into a pi­geon by a gad­get engi­neer, with the newly mis­matched pair hav­ing to work to­gether on the mis­sion.

With Dis­ney near­ing com­ple­tion of the $71 bil­lion acquisition of the 21st Cen­tury Fox par­ent of Blue Sky Stu­dios, the en­ter­tain­ment gi­ant will be adding a third ma­jor an­i­ma­tion house in Green­wich-based Blue Sky in ad­di­tion to Walt Dis­ney An­i­ma­tion and Pixar.

Start­ing this month with Ralph Breaks the In­ter­net, Dis­ney has a big slate of po­ten­tial block­busters lined up to in­clude the an­i­mated Toy Story 4 from Blue Sky ri­val Pixar; as well as the live-ac­tion Cap­tain Mar­vel, Dumbo, Aladdin, The Lion King and Star Wars Episode IX; and next month, the hy­brid Mary Pop­pins Re­turns.

In its fourth fiscal quar­ter end­ing in late Septem­ber, Dis­ney rev­enue rose 12 per­cent from a year ago to $14.3 bil­lion, with prof­its up a third to $2.3 bil­lion. For the 2018 fiscal year, Dis­ney earned $12.6 bil­lion on rev­enue of $59.4 bil­lion, rep­re­sent­ing gains of 40 per­cent and 8 per­cent re­spec­tively.

In ad­di­tion to its pend­ing acquisition of Fox and Blue Sky, Dis­ney owns Bris­tol­based ESPN, with Hearst a mi­nor­ity in­vestor with a 20 per­cent stake.

ESPN had a 6 per­cent drop in ad rev­enue dur­ing the third quar­ter, which Dis­ney at­trib­uted in part to drop­ping view­er­ship num­bers, with ad sales up in the cur­rent fourth quar­ter. Dis­ney has been at­tempt­ing to re­verse ESPN’s for­tunes by ty­ing it into emerg­ing “over the top” video ser­vices like Hulu that view­ers stream over the In­ter­net, in­de­pen­dent of pay-ca­ble net­works like Op­ti­mum, Spec­trum or Xfin­ity.

“Th­ese ser­vices tend to be very at­trac­tive for younger view­ers — they are also less ex­pen­sive, which I think is im­por­tant, even though I think there might be an op­por­tu­nity for us to take pric­ing up a bit at Hulu,” said Dis­ney CEO Bob Iger, dur­ing a Thurs­day con­fer­ence call. “And the user ex­pe­ri­ence is great, so ... with that in mind we be­lieve that ESPN will ben­e­fit nicely from that over the long term.”

Dis­ney plans to roll out its own stream­ing ser­vice next year called Dis­ney+ af­ter in­tro­duc­ing ESPN+ ear­lier this year un­der a $5 monthly sub­scrip­tion.

“It clearly is work­ing in terms of in­ter­est from users and sub­scrip­tions, which con­tinue to grow,” Iger said of the new ESPN+ stream­ing ser­vice. “From the re­search we’ve seen and just gen­er­ally anec­do­tal in­for­ma­tion, it’s a prod­uct that is con­sid­ered a good con­sumer ex­pe­ri­ence — easy to nav­i­gate, easy to use and very high quality in terms of the quality of the live stream­ing . ... I would say we’re just in the early in­nings, to use a sports anal­ogy, of where we’re go­ing to be.”

Michael Na­gle / Bloomberg

A mon­i­tor dis­plays Walt Dis­ney Co. sig­nage on the floor of the New York Stock Ex­change in New York on Fri­day.

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