Disney (NYSE:DIS) announced fiscal third-quarter earnings results this week that included strong growth in a few of the media giant's biggest business lines. While a few segments, notably its cable networks and consumer products divisions, struggled, the company offset those challenges with healthy gains elsewhere. The company also made big strides toward breaking out of the traditional TV broadcast model that has served shareholders so well over the past few decades.
Let's take a look at a few numbers that stood out from Disney's earnings report.
20%: Studio revenue growth
The studio business is Disney's main path for launching, and building, its massive trove of intellectual property. That value-creating machine is firing on all cylinders right now, with revenue jumping 20% this quarter to push year-to-date gains to 13%.
Avengers: Infinity War and Incredibles 2 in this period joined Black Panther from the prior quarter to send Disney's overall box office results higher than $6 billion for the third straight year. The media giant's lead here should only get bigger after it acquires studio assets from Twenty-First Century Fox.
15%: Parks and resorts profit growth
The parks and resorts business only logged a 6% sales boost but saw profitability jump thanks to a double-digit earnings spike. In a conference call with analysts, Disney explained that the gains came from higher spending at both its domestic and international parks, price increases, and rising park attendance. The profit spike would have been bigger, too, if it weren't for a shift in the timing of the Easter holiday period and a temporary drop in hotel occupancy tied to room refurbishments.
$6.2 billion: Revenue from the media division
The media segment remains Disney's biggest source of sales and profits, and so it was good news for investors that revenue growth sped up to a 5% rate in that division from 3% in the prior quarter. The business benefited from strong sales growth in the broadcasting segment tied to demand for hit shows like How to Get Away With Murder and Luke Cage. The cable segment inched higher, too, thanks to higher advertising sales and affiliate revenue.
2%: Drop in cable subscribers
The pool of cable subscribers continued to shrink as TV fans move to online sources, which puts pressure on Disney's ratings and, ultimately, its advertising volumes. But this time that decline was 2% compared to 3% in the prior quarter. Disney executives expressed optimism back in May that subscriber losses were stabilizing, and that appears to be happening right along those predictions.
Declines have moderated in each of the last four quarters, in fact, and so investors can reasonably expect steadier results from the media network business going forward.
2019: Streaming service date launch
Executives didn't reveal hard data following the first full quarter of operation for the ESPN+ streaming platform, but they did say trial conversion rates are strong, and subscription growth is tracking ahead of their targets. Costs aren't ballooning beyond their latest projections, either.
Those successes are laying the groundwork for Disney's bold direct-to-consumer launch that's still slated for late 2019. While the service will include plenty of original content from across its Marvel, Disney, Pixar, and Lucasfilm production studios, the volume of choices won't rival Netflix for quite some time. "We're gonna walk before we run," CEO Bob Iger said in the conference call, "because it takes time to build the kind of content library that ultimately we intend to build." A lower monthly price might reflect that relative scarcity of choices, but Disney has the advantage of starting off with a much higher proportion of exclusive and original content than Netflix did in its early days.