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Crowds flocked to Disney’s US theme parks in the second quarter, helping the entertainment group post stronger than expected profits despite the continued slide of its traditional television business.
The group reported net income of $5.3bn in the quarter to the end of June, boosted by a $3.3bn tax benefit, which helped it eclipse Wall Street forecasts for $2.3bn. Adjusted earnings rose 16 per cent from a year ago to $1.61 per share, beating estimates of $1.44.
Despite concerns of a US consumer slowdown, Disney’s Florida and California theme parks reported higher spending in the quarter to June. Operating income at Disney’s US parks rose 22 per cent to $1.7bn.
“Consumers generally these days are willing to pay for value,” Disney chief financial officer Hugh Johnston said in an interview. “Our consumer still sees, especially with the investments we’ve been making with parks and cruise ships, a tremendous amount of value.”
The upbeat performance at Disney’s US theme parks contrasted with declines at its traditional television networks, which include ABC, Freeform and the Disney Channel, where revenue shrank 15 per cent from a year ago to $2.3bn.
Johnston said this was due to “the ongoing shift from linear television to the direct-to-consumer side”.
“To be down double digits is not surprising,” he added.
While its linear channels continued to shrink, Disney found fresh momentum in streaming. Revenue from its streaming services climbed 6 per cent from a year ago to $6.2bn, lifting operating income to $346mn in the quarter. Disney+ added 1.8mn subscribers during the quarter, reaching 128mn at the end of June.
Disney also boosted its financial year outlook, raising its full-year profit guidance slightly from the previous quarter. Chief executive Bob Iger said he was “pleased with our creative success and financial performance”.
Disney shares have gained 7 per cent this year, broadly tracking the S&P 500 index.
The company on Tuesday announced it would sell a 10 per cent stake in ESPN to the National Football League, as it prepared a high-stakes streaming launch for the sports channel later this month.
