Magic kingdom: People visit a Disney store in the Manhattan. The company’s board authorised a US$3bil share buyback programme for this year. — Reuters
LOS ANGELES: Walt Disney chief executive officer Bob Iger hit back at activist investors with a slew of announcements, including a splashy investment in Fortnite maker Epic Games and plans to launch an ESPN streaming service in 2025.
Iger revealed the plans after Disney’s board of directors authorised a US$3bil share repurchase programme for the current fiscal year, and declared a dividend of 45 US cents a share, a 50% increase from the dividend paid in January.
Together they helped drive up Disney’s stock nearly 7% to US$106.05 in after-hours trading.
Iger said Disney would take a US$1.5bil stake in Epic Games. The two companies would work together to create a “huge Disney universe” where consumers can interact with characters and stories from Disney, Pixar, Marvel, Star Wars and Avatar, he said.
“This marks Disney’s biggest entry ever into the world of games and offers significant opportunities for growth and expansion,” Iger said in a statement.
The partnership signals another attempt at interactive entertainment for Disney, which in 2016 shut down its Disney Interactive Studios, publisher of the toys-come-to-life game series Infinity, and announced it would instead license its characters to outside game companies.
Iger also offered details about the long-anticipated streaming launch of the flagship ESPN sports network, which would be bundled with Disney+ and Hulu, and integrate features such as ESPN Bet, fantasy sports and eCommerce. He said it is likely to launch in August 2025.
A day earlier, Disney announced it would form a joint venture with Fox and Warner Bros Discovery to launch a streaming sports service that would combine their broad portfolios of professional and collegiate sports rights as well as their networks, including ESPN, Fox Sports 1 and TNT,
“We believe there are a number of sports fans out there that want to watch sports on television, but didn’t want to sign up to the big cable and satellite bundle,” Iger said on a post-earnings conference call.
Disney posted earnings of US$1.22 per share, excluding certain items, ahead of analysts’ consensus forecast of 99 US cents per share for October through December.
Quarterly revenue was comparable to a year ago, at US$23.5bil, but short of projections of US$23.6bil.
Disney said it cut US$500mil in costs across its business during the quarter, and that it remains on track to meet or exceed US$7.5bil in savings by the end of the current fiscal year.
The company is under pressure from activist investor Nelson Peltz, who is seeking Netflix-like profit for its streaming business, better performance of its movies at the box office, and more details about its plans to make ESPN a dominant digital platform.
“Just one year ago, we outlined an ambitious plan to return the Walt Disney Co to a period of sustained growth and shareholder value creation,” Iger said in a statement. “Our strong performance this past quarter demonstrates we have turned the corner and entered a new era of growth for our company.”
The company’s Experiences unit, which includes its theme parks and consumer products, posted record revenue, operating income and operating margins.
Disney reaffirmed guidance that its streaming business would reach profitability by September. It reduced streaming operating losses to US$138mil in the quarter, a dramatic improvement over a year ago, when it lost nearly US$1bil. The average monthly revenue per Disney+ user, outside of India, rose 14 US cents.
The Disney+ streaming service shed 1.3 million subscribers, nearly double the loss of 700,000 that analysts forecast, after an October price increase.
The company forecast it would gain 5.5 million to six million Disney+ subscribers in its second quarter, with positive momentum in per-user revenue. — Reuters
