ESPN Media Disney

Disney revenues down, but company bullish on creative, technology slate


By Doug Zanger, Americas Editor

February 8, 2017 | 5 min read

The Walt Disney Company reported fiscal Q1 2017 earnings, with the company posting revenues of $14.78bn — falling short of analysts expectations of $15.26bn. However, the earnings per share of $1.55 for the quarter that ended on December 31st, was better than the $1.49 per share that was projected by analysts, according to CNBC.

Despite the decrease, and the fact that Disney had a record-breaking first quarter the previous year, the company showed strong results in their parks and resorts business. Additionally, the company is enthusiastic about several aspects of their business, including upcoming opportunities in media and especially digital, with their continued exploration of content through their $1bn investment in BAMTech in August 2016 and the launch of an ESPN-branded OTT service.

“We’re very pleased with our financial performance in the first quarter. Our Parks and Resorts delivered excellent results and, coming off a record year, our Studio had three global hits including our first billion-dollar film of fiscal 2017, Rogue One: A Star Wars Story,” said Bob Iger, chairman and chief executive officer, The Walt Disney Company. “With our proven strategy and unparalleled collection of brands and franchises, we are extremely confident in our ability to continue to drive significant value over the long term.”

Disney’s box office was a particular high point, with Iger noting that their historic $7.5bn box office last year is continuing its momentum with Marvel title Dr. Strange bringing in $670m, Moana $555m, combined with Rogue One’s global success.

Beauty and the Beast, slated to be released in March, is also another highly-anticipated title from the studio and has already garnered significant attention with the first trailer topping 127m online views in the first 24 hours, breaking the record set by the studio’s Star Wars: The Force awakens. However, it is the only studio release in the quarter and faces a tough comparison to last year’s second quarter, which benefited mightily from Star Wars: The Force Awakens and Zootopia.

New films in the Guardians of the Galaxy, Pirates of the Caribbean and Cars franchises are to be released this year, adding to the company’s positive outlook.

The company’s parks and resorts business appears to be healthy with a 6% revenue increase compared to the same quarter last year. A good portion of the growth was related to Shanghai Disneyland, which Iger pointed out was at maximum capacity for the recent Chinese New Year celebration and could top out at 10m visitors by the park’s first anniversary.

The impact of Hurricane Matthew, affected attendance and revenue for the company’s Walt Disney World resort in Florida, but higher guest spending proved to be an important offset to attendance declines. Additionally, a new addition to Disney’s Animal Kingdom in Florida, Pandora: The World of Avatar, the first major new attraction at the park for some time and set to open May 27th, is also a big positive.

On a call with investors, there was a great deal of interest and conversation around Disney’s media properties, especially ESPN and the impact the BAMTech investment would have on future plans around OTT, direct-to-consumer and MVPD services. Iger pointed out the sheer disruption in the space and that the company is bullish on the new technologies and opportunities, but still sees great value in linear television and the more traditional distribution partnerships.

“In reality the best approach to doing well in a world that is disrupted is to have great content and tell great stories,” said Iger.

Specifically related to ESPN, which had a 7% ad revenue dip due to three college football games being moved into the current quarter, Iger noted that OTT has helped with audience gains and that a strong mobile-first approach on platforms is “a signal of what is to come and what the future will be.” ESPN has expanded their multi-channel presence including on Sling TV, PlayStation Vue, DirecTV Now and the soon to be launched Hulu, but has been losing subscribers' due to "cord-cutting" of cable services and packages.

Noting that BAMTech’s technology “has blown us away,” there is great anticipation for the new ESPN OTT service which will provide “complementary” licensed ESPN programming that isn’t airing. Moreover, the data gleaned from the direct-to-consumer approach would be beneficial in giving Disney more control and insight and help advertising revenue. Currently, the company relies on third-party distribution and they “don’t get access to that information.”

Pressed on the call about his own future plans, Iger, whose current contract ends in 2018 and has been at the company for 43 years, indicated that he would make the decision in “the best interest of this company which is something the board is clearly going to help determine.”

ESPN Media Disney

More from ESPN

View all


Industry insights

View all
Add your own content +