Walt Disney Co. on Tuesday delivered better-than-expected results in the past quarter, fueled by box office hits from its latest "Star Wars" and "Frozen" films and a strong response to its new Disney+ streaming service
Profits in the three months leading up to December 28 dipped 24 percent from a year prior to $2.1 billion, while revenues surged 36 percent to $21 billion.
"We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations," said chairman and chief executive Robert Iger.
Iger said on an earnings call that "our hearts go out to all those affected by this devastating" coronavirus outbreak in China, where the entertainment colossus has closed its theme parks in Hong Kong and Shanghai as a health precaution.
The financial hit to Disney's revenue will depend on how long the parks remain closed, and could be more than $135 million if they remain shuttered for two months, chief financial officer Christine McCarthy estimated on an earnings call.
"The current closure is taking place during the quarter in which we typically see strong attendance and occupancy levels due to the timing of the Chinese New Year holiday," McCarthy said.
The earnings report showed that 26.5 million paying subscribers had signed up for the freshly-launched Disney+ by the end of last year, and Iger told analysts that figure reached 28.6 million this week.
Disney, which is the leading force in Hollywood and operates major theme parks and television operations, has been betting heavily on its move to streaming as it takes on rivals such as Netflix and Amazon Prime Video.
"It is a very unique product," Iger said of Disney+.
"There is obviously more competition coming into this space, but there isn't any competition that is like our product."
- Going international -
Disney+ will go international next month, launching in Britain, France, Germany, Spain and other parts of Western Europe on March 24. The streaming television service will launch in India less than a week later, timed for the start of the Premier league cricket season there, according to Iger.
Disney is intent on bulking up its original streaming content, taking advantage of beloved franchises such as "Star Wars" and the Marvel superhero movies. The hit "Mandalorian" series -- a spin-off itself -- is likely to lead to spin-offs starring popular characters, Iger said.
"These same characters and actors from the Marvel cinematic universe, along with events from these new shows, will factor into future Marvel films as we integrate storytelling across these platforms," Iger said.
"We also have the highly anticipated return of 'The Mandalorian' in October."
- Sticking with theaters -
The company saw big gains in its studio entertainment segment, where revenues surged to $3.8 billion in the fiscal first quarter from $1.8 billion a year earlier.
Disney had some of the biggest cinema releases of the year, and the past quarter's results were boosted by "Frozen II" and "Star Wars: The Rise Of Skywalker".
The total global theater box office topped $11 billion dollars, "shattering" a film industry record set by Disney four years ago, according to Iger.
He assured analysts that Disney remains devoted to theatrical releases of films, but that its studios are being relied on for original content for streaming on-demand.
Its "direct to consumer" segment, which includes Disney+, saw revenues jump to $4.0 billion from $900 million. That unit showed an increased operating loss of $693 million, in part due to the costs of launching the streaming service.
Shares in Disney traded in a narrow range after the results, alternating between modest gains and losses.