Walt Disney Studios Q1 Operating Income Plummets 63%

Mary Poppins and The Nutcracker proved no match for Marvel superheroes and “Star Wars” as The Walt Disney Co. said first-quarter (ended Dec. 29, 2018) operating income at Walt Disney Studios dropped 63% to $309 million from operating income of $825 million during the previous-year period. Studio revenue fell 27% to $1.8 billion from $2.5 billion a year earlier.

The studio on Feb. 5 said lower operating income was due to a decrease in theatrical distribution results, partially offset by growth in TV/SVOD distribution.

Specifically, Disney’s previous-year results from Star Wars: The Last Jedi, Coco and Thor: Ragnarok dwarfed Mary Poppins Returns and The Nutcracker and the Four Realms in the current year. Box office hit Ralph Breaks the Internet was released in the current second quarter.

CFO Christine McCarthy warned theatrical and home entertainment operating revenue would come up short in the current second quarter in the range of $450 million to $500 million compared to the previous-year period — which was the best Q2 ever for the studio.

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Growth in TV/SVOD distribution was due to the performance of Incredibles 2 and Avengers: Infinity War in the current quarter compared with Cars 3 and Guardians of the Galaxy Vol. 2 in the prior-year period.

Overall, the Walt Disney Co. reported earnings per share of $1.84, down 3% from the previous year, when the company posted EPS of $1.89. Total revenue came in at $15.3 billion, about the same as last year.

The down financials nevertheless beat Wall Street expectations. Analysts were anticipating EPS of $1.55 and revenue of $15.18 billion.

Higher revenue from broadcast and parks — run by former Disney home entertainment chief Bob Chapek — offset the declines at Walt Disney Studios.

 

Disney to Demonstrate DTC Service Disney+ April 11

The Walt Disney Co. will demonstrate its pending direct-to-consumer streaming service Disney+ and offer a first look at some of the original content being created by the company’s TV and film studios exclusively for the service at an investor day presentation April 11, the company announced.

Also, effective for the first quarter of fiscal 2019, the company will begin reporting segment operating results for four segments: media networks; studio entertainment; parks, experiences and consumer products; and direct-to-consumer and international (DTCI), the company reported Jan. 18 in a filing with the SEC. In the Form 8-K, the company also recast financial results for the past three fiscal years to reflect the reorganization of Disney’s business segments. In the fiscal year ended Sept. 29, 2018, recast numbers show the DTCI segment with a loss of $738 million.

“Our top priority is fully leveraging our global brands and great content to create world-class direct-to-consumer entertainment,” said Disney chairman and CEO Robert A. Iger in a statement. “We have the structure and management in place to drive growth in our DTC business, and our acquisition of 21st Century Fox further enhances our ability to deliver significant value to consumers and shareholders.”

“Acquiring BAMTech enabled us to enter the DTC space quickly and effectively, as demonstrated by the success of ESPN+,” Iger said in a statement. “The service surpassed 1 million subscribers in its first five months and continues to grow as it expands its content mix, all of which bodes well for our upcoming launch of Disney+. The ability to connect directly with millions of Disney, Pixar, Marvel, and Star Wars fans creates tremendous opportunities for growth. In addition to leveraging our existing IP in new ways, we’re making significant investments in original content exclusively for Disney+, creating an impressive pipeline of high-quality movies and series we believe will make the streaming service even more compelling for consumers.”

The slate of Disney+ content currently in production includes the first-ever live-action Star Wars series “The Mandalorian”; an original series based on Disney Channel’s “High School Musical”; an animated series based on Pixar’s “Monsters, Inc.” franchise; a new season of the “Star Wars” animated series “Clone Wars”; a live-action version of the animated classic Lady and the Tramp; and original docu-series. A live-action Marvel series starring Tom Hiddleston and a second “Star Wars” series starring Diego Luna are also in development, the company announced.

Disney’s ‘Christopher Robin’ Coming to Disc and Digital Nov. 6

The family film Christopher Robin will come out on digital (including Movies Anywhere) and on Blu-ray and DVD Nov. 6 from Walt Disney Studios Home Entertainment.

In the live-action adventure, A.A. Milne’s characters from the Hundred Acre Wood — Pooh, Tigger, Piglet, Eeyore, Kanga, Roo, Rabbit and Owl —venture into mid-century London to help grown-up Christopher Robin (Ewan McGregor) and remind him to appreciate the simple pleasures in life.

The film made $98.3 million in theaters.

Bonus features on Blu-ray combo pack (Blu-ray, DVD and digital) and digital include: “In Which … A Movie Is Made for Pooh ,” a behind-the-scenes look at the making of the movie; “In Which … Pooh Finds His Voice,” featuring voice actors; “In Which … Pooh and Walt Become Friends,”  exploring the legacy of Walt Disney’s first encounter with Pooh; and “In Which … Pooh and Friends Come to Life,” about the special effects of bringing the stuffed characters to life. The digital release includes the exclusive bonus feature, “In Which … We Were Very Young,” about the original teddy bear given to Christopher Robin Milne 98 years ago. Bonus features may vary by retailer.

Disney Releasing 25th Anniversary Blu-rays for ‘Nightmare Before Christmas,’ ‘Hocus Pocus’ Sept. 2

Walt Disney Studios will celebrate the 25th anniversary of two of its popular Halloween-themed titles with new Blu-ray and digital (including Movies Anywhere) releases of Hocus Pocus and The Nightmare Before Christmas Sept. 2.

Produced by Tim Burton, The Nightmare Before Christmas is a stop-motion animated musical-fantasy that follows Pumpkin King Jack Skellington’s misguided mission to make Yuletide his own.

The release includes a new sing-along mode version, which includes pop-up lyrics to 11 songs, as well as the original film.

Bonus features (may vary by retailer) on Blu-ray and digital include song selection; six making-of featurettes; deleted storyboards; deleted animated sequences; Burton’s early short film “Frankenweenie”; a tour of Jack’s Haunted Mansion, transformed by Disney Imagineers for Disneyland; Burton’s original poem that inspired the movie narrated by Christopher Lee and set over illustrations based on Burton’s art; storyboard-to-film comparison; the theatrical trailer; and the teaser trailer.

Bonus features exclusive to the Blu-ray include Burton’s early film Vincent, narrated by Vincent Price, and a view of the promotional posters from the movie’s release.

Hocus Pocus stars Bette Midler, Sarah Jessica Parker and Kathy Najimy as three 17th century witches who are accidentally brought to the 20th century.

The Blu-ray includes the original theatrical film and the “We Love Hocus Pocus: Trivia and Treats Edition,” featuring pop-up factoids, trivia, deleted scenes, concept art, filmmaker commentary and behind-the-scenes secrets. The Blu-ray also includes the original 1993 production featurette.

‘Solo: A Star Wars Story’ Due on Digital Sept. 14, Disc Sept. 25

Lucasfilm’s Solo: A Star Wars Story arrives on digital Sept. 14 in HD and 4K Ultra HD (including Movies Anywhere) and on Blu-ray, DVD, 4K Ultra HD Blu-ray and on-demand Sept. 25 from Walt Disney Studios Home Entertainment.

Directed by Ron Howard and starring Alden Ehrenreich as Han Solo, the film explores Han’s first encounters with future friend and copilot Chewbacca (Joonas Suotamo) and notorious gambler Lando Calrissian (Donald Glover), as well as his past alongside fellow street thief Qi’ra (Emilia Clarke) and career criminal Beckett (Woody Harrelson).

 Digital and Blu-ray bonus content includes:

  • “Solo: The Director & Cast Roundtable,” in which Howard and the cast discuss the making of the film;
  • “Team Chewie,” about what it takes to bring a Wookiee to life;
  • “Kasdan on Kasdan,” in which Star Wars screenwriter Lawrence Kasdan and son Jonathan share what it was like to write the movie’s script together;
  • “Remaking the Millennium Falcon,” tracking the transformation of the ship;
  • “Escape from Corellia,” about the making of the chase through the streets of Corellia;
  • “The Train Heist,” which explores the challenges of creating this action sequence, including its remote location and effects;
  • “Becoming a Droid: L3-37,” about creating the droid with the actor;
  • “Scoundrels, Droids, Creatures and Cards: Welcome to Fort Ypso,” an in-depth tour of the bar;
  • “Into the Maelstrom: The Kessel Run,” about this famous moment in Star Wars history;
  • eight deleted and extended scenes;
  • and “The Millenium Falcon: From Page to Park,” an exclusive look at the history of the famous ship and how it will translate in Disneyland’s park.

 

Bonus content may vary by retailer.

Ted Sarandos Says Netflix Subs Won’t Miss Disney Movies

Disney is planning to launch a branded subscription streaming video service in 2019, the same year its exclusive landmark pay-TV window distribution deal with Netflix for original movies expires.

The pending change is noteworthy considering Disney has owned the box office in recent years with its successful slate of Marvel superhero movies, Pixar Animation titles and Star Wars.

At the May 14 MoffettNathanson Media & Communications Summit in New York, Netflix CCO Ted Sarandos was asked about the impact of Disney going direct-to-consumer and pending loss of its original movies.

“People always ask me, ‘where you surprised Disney is going to go direct?’ I don’t know what took them so long, exactly,” said Sarandos.

The executive said that with Netflix releasing 1,000 original programs this year, including scripted series and movies, the pending loss of Disney movies would be measured.

Interestingly, catalog Disney movies made from 2016-18 (and older) will remain on Netflix after 2019 – as well as Disney’s OTT service.

“[Our subs] watch [Disney movies], but it wasn’t particularly passionate watching and those films are widely available on a bunch of other channels,” Sarandos said.

The executive contends Netflix will continue to differentiate programming in an effort to better compete against Disney, Amazon Prime Video, Hulu and foreign OTT video competitors.

Sarandos wonders how Disney will accommodate switching from content licensing (Netflix shelled out more than $300 million annually to Disney) to content cost when it goes consumer-direct.

“Turning that revenue into a cost is going to be an interesting balance, but they’ve got great brands and they will figure it out,” he said.