Disney earnings surge in second quarter, thanks to ‘Black Panther’ hit and theme parks’ growth

Walt Disney Co.’s profit surged in its fiscal second quarter, partly driven by the success of the Marvel Studios hit film “Black Panther.”

Burbank-based Disney on Tuesday reported earnings of $2.94 billion, or $1.84 a share, in the quarter that ended March 31, an increase of 23% from the same quarter in 2017. Total revenue for the entertainment giant was $14.5 billion, up 9% from the same period last year.

The results easily exceeded the $1.70 a share in profit and $14.1 billion in sales that analysts had predicted, according to data compiled by FactSet.

The company’s studio entertainment revenues grew 21% to $2.45 billion, while operating income jumped 29% to $847 million.

“Black Panther,” directed by Ryan Coogler, became a cultural phenomenon upon its February release, collecting more than $1.3 billion in global box office sales. The studio followed up with the April release of “Avengers: Infinity War,” which has already grossed $1 billion, not reflected in the second-fiscal quarter earnings.

Home entertainment sales of “Star Wars: The Last Jedi” also helped quarterly results.

“It’s clear from the recent results, as well as from the slate ahead, that our studio has and will continue to raise the bar in terms of both creative and commercial success,” Disney Chief Executive Bob Iger said on a conference call. “The incredible performance of Marvel’s ‘Black Panther’ is just one of many examples.”

Disney also reported a big boost from its theme parks business, which rose 13% to $4.88 billion in revenue. Growth at Walt Disney World Resort, Disneyland Paris and Hong Kong Disneyland Resort gave the segment a lift.

“The parks and the studio have been the strong areas of the company for a while now, and that continued to be the case this time,” said Robin Diedrich, an analyst with Edward Jones.

As Disney continues to boast strong results from its film studio and parks business, the company is facing a likely showdown with cable giant Comcast Corp. over its purchase of Rupert Murdoch’s 21st Century Fox.

Disney is hoping to buy the bulk of Fox, including the film and TV studio, for $52.4 billion, pending regulatory approval, in a deal first announced in December. The proposed deal is a major component of Iger’s plan to make Disney a more powerful competitor in the face of growing competition from tech giants including Netflix, Amazon and Apple.

However, Comcast Corp. is preparing an all-cash offer to outbid Disney, after previously getting rebuffed by Fox, people familiar with the matter said. Disney’s bid is an all-stock transaction.

Disney shares fell 69 cents, or 0.7%, to $101.79 in regular trading Tuesday after Reuters first reported the potential Comcast bid. The stock fell an additional 0.5% in after-hours trading, following Iger’s conference call with analysts.

The Fox acquisition is partly driven by Disney’s desire to have more film and TV content for two streaming services — a Disney-branded offering set to launch next year, and an ESPN streaming service that launched in April. But Iger said the Fox deal is not make-or-break for the digital strategy.

“We announced the two new digital products, the ESPN+ product and the Disney product, well in advance of the Fox acquisition.” Iger said. “So neither one is dependent upon that acquisition. Both are capable of taking advantage of some of the assets we’ll be buying as part of that acquisition.”

The ESPN streaming service, dubbed ESPN+, is a bid to draw online viewers as the network has been squeezed by cord cutting and the rising cost of televising major sports.

ESPN+ subscribers have on-demand access to live events, including Major League Baseball, NHL hockey and collegiate sports, as well as ESPN’s critically acclaimed “30 for 30” sports documentaries.

Iger did not say how many people have signed up to try ESPN+, but said he was encouraged by the early response.

“A number of people have signed up for the trial and our conversion rates have been good so far,” Iger said. “Basically, I give it a so far, so good.”

Operating income for Disney’s cable networks business declined 4% in the quarter to $1.73 billion, reflecting decreases at ESPN and Freeform and a loss at digital platform BAMTech, Disney said.

Overall media networks revenue, which includes ABC and cable channels, grew 3% to $6.14 billion. The segment’s profit declined 6% to $2.08 billion.

ryan.faughnder@latimes.com

@rfaughnder

UPDATES:

4:57 p.m.: This article was updated with comment from an analyst.

3:05 p.m.: This article was updated with comments from Disney CEO Bob Iger.

This article was originally published at 1:45 p.m.