Three things to watch for in Disney's earnings report today

Three things to watch for in Disney's earnings report today
Walt Disney Co. headquarters in Burbank. (Reed Saxon / Associated Press)

Walt Disney Co. is expected to post strong results for its fiscal second quarter Tuesday, boosted in part by the performance of its film studio.

Analysts expect Disney to deliver earnings per share of $1.45, an increase of 6.6% from the same quarter a year earlier, according to Zacks Investment Research. Analysts also predict the company to report revenue of $13.5 billion, up 3.9% from a year earlier.


Disney's movie studio benefited from two films that did big business during the three-month period that ended April 1: "Rogue One: A Star Wars Story" and "Beauty and the Beast." Both pictures have grossed more than $1 billion worldwide.

Still, investors will be closely watching the performance of ESPN, the crown jewel of the Burbank-based company's media networks unit. ESPN, like other prominent properties in the changing TV landscape, has struggled to adapt to the new ways in which people consume content.

Here are some of the story lines to watch for as Disney reports its earnings after Wall Street's closing bell.

How did ‘Rogue One’ and ‘Beauty and the Beast’ affect the company?

Though "Rogue One" was released prior to the start of Disney's second fiscal quarter, it did notable business during the recent three-month period, crossing the $1-billion mark in late January. And "Beauty and the Beast," which came out March 17, crossed the same plateau a few weeks after the second quarter ended. Beyond accounting for those films' box-office success, investors will be curious to see how they might have turbocharged Disney's other business units.

Past Walt Disney Studios blockbusters such as "Frozen" and "Star Wars: The Force Awakens" have had ripple effects throughout Disney's stable of businesses — boosting, for example, the profits of the company's consumer products arm.

During the fiscal first quarter, the studio posted operating income of $842 million, down 17% from a year earlier. Still, those results were the second best in the studio's history, topped only by its performance during the same quarter last year, when it got a big lift from "The Force Awakens," which grossed more than $2 billion worldwide.

Update on Shanghai Disney Resort?

Disney's ambitious resort in mainland China will celebrate its one-year anniversary June 16. With that milestone looming, Disney could provide updated attendance figures for Shanghai Disneyland during a conference call with analysts that is scheduled to follow the earnings release.

During the company's annual meeting in March, Chief Executive Robert Iger said that almost 8 million people had visited Shanghai Disneyland, the third biggest among the company's dozen theme parks. He said that Disney expects 10 million-plus visitors by the park's one-year anniversary.

The Shanghai development is the biggest partnership between a U.S. entertainment company and a Chinese partner. It is a joint venture with the Shanghai Shendi Group, a state-owned investment entity that holds 57% of the shares. (Disney owns the remainder.)

What about ESPN?

Beyond the numbers, investors will want an update from Disney on how ESPN is charting a path to remain dominant in today's media environment. Consumers are increasingly cutting the cord and freeing themselves of expensive pay-TV services that have been lucrative for the company, forcing ESPN to look to new revenue streams.

ESPN has lost more than 10 million viewers since 2010, according to Nielsen data.

Later this year, ESPN will debut a multi-sport subscription streaming service that will be sold directly to consumers. It is being developed by BAMTech, a video streaming company that Disney acquired a 33% interest in last year.

The network went through a round of high-profile layoffs last month that included the departure of some of the network's popular on-air personalities, including Trent Dilfer and Andy Katz.