Walt Disney Co. reported fiscal fourth-quarter earnings that beat Wall Street expectations, thanks to sharp growth from the company's cable networks powered by ESPN.
The Burbank-based entertainment giant reported a $1.6-billion profit during the quarter ending Oct. 3, with much of the gains attributed to higher affiliate fees and advertising revenue at the sports broadcaster. Profit from Disney's media networks grew 27% year-over-year.
This was reassuring after Disney signaled in August that profit from ESPN and other cable channels would not be as robust next year as initially expected because fewer consumers are subscribing to full pay-TV packages. The sports network recently laid off 300 workers, or about 4% of its workforce, and last week shuttered its respected Grantland online magazine.
Investors have been worried about how cord-cutting, or viewers abandoning traditional cable subscriptions in favor of less expensive online options, would affect profit at media companies.
Disney Chairman and Chief Executive Robert Iger was upbeat about the changes in consumer habits affecting the entertainment industry, and said the company had chosen to be "refreshingly" candid about the digital shifts as consumers flock to online outlets such as Netflix and Hulu.
"The fact remains that we're in an environment today that's definitely changing. ... There is a lot more competition for people's time," said Iger on a conference call with analysts. "We have an opportunity to distribute our content in more different ways than we ever have before. So there's not only a silver lining, but there's a glass half-full perspective on this, and that's what we have."
Results from Hollywood's biggest entertainment company appeared to neither frighten nor excite investors, and shares changed little in after-hours trading. Shares are up 20% this year and ended the Thursday trading session virtually flat at $113.
The company reported on Thursday earnings of $1.20 a share, up from 89 cents in the year-ago period. Revenue jumped 9% to $13.51 billion during the quarter, coming in slightly lower than Wall Street predicted.
Analysts surveyed by FactSet had estimated that Disney would generate fourth-quarter earnings of $1.14 a share and sales of $13.55 billion.
Disney's film studio posted flat revenues of $1.78 billion during the quarter However, its profit more-than-doubled to $530 million due to greater TV and streaming distribution revenue for its content, and the strong theatrical performance of hits such as "Ant-Man" and Pixar's "Inside Out."
"Ant-Man," starring Paul Rudd as a little-known Marvel superhero, collected nearly $514 million in worldwide box-office ticket sales, according to box office data firm Rentrak. "Inside Out," released in mid-June, has grossed more than $840 million.
The company's theme parks continue to perform, with revenues from the parks climbing 10% to $4.4 billion. Executives attributed the higher revenues mostly to a 15% increase in attendance in Disney's domestic parks, offset partly by higher costs and lower attendance at Disneyland Paris and Hong Kong Disneyland Resort.
"It was a solid quarter, which is pretty much what you've come to expect from Iger," said Rick Munarriz, an analyst with the Motley Fool.
The company is now looking forward to a big attendance jump when it opens its $5.5-billion Shanghai Disney Resort this spring. The company delayed the opening of the park by several months to invest an additional $800 million to expand the size of the park.
Disney executives touted the moves it's making in the on-demand video space to adapt to increased demand for content through streaming services. This month the company is launching Disney Life in Britain, a subscription service with Disney movies, TV shows and other content.
"Actions speak louder than words," said Robin Diedrich, an analysts at Edward Jones. "The new service speaks to the fact that they're willing to and wanting to ... reach consumers in new ways."
The current quarter is expected to feel the power of "Star Wars: The Force Awakens" as the LucasFilm hits theaters Dec. 18, in time for Christmas. The excitement over the upcoming film helped boost sales of classic Star Wars toys in Disney's consumer products business, where sales increased 11% to $1.2 billion.
For the fiscal full-year, Disney delivered a record $8.4 billion in profits, on $52.5 billion in sales.
Los Angeles Times staff writers Meg James and Hugo Martin contributed to this report.