Disney missed the mark on Wall Street forecasts for its Q3 results, reporting earnings per share (EPS) of $1.35, down 28% from the same period a year ago.
Analysts had forecast an EPS of $1.75, as well as revenue of $21.47bn. Disney, however, fell short of expectations, reporting overall revenue of $20.25bn.
Bob Iger, chairman and CEO of The Walt Disney Company, blamed the earnings shortfall on the business’s acquisition of 21st Century Fox’s entertainment assets. This quarter marks the first full quarter for the Mouse House since the completion of the merger in March.
“Our third-quarter results reflect our efforts to effectively integrate the 21st Century Fox assets to enhance and advance our strategic transformation,” said Iger in the Q3 report.
The business later noted that “lower than expected” earnings from 21st Century Fox’s film studio and Indian business Star, which includes regional SVOD Hotstar, contributed to the business’s underperformance in Q3.
Breaking down the results, Media Networks reported revenue of $6.71bn, a 21% year-on-year increase, while direct-to-consumer and international brought in $3.86bn, up over 100% year on year.
However, operating losses for the direct-to-consumer and international segment came in at $553m, compared to just $168m for the same period a year ago.
Disney has attributed this loss to the “consolidation of Hulu, the ramp up of investment in ESPN+, which was launched in April 2018, and costs associated with the upcoming launch of Disney+”.
In its earnings call, Disney revealed plans for a $12.99 per month SVOD bundle of Disney+, ESPN+ and the ad-supported Hulu offering.