ESPN Troubles Cloud Disney Earnings; Apple Surpasses $800 Billion Mark
The Walt Disney Co. reported better-than-expected quarterly earnings on Tuesday.
Theme park profits, which climbed 20 percent, and movie incomes, which soared 21 percent, helped the company beat analysts' estimates for the January through March quarter.
Adding to the company's success was the live-action adaptation of Beauty and the Beast. The remake of the 1991 animated movie has become the highest-grossing PG-rated movie of all time in the U.S.
A new theme park in China also helped Disney's bottom line. Attendance at the Shanghai park is expected to cross 10 million visitors in the coming days, faster than Disney projected, CEO Bob Iger told analysts in a post-earnings call.
And while those results sound pretty cheery, analysts wanted to know more about the state of ESPN. The company's longtime profit engine is slowing down.
In the quarter that ended April 1, Disney's media division, which includes ESPN, reported $2.22 billion in operating income, a 3 percent decline.
The sports network has been losing subscribers and dealing with higher programming costs. Despite increased advertising sales and subscriber fees, Disney said ESPN was hurt by costs related to college football playoff games and a new contract for the rights to NBA games.
"CEO Iger said Disney was adapting quickly to the changing TV marketplace and was encouraged by consumer interest in digital services that feature ESPN, such as Dish Network Corp's Sling TV and Sony Corp's PlayStation Vue.
" 'The substantial growth we're already seeing makes us bullish on the future of these nascent offerings,' Iger said. 'Right now, they're a small part of the pay TV universe, but we believe they'll be a much bigger part of the business going forward.'
"Disney also is preparing to launch an ESPN subscription streaming service and bought a 33 percent stake in video-streaming company BAMTech for $1 billion last year.
Apple reaches a record
Apple on Tuesday became the first U.S. company to top the $800 billion market capitalization threshold.
The company reached that level about two years after it crossed the $700 billion mark. It's estimated that if Apple keeps going on its growth path, the company will exceed the $1 trillion market cap level later this year.
The company's shares have risen 33 percent this year.
Reuters reports Apple's closing market cap of $802.8 billion was larger than the economies of 45 of the 50 U.S. states, topped only by Illinois, Florida, New York, Texas and California.
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