BURBANK (dpa-AFX) - Walt Disney Co. (DIS), Tuesday reported a drop in profit for the third quarter, as revenues were below market expectations. The media and entertainment giant also announced its plans to launch a direct-to-consumer streaming service in 2019.
Burbank, California-based Disney's third-quarter profit dropped to $2.37 billion or $1.51 per share from $2.60 billion or $1.59 per share last year.
Excluding special items, earnings for the quarter declined to $1.58 per share from $1.62 per share last year. Analysts polled by Thomson Reuters estimated earnings of $1.55 per share.
Revenues for the quarter were relatively flat at $14.24 billion from $14.28 billion last year. Analysts had a consensus revenue estimate of $14.42 billion.
'Our results for the quarter reflect the underlying strength of our brands and franchises, and our continued investment in high-quality content. Our ability to successfully execute on our core strategy, coupled with our plans for new direct-to-consumer offerings, give us continued confidence in our ability to drive shareholder value,' said CFO Christine McCarthy.
The entertainment giant also announced that it will end its distribution agreement with Netflix for subscription streaming of new releases, beginning with 2019. Instead, Disney plans to launch a Disney-branded direct-to-consumer streaming service in 2019 starting in the U.S. and expanding globally.
Disney has agreed to buy an additional stake of 42 percent in BAMTech LLC for $1.58 billion. BAMTech provides direct-to-consumer streaming technology and marketing services, data analytics, and commerce management.
Disney had previously acquired a 33 percent stake in BAMTech under an agreement that included an option to acquire a majority stake over several years.
Disney will also launch its own ESPN-branded video streaming service in early 2018. The platform, which will feature about 10,000 sporting events each year, will have content from the MLB, NHL, MLS, collegiate sports and tennis' Grand Slam events.
CEO Robert Iger said, 'This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the Company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands.'
The BAMTech transaction is expected to be modestly dilutive to Disney's earnings per share for two years.
Media networks segment's revenues dropped 1 percent to $5.87 billion, while parks and resorts units climbed 12 percent to $4.89 billion. Studio entertainment revenues declined 16 percent to $2.39 billion and consumer products & interactive media division revenues decreased 5 percent to $1.09 billion.
DIS closed Tuesday's trading at $106.98, up $0.63 or 0.59%, on the NYSE. The stock, however, dropped $3.23 or 3.02% in the after-hours trade.
Copyright RTT News/dpa-AFX
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