Misfiring ESPN sees Disney take hit in Q1
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Joseph O'Halloran
| 08 February 2017

Parks and Resorts were ‘excellent’ and the new Star Wars was its first billion-dollar film, but falling media network revenues put a brake the Walt Disney Company in the first quarter of 2017.
For the quarter ended 31 December 2016, the House of Mouse posted revenues of $14.784 billion, a 3% year-on-year fall, with net income of $2.479 billion showing a 14% drop compared with the first quarter of 2016.

In the media networks division, revenues slipped 2% year-on-year to $6.233 billion, driving an operating income of $1.362 billion, itself dropping 4% annually. The company also said that performance was adversely affected by its investment in A+E Television Networks.*

Drilling deeper into the division, the quarterly results showed revenues at cable networks decreased 2% compared with the corresponding period a year ago, and operating income tumbled 11% to $900 million. The latter was due mainly to higher programming costs and lower advertising revenue at ESPN, themselves partially offset by affiliate revenue growth.

It was a happier story at the broadcast line of business where even though revenues stayed flat at $1.805 billion, operating income increased 28% to $379 million. This increase was due to affiliate revenue growth and decreased programming cost write-downs for network programming. Affiliate revenue growth was primarily due to contractual rate increases.