Disney earnings beat forecasts as more customers visit theme parks

Walt Disney’s first-quarter profit beat expectations as more visitors to its theme parks made up for lack of growth at the media and entertainment company’s other businesses.

Adjusted earnings per share for the three months to the end of December rose 22% to $1.89 (£1.36), outstripping the $1.61 average of analyst estimates compiled by Thomson Reuters.

The earnings numbers excluded a $1.6bn gain caused by a recent reduction to US corporation tax. The gain sent net income up 78% to $4.4bn.

The owner of the Mickey Mouse and Star Wars reported revenue up 4% to $15.3bn, driven by a 13% rise at parks and resorts to $5.1bn. More people visited Disney’s parks in the US and spent more money while they were there. Disneyland Paris also did well, helped by higher attendance and ticket prices around the 25th anniversary of the park’s opening.

Revenue at Disney’s biggest business, media networks, was flat at $6.2bn because of falling income from advertising and programme sales at its ABC network.

Revenue from studio entertainment dropped 1% to $2.5bn despite the release of popular films such as Star Wars: The Last Jedi and Thor: Ragnarok as home entertainment and streaming sales fell. Sales of consumer products and interactive media dropped 2% to $1.5bn.

Disney is seeking to transform itself into a digital entertainment giant to rival subscription services such as Netflix that let viewers watch films and TV shows online. It has agreed to pay $52bn to buy film, TV and international assets from Rupert Murdoch’s Twenty-First Century Fox. The deal includes purchasing Fox’s stake in Sky.

Steven Cahall, an analyst at RBC Capital Markets, said: "We see good momentum in Disney’s results that support a long-term rerating story around streaming/direct to consumer. Tax reform provides a bigger war chest for content investments and shareholder returns."

Disney’s Black Panther, based on the Marvel comic book series, has received rave reviews and opens in the US on 16 February. The company’s largest network, ESPN, will launch a streaming service for sports fans in 2018 followed by an entertainment offering the following year.

Chief Executive Bob Iger said: "We’re excited about what lies ahead, with a robust film slate, the launch of our ESPN direct-to-consumer business, new investments in our theme parks, and our pending acquisition of Twenty-First Century Fox."