Image: People wait in line for the first showing of the movie “Star Wars: The Force Awakens” in the forecourt of the TCL Chinese Theatre in Hollywood, California in this December 17, 2015 file photo. REUTERS/Mario Anzuoni/Files
By Lehar Maan
(Reuters) – A drop in profit at Walt Disney Co’s cable networks unnerved investors despite jumps in overall quarterly income and revenue, driven by the blockbuster release of “Star Wars: The Force Awakens”.
Disney shares fell 2.7 percent to $89.75 in after-hours trading. They fell 9.5 percent in the 12 months up until Tuesday’s close.
The media networks unit that includes sports network ESPN, the Disney Channels and ABC recorded a 5.6 percent decline in operating income to $1.41 billion, due mainly to higher programming costs at ESPN, which offset an increase in advertising revenue.
Disney faces declining subscribers at ESPN as viewers switch to watching sports games online and cut TV cable subscriptions.
That took the shine off a blockbuster launch for “The Force Awakens”, the first “Star Wars” movie produced by Disney after it bought Lucasfilm from creator George Lucas in 2012 for $4 billion.
Disney spent more than $200 million to produce “The Force,” the seventh installment in the series. The stellar launch of the movie helped the studio business almost double its operating income to $1.01 billion.
Part way through its run at cinemas, “Force Awakens” is already the third highest-grossing movie in Hollywood history, behind “Avatar” and “Titanic.” “Avatar” holds the all-time record with nearly $2.8 billion in worldwide box office receipts.
Global ticket sales for the blockbuster movie crossed $2 billion worldwide by Feb. 7, according to Box Office Mojo.
Disney’s quarterly net income rose to a record $2.88 billion, or $1.73 per share, from $2.18 billion, or $1.27 per share, a year earlier.
On an adjusted basis, the company earned $1.63 per share, that handily beat analyst average estimate of $1.45 per share, according to Thomson Reuters I/B/E/S.
Revenue rose 13.8 percent to $15.24 billion in the first quarter ended Jan. 2, which beat expectations of $14.75 billion.
(Reporting By Lehar Maan in Bengaluru; Editing by Rodney Joyce)
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