Disney Rises as Cost Cuts, Hollywood Strikes Save $3 Billion
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Disney Rises as Cost Cuts, Hollywood Strikes Save $3 Billion
(Bloomberg) -- Walt Disney Co. rose more than 6% in extended trading after management of the world’s largest entertainment company said capital spending and outlays for movies and TV shows are coming in lower than projected.
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Disney expects content spending this year to total about $27 billion, Kevin Lansberry, acting chief financial officer, said Wednesday on a call with investors after the Burbank, California-based company posted third-quarter results. Disney typically spends about $30 billion.
The savings are partly as a result of production cuts tied to writer and actor strikes in Hollywood, he said. Disney also forecasts capital spending of $5 billion, lower than projected previously, as the company shifts the timing of some projects. He reiterated Disney’s ambition to pay a modest dividend this year.
The comments lifted shares of Disney to as high as $92.80 in extended trading, reversing an earlier decline.
Earlier Wednesday, Disney reported fiscal third-quarter profit of $1.03 a share, beating the 99-cent average of estimates compiled by Bloomberg. Sales grew 3.8% to $22.3 billion in the quarter ended July 1, missing analysts’ projections slightly.
During the period, Disney’s online video operation cut its loss to $512 million from more than $1 billion a year ago. Just three months ago, management predicted the direct-to-consumer business would lose more than $750 million in the quarter. Chief Executive Officer Bob Iger also told investors that the company will crack down on password sharing, echoing the recent effort from rival Netflix Inc. that has boosted subscriber numbers.
But subscribers to the Disney+ streaming service tumbled 7.4% to 146.1 million from the previous three months, missing the 154.8 million consensus analysts had expected. Nearly all of that shortfall was borne by the company’s Disney+ Hotstar in Asia. It lost almost 25% of its customers after Disney failed to renew streaming rights for popular cricket games in the Indian Premier League.
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