The Walt Disney Company reported their earnings today for the third quarter (Q3) of fiscal year 2017 which ended on July 1, 2017. According to Christine M. McCarthy, Senior Executive Vice President and Chief Financial Officer, The Walt Disney Company the second quarter reflects the underlying strength of Disney’s brands and franchises, and their continued investment in high-quality content. She continued to say that Disney’s ability to successfully execute on the core strategy, coupled with plans for new direct-to-consumer offerings, give Disney continued confidence in the ability to drive shareholder value.
In what may be a big deal for cord cutters, Disney announced a strategic shift in the way they distribute their content. According to Bob Iger, the media landscape is increasingly defined by direct relationships between content creators and consumers, and Disney’s control of BAMTech’s full array of innovative technology will give the company the power to forge such connections, along with the flexibility to quickly adapt to shifts in the market.
“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.” Bob Iger
Diluted earnings per share (EPS) for the quarter decreased 5% to $1.51 from $1.59 in the prior-year quarter. Excluding certain items affecting comparability, EPS for the quarter decreased 2% to $1.58 from $1.62 in the prior-year quarter. Diluted EPS for the nine months ended July 1, 2017 decreased to $4.55 from $4.63. Excluding certain items affecting comparability, EPS for the nine months increased to $4.63 from $4.61.
The Parks and Resorts segment (which includes Disney Cruise Line) revenues for the quarter increased 12% to $4.9 billion and segment operating income increased 18% to $1,168 million. Operating income growth for the quarter reflected an increase at our international operations, while results at our domestic operations were comparable to the prior-year quarter. Segment results benefited from the timing of the Easter holiday, which fell in the third quarter of the current year compared to the second quarter of the prior year.
Operating income growth at our international operations was due to increases at Shanghai Disney Resort and Disneyland Paris. The increase at Shanghai Disney Resort reflected a full quarter of operations in the current year compared to the prior-year quarter, which included pre-opening costs. Higher operating income at Disneyland Paris was due to increases in guest spending and attendance, partially offset by higher costs for new guest offerings, including the 25th Anniversary celebration. The increase in guest spending was primarily due to higher average ticket prices and increases in food, beverage and merchandise spending.
At our domestic operations, increased costs were essentially offset by increases in guest spending and volumes. Higher costs were primarily due to labor and other cost inflation, increased operations support costs, new guest offerings and the dry-dock of the Disney Fantasy in the current quarter. Costs for new guest offerings were driven by the launch of the expansion of Disney’s Animal Kingdom at Walt Disney World Resort, including the related marketing costs. Guest spending growth was due to increases in average ticket prices for sailings on our cruise ships and admission to our theme parks, as well as higher average daily hotel room rates and food and beverage spending. Higher volumes were due to attendance growth, partially offset by a decrease in occupied room nights and lower passenger cruise days due to the dry-dock of the Disney Fantasy. The decrease in occupied room nights was due to refurbishments and conversions to vacation club units.
For more information and an overall report click over to the Q3-2017 Earnings Report.