Disney Makes a Lot of Money 2019 Edition
The Walt Disney Company reported its annual earnings on November 7th, and the results this time left a smile on everyone’s face. In the wake of the Fox acquisition, Disney’s revenue has broken records. Let’s take a look at some of the most essential details.
More Record Earnings
When Disney released the fiscal third quarter 2019 earnings report, I commented that the Fox acquisition would lead to sustained revenue growth. The most recent report reinforces this (admittedly obvious) statement.
Disney has announced its fiscal fourth-quarter earnings. More importantly, the company has also revealed its fiscal 2019 totals, the most significant numbers for all involved. Both the end-of-quarter and end-of-year results are impressive, which explains why Disney’s stock has soared in the aftermath of each earnings report.
Let’s start with the critical one. During fiscal 2018, Disney earned a historic $59.4 billion. At the time, I emphasized the rarity of staggering year-over-year revenue growth. The company had increased its earnings by $4.3 billion in a single year. Friends, that number seems like small potatoes today.
For fiscal 2019, Disney grossed almost $69.6 billion. Yes, they grossed over $10 billion more than the company managed in fiscal 2018. There aren’t that many businesses that earn $10 billion annually in total. That’s just the extra amount that Disney earned year-over-year. In only two years, the company’s gone from $55 billion in revenue to just under $70 billion.
Disney is a juggernaut.
The Stock Market Stuff
I’ve previously discussed the madness of stock market analysis. Often unnamed analysts project earnings from numbers pulled out of thin air. Then, they determine the success or failure of a stock based on comparisons to those arbitrary numbers.
Disney rarely plays this game, understanding that its business is there for the long haul. Still, some of the numbers that they report inevitably become headlines. I don’t want to bury you with math, but let’s take a quick look at some of them.
Disney reported quarterly earnings of $1.07 per share, which beat expectations by more than 10 percent. The other unexpected news is that the company earned profits of $1.05 billion during the quarter.
Due to the expenses of the Fox acquisition and all sorts of other factors, many analysts projected losses for the company. Instead, Disney came out ahead. In fact, its operating income of $1.78 billion was right in line with last year’s total.
In short, rumors of Disney’s struggles are comically incorrect.
How Did the Parks Do?
By this point, you know that Disney operates four distinct divisions. Your favorite is Parks, Experiences and Products, which you know as the theme parks division. This part of the company features more than just the parks, of course, but the six Disney theme parks around the world comprise the heart of it.
The Parks division held much intrigue this quarter due to reports about attendance issues, ones that Disney executives have largely confirmed. While analysts braced for the worst, park revenue increased by $500 million this quarter. During fiscal 2018’s fourth quarter, the parks grossed $6.14 billion. They improved to $6.66 billion during the final quarter of 2019.
For the full year, the improvement is dramatic. During fiscal 2018, the parks grossed $24.7 billion. A year later, Disney earned $26.22 billion. I recognize that I’m throwing a lot of numbers at you, so let’s reduce the situation to basics.
The parks grossed six percent more in 2019 than during 2018. For all of the alarmist headlines about attendance struggles, Disney parks did the best that they’ve ever done in the history of the business!
Discussing Two of the Other Three Segments
Disney’s other core businesses were similarly successful. One of them, in particular, did mind-boggling numbers.
The television part of Disney is Media Networks. In recent years, this division has come under fire due to no fault of the company’s. The evolving consumer viewer habits have caused a decline in cable television viewing.
These cataclysmic industry changes border on qualifying as Act of God status for insurance purposes. Somehow, Disney’s mostly done quite well, anyway. For fiscal 2019, the Media Networks division grossed $24.83 billion, an increase of 13 percent from 2018. Disney’s the envy of cable television with these numbers.
Last year in this space, I indicated that Studio Entertainment couldn’t possibly match the 2018 numbers. I said this because of Disney’s staggering movie blockbusters last year.
Somehow, the company has topped itself in 2019. Thanks to billion-dollar winners like The Lion King, Toy Story 4, and Aladdin, Disney has broken its own box office records. That translates to fiscal 2019 Studio Entertainment revenue of $11.13 billion. It’s not only Disney’s strongest performance ever but the best that any movie studio in history has ever done.
The Final Segment
The fourth division of Disney provided the most pleasant surprise. It’s also the most significant segment starting next week. Direct-to-Consumer & International is the official term for the division that we will primarily recognize as Disney+.
Even though the service isn’t officially active yet, at least not in most countries, Disney still earned a great deal of revenue. In fact, fiscal 2019’s earnings of $9.35 billion are almost triple last year’s $3.41 billion. For that matter, the fiscal fourth quarter’s revenue of $3.43 billion surpasses that amount.
These numbers reflect the growing importance of Direct-to-Consumer. In fiscal 2018, the division represented only 5.7 percent of Disney’s overall revenue. For fiscal 2019, that number has spiked to 13.4 percent. You can imagine how significant it will become once Disney+ starts earning monthly/annual revenue.
Overall, the picture of Disney is much rosier than expected. Not coincidentally, the stock has increased dramatically over the past 12 months. Analysts have finally started to recognize the growth potential of Disney thanks to its Fox pieces and upcoming Disney+ service.