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Nov 7, 2019

Disney profit soars on 'Lion King' success; reaches streaming agreement on Amazon devices

Disney beats third-quarter earnings estimates

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Walt Disney Co. reached an agreement to put its new streaming service on Amazon, Samsung and LG devices, ensuring the company will have access to tens of millions of online viewers when it launches Disney+ next week.

The US$7-a-month service featuring most of the company’s best films and TV shows debuts Nov. 12. Disney had already signed agreements to distribute the product on devices by Apple Inc. and Roku Inc. Amazon.com Inc., which sells the Fire TV product, had been a notable holdout as the companies argued over terms.

Agreements with those tech giants, along with a promotional tie-in with Verizon Communications Inc., mean Disney+ can get off to a fast start when it launches next week. Disney, the world’s largest entertainment company, is counting on the new service, along with Hulu and ESPN+, to deliver growth as consumers continue to abandon conventional TV.



Earlier Thursday, Disney reported better-than-expected fourth-quarter results, sending its shares up as much as 4.5 per cent in extended trading. Results for the quarter were led by the company’s storied film studio, which released hits such as the live-action “Lion King” during the period.

Disney rose as high as US$141 after the results came out. The shares soared in April after the company outlined ambitious subscriber numbers for its streaming services by 2024 and were up 21 per cent this year as of Thursday’s close.

Park Profits

The company’s theme parks and consumer product division also registered a gain in profit, bolstered by sales of merchandise tied to its hit movies, improved results at the Disneyland Resort in Southern California and the Disney Vacation Club.

Fourth-quarter earnings, while down from a year earlier, came in at US$1.07 a share, beating the 95-cent average of analysts’ estimates. Revenue soared 34 per cent to US$19.1 billion as result of the US$71 billion acquisition of 21st Century Fox assets, which closed in March.

But the company’s results also underscore the shifting nature of the TV business and the urgency of Chief Executive Officer Bob Iger’s push into streaming.

Profit at the company’s ESPN network fell due to rising sports-programming costs and shrinking cable subscribers. Earnings at the ABC broadcast network also dropped, with fewer TV shows being sold to third parties.

Meanwhile, losses in the newly created direct-to-consumer division soared to US$740 million. The Disney+ streaming businesses is part of that division, and costs are climbing as the company prepares to do battle with industry leader Netflix Inc.

Disney’s film studio continued its strong performance with a remarkable 79 per cent leap in profit, thanks to hits that also included “Toy Story 4” and “Aladdin.” The company releases “Frozen 2” and a final chapter in the “Star Wars” saga this quarter.