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Disney Q1 Operating Income 'Impacted' by Past Year's Record Success

7 Feb, 2017 By: Erik Gruenwedel



When is a drop of $172 million in quarterly profit and $201 million revenue heralded a success? When the company is Walt Disney Studios, and the previous-year fiscal quarter was the best in the company’s history.

The studio, which includes Walt Disney Studios Home Entertainment, Feb. 7 reported first-quarter (ended Dec. 31, 2016) operating income of $842 million, compared with $1 billion in the previous-year period. Revenue topped $2.5 billion, compared with $2.72 billion a year earlier.

The results were the second-best in the studio’s history following last year’s record quarter on the back of theatrical juggernaut Stars Wars: The Force Awakens.

While the title was the best-selling packaged-media release in 2016, it generated the bulk of its $161 million in sales following its April 5 release. Disney attributed financial declines in the quarter in part on lower unit sales of Star Wars: The Original Trilogy and Star Wars: The Prequel Trilogy, in addition to 2014 animated hit Frozen.

“Lower home entertainment results reflected strong catalog sales in Q1 last year, particularly the classic ‘Star Wars’ titles,” CFO Christine McCarthy said on the fiscal call.

Indeed, the “Star Wars” releases generated $50 million in combined sales last year, compared with $185 million in 2015, when including Star Wars: The Complete Saga, according to The-Numbers.com.

In addition, home entertainment in 2015 generated nearly $60 million from combined disc sales of Aladdin: Diamond Edition and Frozen, in addition to Guardians of the Galaxy with $25 million. Retail hits in 2016 such as The Good Dinosaur ($55 million) and Zootopia ($88 million) were released in February and June, respectively.

Disney said the decrease in theatrical distribution reflected comparisons between Rogue One: A Star Wars Story and The Force Awakens in the prior-year quarter. The decline was partially offset by the success of Doctor Strange and Moana in the current quarter compared with the performance of The Good Dinosaur in the prior-year quarter.


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