Income drops, Fox Studio disappoints

NEW YORK – Disney says its net income fell 39% in the latest quarter, as underwhelming performance from its newly acquired Fox businesses offset box office successes such as “Avengers: Endgame.”

Tuesday’s results missed Wall Street’s expectations, and shares fell 3% in aftermarket trading.

CEO Bob Iger said one of the biggest issues affecting earnings was the Fox Studio performance.

“It was well below where it had been and well below where we hoped it would be when we made the acquisition,” he said during a conference call with analysts.

Particularly underperforming was “Dark Phoenix,” Disney said.

Iger said it would be two years before Disney can have an impact on the Fox films in production.

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Disney also spent more money on its ESPN Plus and upcoming Disney Plus streaming services. And its results were hurt by taking control of Hulu with the purchase of Fox’s entertainment businesses. It took a $123 million charge as it lowered its estimated valuation of Hulu, and it lost revenue it used to get from licensing its video to a separate Hulu entity.

Disney said Tuesday it will offer its three streaming services in a package for $13. Hulu now costs $6, and ESPN Plus costs $5. The upcoming Disney Plus service will cost $7. So the package will represent a $5 savings. Disney is making the package available Nov. 12, the same day Disney Plus is launching.

Disney is turning to its own streaming services to compete with Netflix as people drop traditional cable services, and Disney loses revenue from its ESPN and traditional channels.

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For the fiscal third quarter, which ended June 29, net income fell to $1.76 billion, from $2.92 billion last year. Excluding one-time items, net income totaled $1.35 per share. Analysts surveyed by FactSet expected net income of $1.72 per share.

Revenue rose 33% to $20.2 billion from $15.2 billion, short of the revenue of $21.4 billion analysts expected.