Disney earnings fall after holiday season without 'Star Wars' movie

Company still beat Wall Street's expectations

By FRANK PALLOTTA, CNN BUSINESS
KCAL via CNN

(CNN) - Disney's earnings fell sharply compared to its first quarter a year ago, but it still beat Wall Street's expectations.

The company's theme parks and TV networks led the way with growth in the first quarter while the film unit's revenue took a 27% hit, falling to $1.8 billion.

Missing from theaters last holiday season was a "Star Wars" movie. Disney has released a film from the franchise every December since 2015.

Instead, the company released "Mary Poppins Returns," which made more than $325 million globally. "Star Wars: The Last Jedi" made $1.3 billion worldwide the year prior.

In all, net income fell by 37% compared to the same quarter a year ago.

Disney's stock rose 2% initially in after hours trading on Tuesday before coming back down.

2019 could prove to be one of Disney's biggest years.

The company has a powerhouse lineup of films that includes potential blockbusters such as April's "Avengers: Endgame" and the next chapter in the "Star Wars" saga, "Star Wars: Episode IX." "Star Wars: Galaxy's Edge," the largest expansion ever at its theme parks, will open later this year.

Disney is also expected to complete its purchase of most of 21st Century Fox's assets, which will bring over a slew of new intellectual property, including X-Men and "Avatar."

Trip Miller, a Disney shareholder and managing partner at Gullane Capital Partners, told CNN Business that the most important storyline for Disney in 2019 will be in how it rolls out its new streaming service, Disney+.

"That's where this year starts and ultimately where it ends for Disney," Miller said.

Disney CEO Bob Iger told analysts on Tuesday's post-earnings call that the company will reveal more about its streaming strategy at its investor day on April 11.

"Presented with an overabundance of choice, consumers look to brands they know to sort through the options and find what they actually want," Iger said on the call. "We're confident that our iconic brands and franchises will allow us to break through the competitive clutter."

Disney has sports, news and what Miller calls "tried and true" brands and content to offer consumers. That creates an advantage over its streaming competitors. Disney's success in the streaming world will come down to how well it's able to distribute its content directly to the masses, Miller said.

"We're all going to go to theme parks, we're all going to ride the cruise lines, we're all going to go see 'Star Wars' for the gazillionth time, but they have to get this direct to consumer platform right," Miller said. "For me, that's what 2019 is all about."

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