Disney raises earnings guidance as launch date for ESPN streaming service unveiled

Investing.com - Walt Disney (NYSE:DIS) has lifted its annual adjusted earnings per share guidance, as the media conglomerate’s ESPN sports broadcasting empire said it would launch a new direct-to-consumer streaming service on August 21.

The platform, which will be priced at $29.99 a month, will be the exclusive home for WWE wrestling events, ESPN said on Wednesday. It will also provide access to ESPN’s portfolio of professional and college, such as the National Football League, Major League Baseball, and National Basketball Association, as well as popular studio programs like "Pardon the Interruption" and "SportsCenter."

ESPN’s offering comes as Disney has been pushing to increase its own presence in the lucrative streaming market as more viewers choose to move away from traditional cable packages.

In a statement, CEO Bob Iger said Disney is taking "major steps" in streaming through the ESPN service, recently-announced plans with the NFL, and an upcoming integration of the Hulu platform in its Disney+ product.

Fiscal third-quarter total subscribers to Disney+ grew by 1.4% versus the prior three-month period to 127.8 million, compared with Bloomberg consensus expectations of 127.97 million. For its current quarter, subscribers to Disney+ are anticipated to increase "modestly," the firm said.

Iger added that more expansions are underway at its theme parks and cruises businesses around the world. 

In a note, analysts at Barclays (LON:BARC) flagged content write downs at Disney’s studio business, saying this was likely due to the disappointing performance of recent movies like "Elio." Operating income at Disney’s entertainment division, which houses the studio unit, dropped by 15% year-on-year to $1.02 billion, falling short of estimates.

Against this backdrop, full-year adjusted earnings per share is now seen coming in at $5.85, above prior projections of $5.75. Wall Street had anticipated the figure would stand at $5.77.

Revenue in Disney’s latest quarter grew by 2.1% year-over-year to $23.65 billion, while adjusted per-share income rose to $1.61. Analysts had called for $23.68 billion and $1.46 a share, respectively.

"Overall, while the quarter was a mixed bag along with guidance, which doesn’t help when the company is trying to earn back credibility with investors, performance of the core segments with the exception [of] studios remains strong," the Barclays analysts said.

Shares in Disney were lower by more than 3% in early U.S. trading.