Disney Shares Fall After Earnings Miss

Despite the blockbuster success of Disney’s “Avengers: Endgame,” the three months ended June 29 were marred by the weak performance of Fox entertainment assets purchased in the $71.3 billion deal that closed in March, according to The Wall Street Journal.

Disney fell short of analysts’ expectations for the quarter, sending shares down more than 3% in after-hours trading Tuesday.

Behind the disappointment were some of the high-profile assets acquired in the Fox deal. Fox movies like “X-Men: Dark Phoenix” flopped, even as Disney’s own hits set records.

Fox’s Star India, a TV network considered a linchpin in Disney’s international expansion strategy, dragged down the company’s direct-to-consumer segment after several matches in a major cricket tournament were canceled.

Robert Iger

Disney Chief Executive Robert Iger opened his earnings call with investors by declaring it among the most complicated in his 14-year tenure as CEO.

Disney said Tuesday that that forthcoming streaming service, called Disney+, will launch in November and be available as a bundle along with its ESPN+ and Hulu offerings for $12.99—the same price as Netflix Inc. ’s most popular subscription plan.  Disney+ on its own will cost $6.99 at launch, the company has said.

Marketing for that service should begin in earnest at the end of this month, Mr. Iger said, and be featured by nearly every division of the company, from hotels to branded credit cards.

Continued expenses related to launching Disney+, which requires dozens of hours of newly produced programming, should lead the company’s direct-to-consumer division to lose about $900 million in the quarter that ends in September, said Disney finance chief Christine McCarthy.

The Fox deal is still on track to produce about $2 billion in cost synergies by fiscal 2021, she added.

Profit in the company’s fiscal third quarter declined 40% to $1.76 billion, or 97 cents a share. Excluding charges related to the integration of the Fox properties and other items, profit fell to $1.35 a share from $1.87 a share. Revenue was $20.25 billion.

Analysts surveyed by FactSet had projected $1.46 a share, or $1.72 a share as adjusted, on $21.45 billion in revenue.