Disney Profit Slumps Over Start-Up Costs For Disney+

Walt Disney Co.’s hit movies, led by “The Lion King” and “Toy Story 4,” once again helped drive strong quarterly results. But, reports The Wall Street Journal, the company is largely looking beyond the theater for its future, focusing instead on reasons for folks to stay home.

Disney Chief Executive Robert Iger has spent billions of dollars buying franchises, from the Avengers to Star Wars—brands that will soon be put to the test when Disney launches Disney+, its putative streaming rival to Netflix Inc.

“We’re making a huge statement about the future of media and entertainment,” Mr. Iger said on a conference call with Wall Street analysts Thursday.

Highlighting the company’s dueling priorities, Disney’s theatrical-movie division posted a 52% rise in revenue and 79% jump in operating income in the three months ended Sept. 28.

Overall, Disney’s profit slumped by more than half to $1.05 billion, hurt by a sharp rise in costs stemming in part from the Disney+ production costs. But its shares rose in after-hours trading as earnings beat analysts’ expectations.

Despite the company’s box-office riches, a streaming-first mentality now pervades the company, if Mr. Iger’s remarks were any indication. Disney’s film and television divisions are producing hundreds of hours of programming not only for Disney+ but also a 19-month-old ESPN streaming service and Hulu, a third service that Disney now controls after its $71.3 billion acquisition of the 21st Century Fox entertainment assets.

A team of newly hired engineers has built out an interface and technical underpinning to withstand millions of subscribers. Former partners like Amazon.com Inc. are now streaming rivals, forcing Disney to negotiate deals that get its service onto as many platforms as possible.

In trying to turn every home into a Mouse House, Disney’s streaming launch is a long-game attempt to allay concerns Wall Street began expressing in 2015 when Mr. Iger acknowledged subscriber losses at ESPN, the company’s most profitable division. The prospect of long-term decline at the cable sports network delivered a shock to Disney’s share price, since investors focused on the company’s vulnerability to Netflix despite record-setting performances at the box office and in theme parks.