Disney has seen profits lift 23 per cent in its most recent quarter reports to a net income of $2.9bn, but has missed Wall Street estimates for $1.95 a share.
Film studio revenues have increased 20 per cent thanks to hits including Avengers: Infinity War, which has taken $2bn in ticket sales globally, making it the highest-grossing film of the year.
However, despite its record summer at the box office, Disney has failed to beat forecasts owing to a heavy spend on its upcoming streaming service, one that will put the studio in direct competition with Netflix and Amazon.
This is the first earnings report since Disney won a high-stakes battle with Comcast to buy 21 Century Fox’s entertainment assets, and one in which Disney’s chief executive detailed the company’s ambitions to rival streaming service giants today.
Bob Iger said that the launch of its streaming service will come later this year and is the ‘biggest priority of the company.’
He assured investors that Disney can “thrive alongside Netflix, Amazon and anyone else in the market.”
The most recent quarter has seen Disney spend $11.3bn, an eight per cent rise from a year ago while profits declined at its largest business unit, its television networks, which include channels such as ESPN and ABC.
During an investor call, Iger laid out plans for the Disney streaming service, saying that “we’re going to walk before we run” referring to the number of shows it would offer.
It’s been reported that the Fox television and film assets will be crucial to Disney’s ambition to compete with Netflix, adding in studio and cable channels including National Geographic to Disney’s own assets such as Marvel and Pixar.
Disney and Fox shareholders, and the US Department of Justice, have already approved the $71bn proposed merger. Disney is awaiting regulatory approval in several countries including China.
By acquiring the Fox assets, Disney will own 39 per cent of Sky.