Business Corpus: Disney Earnings: A New Netflix Rival Emerges, But Q3 DisappointsThe call largely focused on the yet-to-be-launched streaming service, with Iger offering up some much-desired color on the yet-unnamed platform that will serve as a competitor for direct-to-consumer entertainment heavyweights Netflix, Amazon Prime Video and Hulu. The post Disney Earnings: A New Netflix Rival Emerges, But Q3 Disappoints appeared first on Investor's Business Daily.

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Walt Disney (DIS) earnings and sales disappointed investors after the close Tuesday, initially sending shares of the media titan downward. But Disney stock pared after-hours losses as CEO Bob Iger talked up the upcoming Disney-centric streaming platform (and Netflix (NFLX) rival), and touted his enthusiasm for the opening-quarter performance of direct-to-consumer streaming sports service ESPN+.

Disney Earnings, Sales Fall Short

Estimates: Per-share earnings for fiscal Q3 to grow 25% to $1.97 as revenue rises 9% to $15.49 billion, according to Zacks Investment Research.

Results: Disney earnings of $1.87 a shares and revenue of $15.228 billion both missed views.

Disney's media networks segment, which includes ESPN, grew revenue by 5% to $6.16 billion. Losses at streaming technology provider BAMTech weighed on the unit's operating income amid the April launch of ESPN+.

Parks and resorts revenue rose 6% to $5.19 billion. Higher spending by U.S. park visitors — driven by increases in ticket prices and daily hotel room rates, as well as increased food, drink and merchandise spending lifted operating income.

Studio entertainment revenue saw a 20% pop to $2.88 billion, as Marvel's "Avengers: Infinity War" and Pixar's "The Incredibles 2" buoyed the division.

Meanwhile, sales in the consumer products and interactive media unit declined 8% to $1 billion.

Stock: Shares dipped 1% late Tuesday after rising 0.5% to 116.56 in the stock market today, hitting the highest level since November 2015. Recall that the summer of 2015 saw a sector-wide media meltdown after Disney chief Bob Iger disclosed modest subscriber losses at ESPN, prompting concerns about the state of the pay-TV subscriber.

After initially struggling to stay above a 113.29 entry point, Disney stock ultimately broke out in late July and is now trading in buy territory, climbing higher over the last three sessions.

Disney Streaming Service Set To Launch In Late 2019

The call largely focused on the yet-to-be-launched streaming service, with Iger offering up some much-desired color on the yet-unnamed platform that will serve as a competitor for direct-to-consumer entertainment heavyweights Netflix, Amazon (AMZN) Prime Video and Hulu. (With the $71.3 billion acquisition of 21st Century Fox's (FOXA) entertainment assets, Disney is now a majority stakeholder in Hulu, with a 60% share.)

Giving the fans what they want is a priority for the platform.

"We don't want to go to market with an aggregation play" that replicates a cable bundle, said Iger.

Emphasizing quality over quantity, he said Disney was not in the "volume game" when it comes to streaming, unlike Netflix. (Though he was quick to add that that was not a knock on Netflix.)

"It takes time to build the kind of content library that we intend to build," he told analysts on the call.

Disney is reportedly spending tens of millions of dollars on original content for its new streaming platform, which will feature family-friendly content from Disney, Marvel, Pixar and Lucasfilm.

Iger said that the app will be the only place for viewers to access certain Disney, "Star Wars" and Marvel content. When an analyst prodded the chief executive about older Disney content — Turner holds the rights to the original "Star Wars" trilogy and the prequels until 2024, noted Bloomberg recently — Iger responded that "as rights become available... you'll see them on the service."

He also made clear that the upcoming studio slate is not tethered to licensing deals, and all of those movies will ultimately join the streaming app. The coming year promises the theatrical release of "Captain Marvel," "Dumbo," and more sequels from "Star Wars," "Avengers, "Toy Story" and "Frozen," among other films.

There will be plenty of original content as well, including two new "Star Wars" TV series. Iger has previously promised four to five exclusive feature films a year for the streaming service, and the New York Times recently reported that nine films are currently in development or production.

ESPN+ Performing Above Expectations: Iger

Iger pointed to potential for the family-friendly Disney service to be bundled with Hulu and ESPN+ in the future.

The company had "relatively modest expectations" for the sports streamer, he said, but so far "we feel really good about how we're positioned and we'll continue to look opportunistically in terms of what rights are available."

While it's still early days, said Iger, conversions to paid subscriptions have so far been "strong," and subscriber growth is exceeding expectations. He would not disclose specific user numbers, however.

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