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Disney's consumer biz unit sees revenue boost post-Fox acquisition

Disney's consumer biz unit sees revenue boost post-Fox acquisition

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The Walt Disney Company has reaped benefits from its acquisition of Twenty-First Century Fox in March, reporting a 21% increase in media networks and a 7% increase in operating income for the third quarter of its 2019 financial year (Q3 2019).According to its financial statement, the consolidation of 21st Century Fox businesses (primarily the FX and National Geographic networks) saw higher operating income in the cable network segment for Disney. There was also an increase at ESPN due to higher advertising and affiliate revenue, partially offset by an increase in programming and production costs. This comes as its direct-to-consumer and international segment (DTCI) posted an increase in revenue, from US$827 million to US$3,858 million during Q3 2019.That said, it DTCI segment also witnessed an operating loss of US$553 million, a year-on-year (yoy) increase from US$168 million. Attributing the increase in operating loss to the consolidation of Hulu and the ramp up of investment in ESPN+ in April last year, Disney also said the costs were associated with the upcoming launch of Disney+. According to Disney, the results also reflect a benefit from the inclusion of the Twenty-First Century Fox businesses due to income at the Fox and National Geographic international channels, partially offset by a loss at Star India.In December last year, the company restructured its DTCI segment by consolidating international business units under three key leaders. Chairman, Star and Disney India, and president, The Walt Disney Company Asia Pacific Uday Shankar said at the time that the company aims to transform into a direct-to-consumer company.Meanwhile, Disney also recorded higher advertising revenue overall for Q3 2019, due to increases in units sold and rates, partially offset by lower viewership. While the company did not reveal the exact figures in its financial statement, it said that advertising revenue was positively impacted by two additional NBA finals games.Robert A. Iger, chairman and chief executive officer, The Walt Disney Company said that the third quarter results reflect Disney's efforts to effectively integrate the Twenty-First Century Fox assets to enhance and advance its strategic transformation.“I’d like to congratulate The Walt Disney Studios for reaching US$8 billion at the global box office so far this year - a new industry record- thanks to the stellar performance of our Marvel, Pixar and Disney films," he said. Iger added that the "incredible popularity of Disney’s brands and franchises positions the company well as it launches Disney+, and the addition of original and library content from Fox will only further strengthen its direct-to-consumer offerings.During an earnings call, Iger also confirmed that Disney will be offering a bundle package costing US$12.99 a month for all three streaming devices - Disney+, ad-supported Hulu, and ESPN+. While this is only for US customers, he said that Hulu will expand the opportunity for Disney to accelerate on TV networks.

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