ESPN Plus to launch at $4.99 per month

Disney Profits Jump Because of Tax Benefit

Walt Disney Co (DIS) Tops Earnings Estimates, Misses Revenue Outlook

When Disney acquired majority ownership of streaming video technology provider BAMTech, the announcement back in August included plenty of details of what ESPN's new streaming service would deliver to consumers. Compared with Netflix's increasingly hefty outlays ($8 billion this year and headed upward), Disney "will not necessarily go in the volume direction that Netflix has gone", Iger said.

In December, Disney announced a $66.1 billion deal, including debt, to acquire many parts of Fox.

The new app could help take the focus on ESPN business from its declining sub base in traditional TV to its new streaming model. Analysts' outlook called for revenue of $6.35 billion in this category.

Steven Cahall, an analyst at RBC Capital Markets, said: "We see good momentum in Disney's results that support a long-term rerating story around streaming/direct to consumer".

The company's net income increase was partly due to a US$1.6 billion one-time tax benefit associated with new U.S. federal income tax legislation. Streaming ESPN TV networks will require a subscription to an existing service that offers those channels. "If anything points to what the future of ESPN looks like, it will be this app and the experience that it provides", said Disney CEO Bob Iger Tuesday on a conference with investors.

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Disney's Black Panther, based on the Marvel comic book series, has received rave reviews and opens in the United States on 16 February. In addition to a new trilogy already under development, the company announced Tuesday that "Game of Thrones" creators David Benioff and D.B. Weiss will work on a new series of "Star Wars" films.

Disney's Theme Parks revenue grew 13% y-o-y and operating income increased 21% y-o-y, driven by growth in both its domestic and worldwide businesses. Lackluster ratings at Disney-owned ABC also caused headaches for Disney Media Networks, which reported a 12 percent decline in operating income, to $1.19 billion.

Iger said subscribers are expecting the streaming service to be "populated by Disney, Marvel, Pixar and Star Wars product".

Disney's effective tax rate with the new law was -19.4%, vs. a prior-year 33.2%. "They will have rights to the films that were made in '16, '17, and '18 for quite a long period of time thereafter, with a window for us to use them ourselves that falls within the period of time. where they'll have those rights".

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