Will Disney’s Studio Revenue Continue to Fall?

The Walt Disney Company’s (DIS) Studio Entertainment revenue fell 15% YoY (year-over-year) to $2.1 billion, and its operating income plummeted 39% YoY to $534 million in the second quarter of fiscal 2019. These significant falls in revenue and operating income continued from the first quarter due to a slowdown in the company’s worldwide theatrical and home entertainment distribution business.

Improved growth in TV subscription video on demand distribution, however, partially offset the fall in the segment.

Ready to put your morning scrolling to use? Sign up for Bagels & Stox, our witty take on the top market and investment news straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.

Disney’s Studio Entertainment revenue is mainly dependent on its box office hits, the popularity of its movies, and the timing of its movie releases. In the second quarter, its theatrical distribution and home entertainment businesses took a hit, as Captain Marvel couldn’t earn enough to beat the success of films such as Black Panther. The continued outperformance of Star Wars: The Last Jedi (which was released in December 2017) in the second quarter of fiscal 2018 also dented the company’s fiscal 2019 second-quarter revenue. The lack of a comparable Star Wars title in the latest quarter further added to the fall.

However, Disney’s Studio Entertainment revenue is expected to skyrocket again in the third quarter of fiscal 2019 due to its latest film release, Avengers: Endgame, which has already crossed $2 billion at the box office and is now on track to beat the record of the highest-grossing film, Avatar, which earned ~$2.79 billion at the box office.

According to Box Office Mojo, as of May 5, 2019, Disney’s Buena Vista Pictures has topped the domestic box office with a 33.9% market share, leaving behind Comcast’s Universal, AT&T’s Warner Bros., Sony/Columbia, and Paramount, which had market shares of 15.5%, 14.7%, 5.9%, and 5.7%, respectively, year-to-date as of May 5.