Star Wars Helps Disney To Record Results

The "phenomenal success" of the release of the latest Star Wars movie and its merchandise helped Walt Disney post record quarterly profits.

Disney reported earnings of $2.9bn (£2bn) for the first quarter to January 2, up 32% compared to the same period a year earlier, with revenues up 14% to $15.2bn (£10.5bn).

However, investors were unnerved by a drop in profits at its cable networks - which include sports channel ESPN, the Disney channels and ABC (HKSE: 1288-OL.HK - news) - sending shares more than 4% lower in after-hours trading.

That took the shine off the boost Disney received from Star Wars: The Force Awakens – the first Star Wars blockbuster produced by Disney since it bought Lucasfilm from creator George Lucas in 2012 for $4bn (£2.8bn).

The film cost more than $200m (£140m) to produce but the investment paid off as Disney said operating income was up 86% to $1bn (£700m) at its Studio Entertainment division thanks to its success in cinemas.

In its consumer products and interactive media division, income rose 23% to $860m (£590m) helped by higher revenues from Star Wars merchandise.

The film, still part-way through its cinematic run, has taken more than $2bn (£1.4bn) globally at the box office so far and is already the third highest grossing in Hollywood history - behind Titanic in second place and record-holder Avatar on $2.8bn (£1.9bn).

Chief executive Robert Iger said: "Driven by the phenomenal success of Star Wars, we delivered the highest quarterly earnings in the history of our company.

"We're very pleased with our results, which continue to validate our strategic focus and investments in brands and franchises to drive long-term growth across the entire company."

The cable networks unit saw a 5.6% fall in operating income to $1.4bn (£1bn) mainly due to higher programming costs at ESPN, offsetting a rise in ad revenues. Disney faces pressure on subscriber numbers at ESPN as viewers switch to watching sports online.