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Disney shares surge as it prepares to enter streaming battle

Sky News logo Sky News 4 days ago
a dog with a sunset in the background: The remake of the Lion King was credited by Disney for helping drive revenue higher in its fourth quarter © Other The remake of the Lion King was credited by Disney for helping drive revenue higher in its fourth quarter

Walt Disney shares have surged after its theme parks, a remake of The Lion King and the Toy Story 4 movie helped pushed revenue up by more than a third in its last quarter.

The US entertainment firm unveiled its latest results as it prepares for the debut of its Disney+ service in the US next week amid an industry-wide battle for streaming supremacy.

Revenue for the three months to 28 September rose 34% to $19.1bn (£14.9bn) - in line with market expectations.

a group of people wearing costumes: Profits at Disney's movie division jumped almost 80% thanks to hits like Toy Story 4 © Getty Profits at Disney's movie division jumped almost 80% thanks to hits like Toy Story 4 Net income, its core profit measure, fell by more than half however - to just above $1bn as it booked a series of costs related to Disney+ and its takeover of Fox entertainment assets.

However, the figure beat market estimates as streaming investment costs came in lower than Disney had guided.

Disney is the latest US firm attempting to enter a market dominated by Netflix, with other new entrants including AT&T and NBC - the latter a division of Sky News' US parent firm, Comcast.

Disney boss Bob Iger told analysts in a conference call after the results were published that Disney+ would have 620 movies, 10,000 TV episodes and numerous short features by its fifth year.

a screen shot of Tom Hollander, John Simm, James Norton, Mark Rylance posing for a photo: UK content-focused streaming service Britbox was also launched on Thursday © Imagebridge UK content-focused streaming service Britbox was also launched on Thursday

It is targeting 60 million to 90 million subscribers by that time.

There will be five content categories for subscribers: Disney, Pixar, Marvel, Star Wars and National Geographic.

They will be available through Apple, Google, Microsoft, Sony and Roku's streaming-distribution platforms with Amazon Fire, Samsung and LG also hosting the service.

It is not due to launch in the UK until next spring.

© Getty

Shares were more than 5% higher in after-hours trading.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said of the results: "Disney has, as expected, seen costs spike in the run up to the launch of Disney+.

"That makes these results superficially pretty ugly... even if you look through the disruption caused by the Fox deal earlier this year.

"On a more fundamental level though we think there's a lot to like. Despite the extra investment Disney continues to generate significant free cash flow, which Netflix will likely look at with envy, and the potential for the new Direct-to-Consumer offer to generate new revenue streams appears significant."

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