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Media Networks, Studio Entertainment & Other Key Disney (DIS) Q4 Estimates

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Disney’s (DIS - Free Report) $71.3 billion deal to buy key 21st Century Fox (FOXA - Free Report) assets took a major step forward after European Union authorities approved the acquisition Tuesday. But Disney’s Fox deal won’t impact its fiscal Q4 financial results. So, let’s see what investors should expect from Disney’s largest business units, which house everything from ESPN to its theme parks.

Disney Overview

Disney's offer to buy some of Fox’s largest entertainment assets earned approval from the European Commission, under the condition that Disney divest its interests in channels such as History and Lifetime in the European Economic Area. The EU, the U.S. Justice Department, and both companies’ shareholders have now approved the deal.

Disney’s acquisition of Fox’s film and TV studios, among other assets, is designed to help it fight Netflix (NFLX - Free Report) and Amazon (AMZN - Free Report) in the new streaming age and boost its box office sales. Fox’s film and TV studios will bolster the media conglomerate’s array of assets that currently include Star Wars production company Lucasfilm, Marvel Entertainment, Pixar, and its namesake studio.

Bob Iger’s company plans to roll out its stand-alone streaming service in late 2019. The likes of AT&T (T - Free Report) and Apple (AAPL - Free Report) are set to join Disney, which has found early success with its ESPN+ streaming service. With all that said, we need to know what to expect from Disney when it reports its fiscal Q4 financial results after the closing bell Thursday.



Fourth Quarter

Disney’s adjusted quarterly earnings are projected to jump 22.4% to reach $1.31 per share, based on our current Zacks Consensus Estimate. Meanwhile, at the top of the income statement, the company’s Q4 revenues are projected to jump roughly 8.1% to reach $13.81 billion.

These are solid growth projection for DIS. But we still need to know what to expect from the media powerhouse’s specific business units, as their performances could easily determine how DIS stock trades following its earnings release.

Luckily, we can turn to our exclusive non-financial metrics consensus estimate file to prepare for this. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

Media Networks

Let’s start with Disney’s Media Networks unit. This segment is made up of its cable and broadcast division, which includes sports media power ESPN, ABC, Freeform, and more.

Media Networks revenues are projected to climb 4% from $5.465 billion in the fourth quarter of 2017 to touch $5.688 billion.

It is worth noting that Media Networks revenues slipped 3% in the year-ago quarter. Meanwhile, Disney’s largest division popped 5% in Q3. And remember to pay close attention to any and all ESPN updates, including ESPN+ spending news.

Parks and Resorts

Moving on, Disney’s Park and Resorts revenues are expected to jump approximately 11.5% from $4.667 billion in the fourth quarter of 2017 to reach $5.204 billion. Disney’s theme park and resort revenues jumped 6% in both Q3 and the prior-year quarter.

Studio Entertainment

Meanwhile, Disney’s Studio Entertainment revenues are projected to soar 27.5% from the year-ago period’s $1.432 billion to touch $1.826 billion. Despite this outsized growth estimate, investors should remember that Studio Entertainment is Disney’s most volatile segment based on the nature of movie release cycles and box office success.

With that in mind, Studio Entertainment revenues sunk 21% in the fourth quarter of 2017 and surged 20% to reach $2.878 billion in Q3.

Consumer Products & Interactive Media

Lastly, we take a peek at one of Disney’s less talked about divisions. The company’s Consumer Products & Interactive Media leg is comprised of toy and clothing sales, licensing activities, video games, books, and apps. Our NFM estimate is calling for this unit’s revenues to slip roughly 1% from $1.215 billion in  Q4 of 2017 to hit $1.201 billion. This unit sunk 8% in Q3 and 6% in the year-ago quarter.

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