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Walt Disney Earnings Beat Market Estimates; Profit Slips at Parks

The entrance to Walt Disney studios is seen in Burbank, California, US August 6, 2018. REUTERS/Lucy Nicholson/File Photo Purchase Licensing Rights
The entrance to Walt Disney studios is seen in Burbank, California, US August 6, 2018. REUTERS/Lucy Nicholson/File Photo Purchase Licensing Rights
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Walt Disney Earnings Beat Market Estimates; Profit Slips at Parks

The entrance to Walt Disney studios is seen in Burbank, California, US August 6, 2018. REUTERS/Lucy Nicholson/File Photo Purchase Licensing Rights
The entrance to Walt Disney studios is seen in Burbank, California, US August 6, 2018. REUTERS/Lucy Nicholson/File Photo Purchase Licensing Rights

Walt Disney reported on Wednesday quarterly earnings that exceeded Wall Street expectations, buoyed by the success of animated Pixar film "Inside Out 2", which helped overcome a profit decline at theme parks.

April-June operating income nearly tripled at its Entertainment unit, with the combined streaming businesses of Disney+, Hulu and ESPN+ posting a profit for the first time, Reuters reported.

But the company's shares slipped 0.8% before the bell as its experiences segment that includes parks and consumer products - and makes up just over half of profit - recorded an operating income drop of 3%. Disney said "moderation" of demand at its US parks could continue through the next few quarters.

Operating income for the unit is likely to fall by "mid single digits" in the July-September quarter compared with the same period a year prior, Disney said.

Adjusted earnings-per-share reached $1.39 for Disney's fiscal third quarter, topping analyst estimates of $1.19, LSEG data showed. Revenue rose 4% to $23.2 billion, beating forecasts of $23.1 billion.

Chief Executive Bob Iger touted success in the entertainment division, where Disney's combined streaming businesses turned a profit a quarter ahead of its projections.

"We are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets," Iger said in a statement.

Iger is working to rebuild Disney after billions of dollars in loss from streaming efforts, the decline of traditional television and a rough patch for its storied film studio.

The movie studio is showing signs of resurgence.

"Inside Out 2" notched $1.6 billion in global ticket sales and "Deadpool & Wolverine," which debuted in the current quarter, has brought in more than $850 million.

"After several years of misfires and muted successes, Disney has now in the span of a month and a half released the highest grossing animated film of all time and achieved the largest ever opening for an R-Rated film," MoffettNathanson media analyst Robert Fishman wrote ahead of Disney's earnings release.

While it remains to be seen whether those successes represent a return to form, Fishman said, the upcoming film slate is "filled with highly dependable" titles including "Moana 2" and Oscar-winning director Barry Jenkins' "Mufasa: The Lion King."

The Entertainment division, which includes the film, television and streaming businesses, reported operating income of $1.2 billion in the quarter.

The Disney+, Hulu and ESPN+ streaming services produced operating profit of $47 million.

At the Sports unit, which includes the ESPN network and Star India business, operating income reached $802 million, a 6% decline from the previous year as costs to air cricket matches increased.

The experiences unit reported operating income of $2.2 billion. Demand slid at domestic parks, cruise ships, consumer products and some international parks "delivered improved results," Disney said.

Ben Barringer, technology and media analyst at Quilter Cheviot, said the parks results "pour fuel onto the fire" of concern about a slowing US economy.

"Coupled with other travel companies recognizing poor growth, it is clear people are scaling back their spend when it comes to tourism and recreation," Barringer said. "Some of this is due to Disneyland Paris struggling due to the Olympics being in town, as well as China going through its own economic problems, but the guide is not a positive one and thus we should expect further struggles through the rest of the year."

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New York City's Freewheeling Era of Outdoor Dining Has Come to End

People eat outside a restaurant in New York, Wednesday, July 31, 2024. (AP Photo/Pamela Smith)
People eat outside a restaurant in New York, Wednesday, July 31, 2024. (AP Photo/Pamela Smith)
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New York City's Freewheeling Era of Outdoor Dining Has Come to End

People eat outside a restaurant in New York, Wednesday, July 31, 2024. (AP Photo/Pamela Smith)
People eat outside a restaurant in New York, Wednesday, July 31, 2024. (AP Photo/Pamela Smith)

Outdoor tables saved thousands of New York City restaurants from ruin when they were forced to close their dining rooms during the COVID-19 pandemic.
But four years into an experiment that transformed New York’s streetscape — briefly giving it a sidewalk cafe scene as vibrant as Paris or Buenos Aires — the freewheeling era of outdoor dining has come to an end.
Over the weekend, restaurants hit a deadline to choose between abiding by a strict set of regulations for their alfresco setups or dismantling them entirely — and thousands chose to tear down the plywood dining structures that sprouted on roadways in the pandemic's early days.
Fewer than 3,000 restaurants have applied for roadway or sidewalk seats under the new system, a fraction of the 13,000 establishments that participated in the temporary Open Restaurants program since 2020, according to city data.
Mayor Eric Adams said the new guidelines address complaints that the sheds had become magnets for rats and disorder, while creating a straightforward application process that will expand access to permanent outdoor dining.
But many restaurant owners say the rules will have the opposite effect, dooming a vestige of the pandemic that gave them unusual freedom to turn parking spaces into rent-free extensions of their dining rooms with minimal red-tape.
“They’ve found a middle ground to do one thing while saying another thing,” said Patrick Cournot, the co-founder of Ruffian, a Manhattan wine bar. “They’ve managed us out, essentially.”
Ramshackle plywood dining structures seemed to sprout from New York City’s streets almost overnight in the early days of the COVID pandemic.
With its crowded sidewalks and traffic-choked streets, the city had never really been known previously for an outdoor dining scene. But with customers banned from congregating indoors for months, the city gave restaurants a green light to expand dining areas onto public sidewalks and roadways.
Simple sheds for outdoor seating were soon replaced or expanded into more elaborate constructions, which have remained standing long after the days of social distancing and disinfected groceries. Restaurants added planters, twinkling lights, flowers and heating lamps so people could dine outdoors well into the cold weather. Other outside dining spaces appeared inside heated igloos, or with open fire places and under tiered rooftops.
Now, these structures must conform to uniform design standards, with licensing and square footage fees that could total thousands of dollars a year, depending on size and location.
But the most significant change, according to many restaurants, is a requirement that the roadside sheds be taken down between December and April each year.
That's a deal-breaker for Blend, a Latin Fusion restaurant in Queens that once won an Alfresco Award for its “exemplary” outdoor set-up.
“I understand they want to keep it consistent and whatever else, but it’s just too much work to have to take it down every winter,” said manager Nicholas Hyde. “We’re not architects. We’re restaurant managers.”
Blend's 60 outdoor seats “kept us alive” during the pandemic and remained well-used with diners who “since COVID just want to be able to enjoy themselves outside,” Hyde said. But after looking over the application, they decided to remove the curbside structure, opting instead to apply for sidewalk seating that can remain year-round.
Of the 2,592 restaurants that have applied for the new program, roughly half will forgo roadway set-ups in favor of sidewalk-only seating, according to the city.
Karen Jackson, a teacher, was going to lunch indoors Tuesday at Gee Whiz diner in Tribeca, one of the restaurants that took its outdoor shed down ahead of the deadline.
Jackson said she has mixed feelings, recalling how having coffee outside in a shed was one of the few entertainment options available early in the pandemic, The Associated Press reported.
“Some of them were really cute,” but others were unattractive and rat-infested, Jackson said.
“Unfortunately I think the places with more money were able to build the cute sheds and the places that were struggling couldn’t,” she said.
Andrew Riggie, the executive director of the NYC Hospitality Alliance, said the city should examine why so few eligible restaurants have applied, and consider how costly it will be to take down, store and rebuild the structures each year.
Applications for roadway dining structures must also undergo a review from local community boards, where some of the fiercest debates over outdoor dining have played out. Opponents have complained that the sheds eliminate parking, contribute to excessive noise and attract vermin.
On the Lower East Side, a row of sheds owned by a sushi counter, a coffee shop, a Mexican eatery and a Filipino restaurant stand side-by-side.
Paola Martinez, a manager at Barrio Chino, the Mexican restaurant, acknowledged the trash headaches and neighborhood conflict — on one particularly busy night, an angry neighbor hurled glass at the structure from an upstairs window, she said. But her restaurant has applied to stay in the roadway.
“It attracts a lot more people to the area,” she said. “It’s been great for business.”
City officials say restaurants who missed the deadline are welcome to apply in the future, while those that haven't will soon be fined $1,000 each day their set-ups remain.
Watching contractors take a crowbar to his once-vibrant dining shed, Cournot described a sense of relief. He said the sheds had come to symbolize an incredibly challenging period when a coworker died from the virus and a drop in sales nearly ended his East Village wine bar.
“When people say it’s the end of an era, I think it’s the end of a uniquely awful era for restaurants in New York,” Cournet said. “Like going through any kind of extended group trauma, the positives that we feel collectively are a little bit of a mirage.”