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$DIS said it will launch its ESPN-branded multi-sport video streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019. With this, $DIS will end its distribution agreement with $NFLX for subscription streaming of new releases, beginning with the CY19 theatrical slate.
$DIS' Studio Entertainment revenue for 1Q18 were relatively flat from last year, while operating income declined 2%. The decrease was due to decreases in home entertainment and TV/SVOD distribution results as well as lower income from Consumer Products & Interactive Media segment revenue share.
$DIS' Parks and Resorts revenue for 1Q18 grew 13% year-over-year, and operating income increased 21%. The growth was due to increases at domestic parks and resorts, cruise line and vacation club businesses as well as at Disneyland Paris. Domestic results benefited from the comparison to the impact of Hurricane Matthew, which occurred last year.
$DIS' Cable Networks revenue for 1Q18 rose 1% year-over-year, while operating income fell 1%. Lower operating income was due to a loss at BAMTech and lower advertising revenue hurt EPSN. Lower average viewership, fewer units delivered and lower rates hurt lower advertising revenue.
$DIS reported a jump in 1Q18 earnings driven by one-time tax benefit associated with new U.S. federal income tax legislation. Net income rose to $4.42Bil or $2.91 per share from $2.48Bil or $1.56 per share last year. Revenue rose 4% to $15.35Bil. Adjusted EPS increased 22% to $1.89.
Social video service Twitch announced a partnership with $DIS' segment Disney Digital Network to bring exclusive content from four of the largest Disney-managed digital content creators - Jacksepticeye, LuzuGames, Markiplier, and Strawburry17 - to Twitch. Each will manage their own channels on Twitch as part of a multi-year partnership.
$DIS agreed to buy $FOXA. Under the terms of the agreement, shareholders of 21st Century Fox will receive 0.2745 Disney shares for each 21st Century Fox share they hold. Disney will also assume about $13.7Bil of net debt of 21st Century Fox. Robert Iger has agreed to continue as Chairman and CEO of $DIS through end of CY21.
$DIS' BoD declared a semi-annual cash dividend of $0.84 per share. The dividend is payable on Jan. 11, 2018 to shareholders of record on Dec. 11, 2017. The company last paid a semi-annual dividend of $0.78 per share in July. This payment brings its total dividends for FY17 to $1.62 a share.
$DIS selected Amazon Web Services Inc. (AWS), an $AMZN company, as its preferred public cloud infrastructure provider. Disney will expand its use of AWS to migrate production workloads to the AWS Cloud. Disney's segments Media Networks, Parks and Resorts, and The Walt Disney Studios, currently run business-critical workloads on AWS.
Amazon Web Services, Inc., an $AMZN company, announced that $DIS has selected AWS as its preferred public cloud infrastructure provider. $DIS will expand its use of AWS to migrate production workloads to the AWS Cloud. $DIS already leverages AWS’s services for a wide variety of use cases, including websites and digital properties.
For Consumer Products, $DIS feels really good about the lineup. $DIS has Star Wars Episode 8: The Last Jedi. $DIS deferred revenue in 4Q into 1Q like it did with Episode 7 for that. $DIS also has a Han Solo movie coming out named Solo in the spring quarters. And it has got four Marvel movies including Avengers in the spring.
$DIS expects capital expenditures for 2018 to be about $1Bil above the 2017 level. The company said a lot of that spend is going into the completion of the two Star Wars Lands and it is also completing Toy Story Land in Orlando and there's other initiatives that are in process around the globe.
$DIS said it has four new Marvel movies in FY18, starting with Thor: Ragnarok. This is followed by Marvel's next great movie, Black Panther, which opens next February, and The Avengers are returning back in May with the release of Infinity War. $DIS' final Marvel movie of the year, Ant-Man and the Wasp, will be in theaters next July.
$DIS said it will continue to invest in its businesses in 2018, particularly at Parks and Resorts where the company is building two Star Wars Lands. The company expects these investments among others to drive FY18 consolidated capital expenditures higher by about $1Bil.
So far this quarter, ESPN's cash ad sales are pacing down, due in part to timing of college football semi-finals and impact of more game windows on other linear television networks. Like last year, $DIS' ESPN will air 3 of New Year's Six bowl games during 1Q18. But, this year 2 semi-final games will air during 2Q18 whereas they aired during 1Q17.
At $DIS' ESPN, growth in affiliate revenue was offset by higher programming costs and lower advertising revenue. Higher spending on programming was primarily driven by a contractual rate increase for the NFL. Ad revenue at ESPN was down low-single digits in 4Q17, as higher rates were more than offset by a decrease in impressions.