Disney's Iger Says Merchandising Profit Will Rise on New Releases

A spate of upcoming film releases will help The Walt Disney Co. (DIS)  boost profits from the sale of movie-themed clothes, toys and other products more over the next two years than they did in the fourth quarter that ended Oct. 1, CEO Bob Iger told investors. 

"In FY2018 alone we have four new Marvel movies, three animated films from Pixar and Disney Animation and two Star Wars releases including Episode VII which will also benefit our consumer products," Iger said in a call with investors on Thursday, Nov. 1.

Before the earnings call, Disney reported that the company generated profits of $424 million from consumer products in the 2016 fourth quarter, a 5% year-over-year slip from profits of $447 million. Fourth quarter revenue from consumer products fell 17% to $1.3 billion, compared to the previous year's fourth quarter consumer product revenue of $1.5 billion.

The sale of Disney merchandise has been driven in recent quarters by the success of movies such as "Frozen" and "Star Wars Episode VII: The Force Awakens."

"Usually when we talk about the studio, we talk about the studio as it relates to box office and the bottom line for that business but you also have to think about it in terms of how we mine these assets, not just in the U.S. but globally at our parks and in consumer products," Iger said in the company's earnings call.

In the 2016 first quarter, the company reported consumer product profits of $860 million on revenue of $1.9 billion, driven by the sales of Star Wars merchandise after the hit movie was released on Dec. 18, 2015.

"Star Wars Episode VII: The Force Awakens" generated about $2.17 billion at box offices worldwide.

"We fully expect to return to more robust growth in FY2018 and beyond, particularly given the powerful upcoming slates in our studio," Iger said on Thursday.

"Rogue One: A Star Wars Story" is set to hit theaters on Dec. 16, with "Star Wars: Episode VIII" following it on Dec. 15, 2017, then "Untitled Han Solo Star Wars Spinoff" will be released on May 25, 2018, and "Star Wars: Episode IX" hits the box office on Dec. 31, 2019.

Iger said 3D animated musical "Moana," scheduled to be released on Nov. 23, is also "already generating great buzz ahead of its opening."

On Thursday's call, Iger declined to comment in detail about acquisition rumors when asked a question by Bank of America Merrill Lynch analyst Jessica Jean Reif Cohen pertaining to the topic. The media giant allegedly mulled putting a bid on Twitter (TWTR)  and is considering purchasing Netflix (NFLX) .

"We think there's some really interesting opportunities" to improve business and improve the consumer experience "by selling directly to consumers," Iger said.

"And we're considering and exploring various ways to accomplish this," Iger said, adding that when the company took a $1 billion stake in MLB Advanced Media's BAMTech, the deal was "designed to do just that."

In August, Disney took a minority interest in media company BAMTech to launch a subscription streaming service of sporting events through ESPN.

On Thursday, Disney reported 2016 fourth quarter earnings of $1.10 per share on revenue of $13.14 billion, compared to Wall Street expectations of earnings of $1.16 per share on revenue of $13.5 billion.

Late Friday afternoon, shares of Disney rose $2.91, equal to 3.06%, to $97.87.

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