Disney profit misses on higher investments, shares fall 5%
Aug 6 (Reuters) - Walt Disney Co on Tuesday missed Wall Street estimates for quarterly profit as heavy investments in its digital portfolio outweighed gains from the worldwide success of "Avengers: Endgame," sending its shares down 5%.
Higher spending to ramp up ESPN+ as well as for technology and building of family-friendly video streaming service Disney+ led to higher operating losses at its direct-to-consumer and international business.
It widened to $553 million from $168 million a year earlier. Disney has projected that Disney+, which is set to be launched in November, will turn a profit in fiscal 2024.
Operating income from its park experience and consumer products business rose 4% to $1.7 billion, but was partly hurt by labor costs and expenses associated with "Star Wars: Galaxy's Edge" theme park.
Disney recently bought the bulk of Twenty-First Century Fox Inc's TV and film assets in a $71 billion deal and is set to launch family-friendly Disney+ with a slate of new and classic TV shows and movies, which is viewed as the biggest threat to streaming giant Netflix.
Netflix's shares slipped in April when Disney priced Disney+, at $6.99 per month, below the video streaming pioneer's basic plan of $8.99.
Last month, Netflix said it lost U.S. streaming customers for the first time in eight years and missed targets for new subscribers overseas, an announcement that jarred investors ahead of looming competition.
Competition in the video streaming space is expected to intensify, with Apple Inc, AT&T's WarnerMedia's HBO Max and Comcast Corp's NBCUniversal also rolling out new services.
Excluding certain items, Disney earned $1.35 per share, below average analyst estimate of $1.75 per share, according to IBES data from Refinitiv.
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Revenue rose 33% to $20.25 billion, but missed analysts' estimates of $21.47 billion.
Shares of the Dow component, which has gained over 28% so far this year, fell to $135 in extended trading. (Reporting by Vibhuti Sharma in Bengaluru; Editing by Arun Koyyur)