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As Fox deal nears, Disney thinks big

November 9, 2018

With the release this month of its first trailer for Spies in Disguise, Blue Sky Studios previewed the plot device for its next animated film — a secret agent who is changed into a pigeon by a gadget engineer, with the newly mismatched pair having to work together on the mission.

With Disney nearing completion of the $71 billion acquisition of the 21st Century Fox parent of Blue Sky Studios, the entertainment giant will be adding a third major animation house in Greenwich-based Blue Sky in addition to Walt Disney Animation and Pixar.

Starting this month with Ralph Breaks the Internet, Disney has a big slate of potential blockbusters lined up to include the animated Toy Story 4 from Blue Sky rival Pixar; as well as the live-action Captain Marvel, Dumbo, Aladdin, The Lion King and Star Wars Episode IX; and next month, the hybrid Mary Poppins Returns.

In its fourth fiscal quarter ending in late September, Disney revenue rose 12 percent from a year ago to $14.3 billion, with profits up a third to $2.3 billion. For the 2018 fiscal year, Disney earned $12.6 billion on revenue of $59.4 billion, representing gains of 40 percent and 8 percent respectively.

In addition to its pending acquisition of Fox and Blue Sky, Disney owns Bristol-based ESPN, with Hearst a minority investor with a 20 percent stake.

ESPN had a 6 percent drop in ad revenue during the third quarter, which Disney attributed in part to dropping viewership numbers, with ad sales up in the current fourth quarter. Disney has been attempting to reverse ESPN’s fortunes by tying it into emerging “over the top” video services like Hulu that viewers stream over the Internet, independent of pay-cable networks like Optimum, Spectrum or Xfinity.

“These services tend to be very attractive for younger viewers — they are also less expensive, which I think is important, even though I think there might be an opportunity for us to take pricing up a bit at Hulu,” said Disney CEO Bob Iger, during a Thursday conference call. “And the user experience is great, so ... with that in mind we believe that ESPN will benefit nicely from that over the long term.”

Disney plans to roll out its own streaming service next year called Disney+ after introducing ESPN+ earlier this year under a $5 monthly subscription.

“It clearly is working in terms of interest from users and subscriptions, which continue to grow,” Iger said of the new ESPN+ streaming service. “From the research we’ve seen and just generally anecdotal information, it’s a product that is considered a good consumer experience — easy to navigate, easy to use and very high quality in terms of the quality of the live streaming. ... I would say we’re just in the early innings, to use a sports analogy, of where we’re going to be.”

Alex.Soule@scni.com; 203-842-2545; @casoulman

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