Disney feels force of Star Wars buy

Disney posted an 86% surge in profits to $1bn from its movie business alone

‘The Force Awakens’ has broken box office records around the world

The $4bn (£2.8bn) Walt Disney shelled out for the Star Wars rights from George Lucas appears to be money well spent. The company reported record fourth-quarter profits, well ahead of market expectations, in no small part thanks to the first of its instalments in the franchise.

With The Force Awakens, one of only three movies to gross more than $2bn worldwide and on track to become the highest grossing film of all time, the company posted an 86 per cent surge in profits to $1bn from its movie business alone.

Wall Street analysts had been forecasting $14.7bn in revenue and earnings per share of $1.45, but the company reported $15.2bn in revenue and profits of $1.63 per share. Despite comfortably beating forecasts, the stock was lower in after-hours trading having been unchanged for most of the day.

The reason was Disney’s cable television business. Disney is fighting against fierce television competition, and even with its flagship sports network ESPN operating income from cable television fell by 5 per cent. Disney has also ploughed money into Hulu, its premium online television channel, an investment that is yet to pay off.