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Disney pops 6% in premarket after Epic Games, Eras Tour announcements

Disney CEO Bob Iger: Disney enters strategic partnership with Epic Games

disney Shares rose 7% in premarket trading early Thursday after the company’s first-quarter earnings beat estimates and it announced a series of major deals and upcoming events.

In his most eye-catching announcement, CEO Bob Iger said the company would take its biggest step yet into gaming with a $1.5 billion stake in Epic Games, the creator of the blockbuster Fortnite.

Disney said the partnership will allow it to work alongside Epic to create new games using its intellectual property, including Disney, Pixar, Marvel, Star Wars and Avatar.

The company also said it would launch an ESPN streaming service in 2025; stream an exclusive version of musician Taylor Swift’s Eras Tour film on Disney+; and release a sequel to the hit “Moana” this year.

Taylor Swift performs on stage during “Taylor Swift | The Eras Tour” at Allianz Parque on November 24, 2023 in Sao Paulo, Brazil.

Buddha Mendes | fake images

Disney’s first-quarter earnings per share were $1.22, versus a forecast of 99 cents, even though revenue missed estimates and remained broadly flat year over year. The company also announced a dividend of 45 cents per share, payable in July, up 50% from its January payment.

Disney lost customers on the Disney+ streaming platform, but revenue increased due to rising subscription costs. The company also updated investors on its plan to cut costs by at least $7.5 billion by the end of fiscal 2024, and forecast earnings per share for the year of around $4.60.

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Walt Disney Company stock price.

The results show stable revenues and effective cost management, according to Ben Barringer, technology analyst at investment manager Quilter Cheviot. The partnership with Epic Games could prove fruitful, but is likely to be “slow,” he said in a note.

“Disney anticipates modest revenue growth while maintaining a focus on cost discipline to ensure returns for shareholders. This strategy will gain support from its activist shareholders, despite current challenges in the Parks business and a continued decline. of linear television,” he added.

Disney and Iger have been under pressure from activist investor Nelson Peltz to improve results. Peltz’s investment firm told CNBC in a statement Wednesday: “We saw this movie last year and didn’t like the ending.”

What Disney's $1.5 billion stake in Epic Games, the maker of 'Fortnite', means for both companies

CNBC’s Sarah Whitten and Alex Sherman contributed to this story.

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