Disney Exceeds Streaming Forecasts Amid Mixed Quarterly Results
Disney’s latest quarterly results reveal a mixed performance driven by strong streaming growth. As of the fiscal fourth quarter, the company reported a total of 196 million subscribers across Disney+ and Hulu, exceeding analyst expectations.
Streaming Success Amid Challenges
Disney+ has reached 131.6 million subscribers, with a notable gain of 12.4 million in the last quarter alone. This increase surpassed Wall Street’s forecast by over 2 million subscribers. Approximately half of this growth resulted from strategic wholesale deals, particularly a significant agreement with Charter Communications, as revealed by CFO Hugh Johnston.
Financial Performance Overview
- Operating income for the direct-to-consumer segment rose by $99 million, totaling $352 million.
- Revenue for this unit increased by 8% compared to the previous quarter.
- Adjusted earnings per share dropped slightly to $1.11, yet exceeded analyst expectations.
- Total revenue for the quarter remained flat at $22.5 billion, falling short of forecasts.
The company’s revenue was impacted by a $40 million shortfall due to lower political ad spending compared to last year. Film studio performance in this quarter lagged due to tough comparisons with the previous year, which featured hits like Inside Out 2.
Film and Sports Revenue Insights
Disney’s film division experienced challenges, with reduced content sales and licensing revenue, down $368 million. However, the studio saw a positive turn with the release of Predator: Badlands, achieving a franchise record during its opening weekend. Upcoming films like Zootopia 2 and Avatar: Fire and Ash are expected for the holiday season.
In sports, revenue approached $4 billion, a 2% increase, although operating income decreased by 2%, partly due to expenses from the new ESPN streaming service. The return of college football and the NFL helped boost ESPN’s domestic ad revenue by 8% during the quarter.
Corporate Developments and Future Plans
Disney’s corporate division, including its theme parks, reported a 6% increase in revenue, reaching $8.77 billion. The company announced plans to expand its cruise fleet with two new ships, the Disney Adventure and Disney Destiny. However, they anticipate incurring $280 million in pre-opening and maintenance expenses.
Although the current carriage dispute with YouTube TV resulted in a two-week blackout, the effects of this situation will not be reflected in this quarterly report as it commenced after the reporting period ended on September 27. Analysts may inquire about this issue in upcoming discussions with CEO Bob Iger and CFO Hugh Johnston.
