Disney’s fiscal third-quarter earnings report exceeded analyst expectations, thanks to the success of its streaming businesses. The company reported adjusted earnings per share of $1.39, higher than the expected $1.19, and revenue of $23.16 billion, surpassing the expected $23.07 billion. Disney’s total segment operating income also increased by 19% to $4.225 billion compared to the same period last year.
One of the highlights of Disney’s earnings report was the profitability of its combined streaming business, which includes Disney+, Hulu, and ESPN+. This segment turned a profit for the first time, a quarter earlier than anticipated. The streaming business posted an operating profit of $47 million, a significant improvement from the $512 million loss in the same quarter last year. However, when excluding ESPN+, the direct-to-consumer streaming unit reported a loss of $19 million.
Disney+ Core subscribers, excluding Disney+ Hotstar in India and other countries in the region, increased by 1% to 118.3 million. Total Hulu subscribers also grew by 2% to 51.1 million. The entertainment segment’s revenue saw a 4% increase to $10.58 billion, largely driven by subscription revenue growth and customer growth for Disney+ Core. However, revenue for traditional TV networks decreased by 7%.
Disney announced further price hikes for its streaming services, citing growth in consumption and the popularity of its offerings. CEO Bob Iger emphasized that the company hasn’t experienced significant customer losses when increasing prices in the past. In addition to adding more content, Disney plans to enhance technology features on its platforms and introduce live channels in the coming months. The company also aims to crack down on password sharing, following Netflix’s lead.
While Disney’s entertainment and sports divisions performed well, the U.S. theme parks business experienced a slowdown due to slowing consumer demand and inflation. Attendance at U.S. parks remained flat, and executives expect this trend to continue for the next few quarters. Despite this, the overall experiences unit, which includes theme parks and consumer products, saw a 2% increase in revenue. Operating income for U.S. parks, however, decreased by 6% due to higher costs driven by inflation and increased technology spending.
Disney CFO Hugh Johnston expressed optimism about the company’s overall performance, noting that the entertainment division’s profit tripled in the quarter. However, he refrained from giving long-term guidance on theme parks as the impact of future investments on earnings remains uncertain.
Overall, Disney’s strong earnings report highlights the success of its streaming businesses and the potential for growth in the future. Despite challenges in the theme parks industry, the company remains optimistic about its overall performance.
