Disney’s media business has long been seen as a burden on the company, with streaming losses and a declining pay TV business weighing down its overall performance. However, the narrative is starting to change. In the second quarter of this year, Disney’s combined streaming businesses, including Disney+, Hulu, and ESPN+, turned a profit for the first time ever, making $47 million. This is a significant improvement compared to the $512 million loss in the same quarter last year.
The company’s theatrical unit is also experiencing success. “Inside Out 2” recently became the highest-grossing animated film of all time, while “Deadpool & Wolverine” has already earned $824 million globally within two weeks of its release. As a result, Disney has become the first studio in 2024 to surpass $3 billion in worldwide ticket sales.
Despite these positive developments, Disney did see a moderation of consumer demand towards the end of the third fiscal quarter, which exceeded their expectations. This led to a 3% slump in the company’s shares during early trading. However, Disney’s CEO Bob Iger remains optimistic about the future of the media business. He expects the momentum to continue and for the streaming business to grow nicely in fiscal 2025.
To generate new subscribers and increase revenue, Disney plans to crack down on password sharing, starting in September. This strategy has proven successful for Netflix, which has gained new customers over the past year. Additionally, Disney will be raising prices for its streaming services in mid-October, with most plans for Disney+, Hulu, and ESPN+ costing $1 to $2 more per month.
Iger highlighted a list of upcoming movie titles that Disney has yet to release, demonstrating the studio’s strong position for the remainder of 2024 and beyond. With films like “Moana,” “Mufasa,” “Captain America,” “Snow White,” “Thunderbolts,” “Fantastic Four,” “Zootopia,” “Avatar,” “Avengers,” “Mandalorian,” and “Toy Story,” Disney not only has potential for box office success but also the ability to drive global streaming value.
While Disney remains committed to investing $60 billion in its theme parks and cruise lines over the next decade, the company wants to assure investors that its media units are not dragging down the share price. The recent drop in Disney’s shares can be attributed to investor focus on the parks. However, the ultimate goal is for shares to rise during a quarterly earnings report due to excitement surrounding the media units.
In conclusion, Disney’s media business is no longer a burden on the company. With the streaming businesses turning a profit, successful theatrical releases, and plans for cracking down on password sharing and raising prices, Disney is poised for growth and profitability. The upcoming movie releases further strengthen the company’s position. While the parks remain important, Disney is striving to convince investors that its media units are driving the company’s success.
