Disney reported earnings for its fiscal third quarter on Wednesday, beating Wall Street forecasts as its overall streaming business turned profitable sooner than expected.
According to LSEG data, Disney’s financial performance exceeded expectations:
- Adjusted earnings per share: $1.39 vs. $1.19 expected
- Revenue: $23.16 billion, above forecast of $23.07 billion
The business segment saw a 19% increase in total operating income to $4.225 billion over the previous year, driven by its entertainment business, particularly its streaming services.
For the first time, the conglomerate’s collective streaming entities — Disney+, Hulu, and ESPN+ — turned a profit overall, marking a significant milestone a quarter earlier than the company had expected.
Operating profit for these streaming services was reported at $47 million, a sharp change from a loss of $512 million in the same quarter a year earlier. Excluding ESPN+, the direct-to-consumer streaming division still had a loss of $19 million.
Previously, in May, Disney had reported a profit only from Disney+ and Hulu. However, including ESPN+, the overall streaming operation posted a loss, reflecting financial challenges within the broader streaming landscape.
Disney has changed its reporting structure, categorizing ESPN under its sports division, while Disney+ and Hulu are considered part of the direct-to-consumer entertainment segment. The change underscores Disney’s strategic focus on improving streaming profitability amid declining traditional TV viewership.
In terms of subscription metrics, Disney+ Core, excluding Hotstar in India and other regions, grew 1% to 118.3 million subscribers, contradicting expectations of no new subscriber additions during the quarter. Hulu subscriber count increased 2% to 51.1 million.
Entertainment revenue rose 4% to $10.58 billion, driven primarily by subscription growth from price increases and an increase in Disney+ Core subscribers. Following this trend, Disney announced additional streaming price increases.
Overall, Disney’s revenue increased 4% year-over-year to $23.155 billion.
Within ESPN, both domestic and international segments saw revenue increases of 5%, with a notable 17% increase in domestic advertising and growth in subscription revenue, as the advertising market shows signs of recovery.
The company’s U.S. theme parks, however, suffered a decline due to lower consumer spending and inflationary pressures, with operating income falling 6%. In contrast, international parks saw a 2% increase in operating income. Disney linked lower earnings at domestic parks to higher spending, including technology upgrades and new guest amenities.
Despite the difficulties in the parks sector in the United States, Disney CFO Hugh Johnston commented on the excellent performance of the entertainment sector, which saw profits triple during the quarter.
Looking ahead, Disney remains committed to investing heavily in its theme parks, planning to spend approximately $60 billion over the next decade.
This juxtaposition of performances not only highlights Disney’s ability to navigate market fluctuations, but also reflects broader industry trends, as seen in Comcast’s recent challenges to its theme park division amid growing competition.
