Bob Iger
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Disney confirmed that its streaming business is expected to turn a profit this summer, with reduced losses in the division due to higher revenue per user and cost control efforts.
In a pivotal quarter, Disney reported that its streaming business incurred a loss of $216 million, including sports, down from $387 million in the previous quarter and over $1 billion a year ago.
The company noted a slight decrease of 1.3 million subscribers in core Disney+, attributed to the price increase in the quarter. However, it anticipates a surge in subscribers in the next quarter to 5.5 million to 6 million. The company also saw an improvement in average revenue per user (ARPU) due to the price hike and better performance from the ad-supported tier of Disney+. Hulu’s subscriber base increased by 1.2 million.
On the earnings call, Disney CEO Bob Iger unveiled several projects and deals, including a $1.5 billion investment in Epic Games to bring Disney franchise IP to the Fortnite universe, a surprise Moana sequel to be released this year, a deal to bring Taylor Swift’s Era’s Tour movie to Disney+ next month, and a planned launch of ESPN’s direct-to-consumer flagship service in fall 2025.
Total revenue remained unchanged at $23.5 billion from a year ago, with diluted earnings per share increasing to $1.22 and operating income reaching $3.9 billion, beating Wall Street expectations.
In the entertainment division, revenues were $10 billion, with operating income of $874 million. In sports, revenues were $4.8 billion with operating losses of $103 million. In experiences, revenue was $9.1 billion and operating income was $3.1 billion.
Iger discussed the company’s parks and experiences business, expressing expectations for expansion in all current physical locations as well as its cruise line.
The company also announced a substantial increase in its dividend and a $3 billion share repurchase program. It provided guidance, projecting a 20% improvement in 2024 EPS and $8 billion in free cash flow for the year.
Disney’s earnings rose following the announcements, but the activists remain unconvinced. In a statement, a Trian spokesperson expressed dissatisfaction, stating “it’s déjà vu all over again. We saw this movie last year and we didn’t like the ending.”
In the streaming segment, Disney CFO Hugh Johnston mentioned the goal to achieve double-digit margins comparable to Netflix and plans for a crackdown on password sharing later this year.
