Disney’s successful earnings report and dividend increase

On Wednesday, Disney (DIS) announced a 50% increase in its cash dividend, in conjunction with its fiscal first quarter earnings report which surpassed expectations and revealed narrowed streaming losses. Disney reported an adjusted earnings of $1.22 per share compared to the anticipated $0.99, while also projecting a 20% increase in full-year fiscal 2024 earnings. Although revenue slightly missed expectations at $23.5 billion, the company announced a 50% dividend increase to $0.45 per share, payable on July 25. Additionally, Disney’s board approved a new $3 billion share repurchase program for fiscal year 2024.

Disney has been facing challenges including a decline in its linear TV and parks business, as well as streaming losses. The company has committed to cost-cutting measures and is on track to meet its $7.5 billion annualized savings target by the end of fiscal 2024.

Shares rose by 7% in premarket trading following the earnings release.

Disney also made several announcements, including plans to invest $1.5 billion in Epic Games, the exclusive streaming of “Taylor Swift: The Eras Tour (Taylor’s Version)” on Disney+, and the release of a sequel to “Moana” in November. Additionally, the company disclosed that the ESPN streaming service would launch in fall 2025.

Streaming losses for the entertainment division decreased to $138 million from $984 million in the prior-year period, largely attributed to raising streaming prices. However, core Disney+ subscribers dropped by 1.3 million due to these increases, slightly higher than expected. Disney expects to add 5.5-6 million core Disney+ users in the second quarter and anticipates an increase in average revenue per user.

The company aims to reach profitability in its streaming businesses by the fourth quarter of fiscal 2024 and is implementing measures to combat password sharing. Disney has warned users about limiting account sharing and anticipates benefits from these initiatives in the second half of the year.

CEO Bob Iger restructured the company into three core business segments: Disney Entertainment, Experiences, and Sports. The first quarter results showed positive performances in all segments, with total segment operating income increasing by 27% compared to the previous year. Entertainment operating income rose over 100% year-over-year and the experiences division achieved record revenue, operating income, and operating margin. However, the sports segment reported an operating loss but showed a 37% improvement compared to the previous year.