Disney’s Magic Fades as Streaming Subscribers Exit

  • Disney (DIS) reported a Q1 revenue of $24.69 billion with a 5% year-over-year increase, beating expectations slightly, but earnings per share missed by $0.05 at $1.40.
  • The company experienced a loss of 700,000 Disney+ subscribers, totaling 125 million, despite growth in the broader streaming ecosystem including Hulu, now at 178 million combined subscriptions.
  • Significant operating income improvements were seen in Direct-to-Consumer ($431 million increase), Sports ($350 million increase), and Content Sales/Licensing ($536 million increase), though the Experiences segment was impacted by natural disasters and pre-opening costs.

disney

Walt Disney Co. (DIS) reported a mixed bag of financial results for its fiscal first quarter, highlighting both the resilience and challenges facing the entertainment giant. Despite beating earnings expectations on both the top and bottom lines, Disney faced a notable decrease in Disney+ subscribers, dropping by 700,000 from the previous quarter to 125 million. This decline marks a significant shift as the company navigates the competitive streaming landscape.

The company’s stock saw a modest increase of $1.10 or 0.97%, reaching $113.30 in premarket trading, reflecting investor sentiment that remains cautiously optimistic. Disney reported earnings per share of $1.40, falling $0.05 short of the consensus estimate of $1.45. However, revenue growth was solid at 5.1%, amounting to $24.7 billion, nearly in line with expectations.

In the Direct-to-Consumer segment, which includes Disney+ and Hulu, operating income saw a significant uptick, rising by $431 million to $293 million. This improvement comes despite the subscriber loss, suggesting better monetization or cost management within the streaming services. The total number of Disney+ and Hulu subscriptions rose slightly to 178 million, indicating some growth in the broader streaming ecosystem even as Disney+ faced subscriber attrition.

On the content side, Disney benefited from strong theatrical releases, with CEO Bob Iger citing the top three movies of 2024 coming from Disney studios. This success in cinemas translated into a $536 million increase in operating income for Content Sales/Licensing and Other, reaching $312 million, largely driven by the performance of “Moana 2.”

The Experiences segment, encompassing Disney’s parks and resorts, maintained robust operating income at $3.1 billion, though this figure was tempered by natural disasters like Hurricanes Milton and Helene, costing around $120 million, and pre-opening expenses for the Disney Treasure, adding another $75 million in costs for the quarter.

In the Sports segment, which includes ESPN among other properties, there was a notable $350 million increase in operating income to $247 million. However, looking ahead to the second quarter, this segment is expected to face headwinds from college sports scheduling and an additional NFL game, alongside a $50 million impact from exiting the Venu Sports JV.

Looking forward to fiscal year 2025, Disney reaffirmed its outlook for high-single-digit EPS growth, aligning with market expectations of about 8.8%. The company anticipates double-digit growth in segment operating income for Entertainment, with significant improvements expected in Direct-to-Consumer profitability. Sports is projected to see a 13% increase in operating income, while Experiences is expected to grow between 6% to 8%.

This financial performance underlines Disney’s strategic adjustments in a shifting media landscape, balancing between traditional revenue streams like theme parks and theatrical releases, and the more volatile but potentially lucrative streaming market. The company’s ability to navigate these challenges while maintaining growth in key areas will be crucial as it moves forward in an increasingly digital and competitive entertainment industry.

WallStreetPit does not provide investment advice. All rights reserved.

About Ari Haruni 471 Articles
Ari Haruni

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