Getty Images
Disney’s adjusted earnings per share for the March quarter beat Wall Street expectations, but the company’s stock price slumped amid concerns from the Mouse House.
Disney stock fell 9.5% to $105.41 per share as of 11:30 a.m. ET. The pullback comes even as the stock had risen 29% since the beginning of the year as of Monday.
Disney’s theme park business led sales and bottom line growth in the first three months of 2024, with sales increasing 10% and segment operating income increasing 12%. The company said it expects segment operating profit for the June quarter to be approximately positive. Revenue was flat, similar to the previous year.
“Consumers continue to travel in record numbers and we continue to see healthy demand, but theme parks are experiencing a “We are seeing some evidence of post-virus peak travel being suppressed globally,” he told analysts. He also said that the division’s profits are likely to fall due to rising costs and inflation, but business is expected to recover in the September quarter.
Meanwhile, revenue from Disney’s linear television business (excluding ESPN) fell 8% to $2.77 billion, and operating profit fell 22% to $752 million, falling below analysts’ expectations. In the U.S., Disney attributed the decline in operating income to “the impact of non-renewal of certain network carriers by affiliates” (a reference to Charter’s elimination of eight cable networks last fall) and average viewership. This is thought to be due to a decrease in advertising revenue reflecting the decline in the number of consumers.
Disney’s second-quarter financial results showed that the company finally made progress toward profitability in its streaming division, with Disney+ and Hulu reporting operating profits for the first time in history. Due to the decline, the company expects losses in its entertainment streaming division. Available in India and other Southeast Asian countries.
Chief Executive Officer Bob Iger said in an earnings call that Disney said the company’s “path to profitability” in its streaming business is not “linear.”
Additionally, Disney posted a one-time $2.05 billion goodwill impairment charge related to Star India and an unspecified Entertainment Linear Network, resulting in a net loss for the quarter. Star India’s impairment was a result of the company’s agreement with Reliance Industries to combine Star India’s operations and Reliance’s Viacom18 in a new joint venture.