Walt Disney Co. is making big strides toward monetizing its streaming business, and the milestone comes soon as traditional TV networks continue to decline.
Media and entertainment giant Burbank reported revenue across its streaming business of $6.19 billion in the second fiscal quarter of 2024, a 12% increase year-over-year. Disney’s streaming business, which includes Disney+, Hulu and ESPN+, reported an operating loss of $18 million for the three months ended March 30, compared to last year, when it reported a loss of $659 million. That’s a 97% change.
The company’s “Entertainment Streaming” business, which consists of only Disney+ and Hulu (not including ESPN+), was profitable in the quarter, with operating income of $47 million (compared to a $587 million loss in the same period last year). . Streaming revenue excluding ESPN+ was $5.64 billion, an increase of 13% year over year.
Overall, Disney had revenue of $22.1 billion in the quarter, up 1% year-over-year. Sales were broadly in line with analyst expectations, according to FactSet. Excluding certain items, earnings were $1.21 per share, up from 93 cents a year earlier and beating analysts’ average estimate of $1.10 per share.
Disney CEO Bob Iger cited streaming growth in a statement, citing the company’s continued strength in experiences, including parks, and the streaming business driving the company’s second-quarter results. said.
Disney’s streaming investments, accelerated to grow its Disney+ service launched in 2019, have lost billions of dollars so far. The company expects the combined streaming business to eventually become profitable in the fourth quarter of 2024.
This will be Disney’s first quarterly earnings report since Mr. Iger defeated activist investor Nelson Peltz in a proxy fight for a seat on the company’s board. Investors flatly rejected Mr. Peltz’s bid when votes were tallied at Disney’s annual shareholder meeting in April.
Among other things, Mr. Peltz wanted Disney to show a realistic plan to achieve profit margins similar to Netflix’s in its expensive streaming business. To bring Disney closer to its revenue goals, Mr. Iger implemented a strict cost-cutting plan and eliminated more than 8,000 jobs.
“Looking at our company as a whole, it is clear that the turnaround and growth efforts we embarked on last year continue to yield positive results,” Iger said in a statement.
Disney’s streaming business was a bright spot for its entertainment division, but its linear TV business struggled in the quarter, with revenue down 8% from a year ago to $2.77 billion. Linear Networks reported operating income of $752 million, down approximately 22% from the same period last year.
The company said the losses at linear networks were due to a decline in subscribers as Spectrum dropped eight networks, including Freeform and Disney Junior, from its lineup as part of Disney’s new cable licensing agreement with cable giant Charter Communications. He said this was due to a decline in affiliate income. These negotiations resulted in more than 10 days of blackouts for ESPN and ABC channels as the two companies rushed to reach an agreement.
The company’s movie studio business also struggled, with sales down 40% to $1.39 billion and an operating loss of $18 million. Disney’s box office revenue was weak compared to last year’s second quarter, when Marvel’s “Ant-Man and the Wasp: Quantumia” and “Avatar: The Way of Water” were in the works.
Disney movies are sluggish in 2024, and the company is hoping for a recovery with “Planet of the Apes,” “Inside Head 2,” and “Deadpool and Wolverine.”
Disney’s sports division’s revenue was $4.31 billion, an increase of 2% from the previous year. ESPN’s operating income was $778 million, down 2% from the same period last year.
Meanwhile, its “Experiences” division includes theme parks such as Disneyland and Walt Disney World. Cruise lines and consumer products continued to drive the company’s revenue, with sales of $8.39 billion, up 10% year-over-year. Parks segment operating income increased 12% to $2.29 billion. This division accounted for 59% of the company’s operating profit.
The company said the growth in experiences was due to improved performance at Walt Disney World in Florida and Disney Cruise Line.
Disney also wrote down its troubled Star India business by $2 billion after agreeing to merge the business into a joint venture controlled by rival Reliance Industries, a major Indian conglomerate. . The Star India business, along with the streaming service Hotstar, became part of Disney through the acquisition of 21st Century Fox in 2019.