Disney on Wednesday reported that its streaming losses narrowed as price increases helped offset the loss of 4 million subscribers at Disney+.
The company, which posted revenue and profit in line with Wall Street’s projections, also reported significant growth at its theme parks during its second fiscal quarter. Its linear TV unit struggled, however.
Disney shares fell about 2% in after hours trading.
This is CEO Bob Iger’s second earnings report since returning to the helm of the company late last year. He is overseeing a broad restructuring of Disney, including a targeted total of 7,000 job cuts. The company plans to roll out its third wave of layoffs before summer.
Here are the results, compared with estimates from Refinitiv and StreetAccount:
Iger’s second tenure at Disney also comes as legacy media companies contend with a rapidly shifting landscape, as ad dollars dry up and consumers increasingly cut off their cable subscriptions in favor of streaming.
Yet the streaming space has been difficult to navigate in recent quarters, as expenses have swelled and consumers become more cost conscious about their media spending.
Wall Street had expected Disney+ subscriptions to grow less than a percent during the quarter to reach 163.17 million users. However, the service saw a 2% decline in memberships, falling to 157.8 million subscribers from 161.8 million as of Dec. 31. The majority of these losses came from an 8% drop in membership at India’s Disney+ Hotstar. An additional 600,000 subscribers were lost domestically.
The company’s direct-to-consumer operating income losses were narrower than expected, however, with Disney posting a loss of $659 million during the quarter, compared to a loss of $841 million projected by Street Account. Revenue for the unit rose 12% to $5.51 billion, reflecting recent price increases.
Disney said the lower operating loss was due to improved results at Disney+ and ESPN+ during the quarter, partially offset by lower operating income at Hulu.
The company also saw higher subscription revenue at Disney+, where average revenue per user rose 20% to $7.14 for domestic subscribers. This gain was offset by a 20% fall in revenue for Disney+ Hotstar, which pushed global Disney+ ARPU to just $4.44, lower than the $4.52 projected by Street Account.
Disney’s linear TV networks posted $6.63 billion in revenue for the period, down 7% from a year earlier.
Overall, for the three-month period ended April 1, Disney reported net income of $1.49 billion, or 69 cents a share, compared with $597 million, or 26 cents a share, a year earlier. Excluding certain items, per share earnings for the most recent period were 93 cents.
Revenue for the quarter rose 13% year over year to $21.82 billion.
A bright spot for Disney came from its parks, experiences and products divisions, which saw a 17% increase in revenue to $7.7 billion during the most recent quarter.
Around $5.5 billion of that revenue came from its theme park locations. The company said guests spent more time and money during the quarter visiting its parks, hotels and cruises both domestically and internationally. Its cruise business, in particular, saw an increase in passenger cruise days.
Beyond day-to-day operations at the company, shareholders and industry analysts expect Iger to address a number of ongoing challenges during Disney’s earnings call Wednesday.
On Monday, Disney expanded its federal lawsuit against Florida Gov. Ron DeSantis, accusing the Republican leader of doubling down on his “retribution campaign” against the company by signing legislation to void Disney’s development deals in Orlando.
Additionally, the company is already seeing rippling effects from the writers strike, including the production shutdowns of Marvel Studios’ “Blade,” which was set to begin filming in Atlanta next month, as well as the Disney+ Star Wars series “Andor.”
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