Disney’s earnings report showed it has topped expectations thanks in part to profit from ESPN+ and continued growth at theme parks, but a decline in ad revenue weighed on the top line. Disney also said it plans to continue to “aggressively manage” its cost base, increasing its cost-cutting measures by an additional $2 billion to a target of $7.5 billion.
After Disney’s earnings report, the shares of the company rose more than 4% after the closing bell on Wednesday.
Disney’s cost cutting
The decrease in ad revenue was primarily from Disney’s ABC Network and other owned TV stations, which saw lower political advertising revenue during the quarter. Over the summer, CEO Bob Iger said the company could be open to selling its TV assets.
Meanwhile, the company added 7 million new core Disney+ subscribers from the previous quarter, bringing its total number of users to 150.2 million, including Hotstar. The streaming business also narrowed its losses compared with a year earlier.
Disney’s earning beating expectations
Wall Street had expected Disney to report a total of 148.15 million subs for the quarter. The company touted the addition of theatrical titles such as “Elemental,” “Little Mermaid” and “Guardians of the Galaxy: Vol. 3” as well as the new Star Wars series “Ahsoka” as key streaming content during the last three months.
The company continues to expect that its combined streaming businesses will reach profitability in the fiscal fourth quarter of 2024.
“As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences business,” CEO Bob Iger said in a statement Wednesday.
Disney’s Q4 2023 earnings
Here are the Q4 2023 earnings results from Disney’s report:
Earnings per share: 82 cents per share adjusted vs. 70 cents per share expected, according to LSEG, formerly known as Refinitiv
Disney’s Revenue: $21.24 billion vs. $21.33 billion expected, according to LSEG
Total Disney+ subscribers: 150.2 million vs. 148.15 million expected, according to StreetAccount.
Disney’s profit
As per the Disney earnings call, the company reported net income of $264 million, or 14 cents per share, for the Q4 2023 ended Sep 30, this is up from a net income of $162 million, or 9 cents a share from 2022.
Excluding impairments, Disney earned 82 cents per share, higher than the 70 cents per share Wall Street had expected.
Revenue increased 5% to $21.24 billion, just short of estimates, which called for revenue of $21.33 billion. This is the second consecutive revenue miss for Disney and the first time it has had a consecutive revenue miss since early 2018.
New financial reporting structure
This is also the first quarter that Disney earnings report is made using new financial reporting structure. This segments the company into three divisions — entertainment, sports and experiences. Entertainment contains all of Disney’s streaming and media operations, sports includes ESPN, and experiences includes the company’s theme parks, hotels, cruise line and merchandising efforts.
Disney’s earning report
As per the Q4 2023 earnings results, Disney’s experience division saw revenues jump 13% to $8.16 billion during the quarter as parks saw higher attendance and ticket prices domestically and abroad. The company reported that there are still lower hotel rates at its Florida resort and that area is experiencing higher operating costs. Parks represented around 66% of total revenue for this division.
Disney’s earnings report showed revenue of $21.2 billion in the quarter, narrowly missing the street estimates but up slightly from last year. Operating income was $2.9 billion with diluted earnings per share of $0.82, beating the street estimates.
In entertainment, Disney earnings report showed revenues were $9.5 billion, with direct-to-consumer making up more than $5 billion of that number. Income was $236 million, with all the profits from linear offsetting the losses in streaming.
In sports, ESPN saw its revenue rise slightly to $3.8 billion, with operating income rising 16 percent to $987 million.
