Disney Exceeds Q4 2023 Earnings Expectations Amidst Streaming Success

Disney (NYSE: DIS) exceeded expectations in its recent earnings report, with notable contributions from ESPN+ profitability and continued expansion in theme park revenue. However, a decline in advertising revenue had a dampening effect on the overall financial performance.

To address the challenges, Disney announced an increase in cost-cutting measures by an additional $2 billion, aiming for a total reduction of $7.5 billion. Following this announcement, the company’s stock experienced a positive surge, rising more than 4% after the closing bell on Wednesday.

The drop in ad revenue was primarily attributed to lower political advertising revenue at Disney’s ABC Network and other owned TV stations during the quarter. CEO Bob Iger had previously indicated openness to selling TV assets.

On a positive note, Disney welcomed 7 million new core Disney+ subscribers in the quarter, bringing the total user count to 150.2 million, including Hotstar. The streaming business also showed improved financials, narrowing its losses compared to the previous year.

Key content additions to Disney+ during the last quarter, including theatrical titles like “Elemental,” “Little Mermaid,” and “Guardians of the Galaxy: Vol. 3,” along with the Star Wars series “Ahsoka,” were highlighted as significant contributors to the platform’s success.

Looking ahead, Disney expressed confidence in the profitability of its combined streaming businesses by the fiscal fourth quarter of 2024. Iger outlined four key building opportunities for the company’s future success: achieving sustained profitability in streaming, establishing ESPN as a leading digital sports platform, enhancing film studio output and economics, and driving growth in the parks and experiences business.

Here are the key financial figures from Disney’s report:

  • Earnings Per Share (EPS): 82 cents per share adjusted vs. an expected 70 cents per share.
  • Revenue: $21.24 billion vs. an expected $21.33 billion.
  • Total Disney+ subscribers: 150.2 million vs. an expected 148.15 million.

In the fiscal fourth quarter ended September 30, Disney reported a net income of $264 million, or 14 cents per share, compared to $162 million, or 9 cents per share, in the same period the previous year. Excluding impairments, the company earned 82 cents per share, surpassing Wall Street expectations.

While revenue increased by 5% to $21.24 billion, it fell just short of estimates, marking Disney’s second consecutive revenue miss and the first consecutive miss since early 2018.

This quarter also marked the implementation of Disney’s new financial reporting structure, dividing the company into three segments: entertainment, sports, and experiences. Notably, the experiences division saw a 13% revenue increase to $8.16 billion, driven by higher attendance and ticket prices at parks domestically and internationally.

Disney+ achieved over 150 million streaming subscriptions by the end of the fiscal fourth quarter, with core Disney+ subscriptions at 112.6 million and Disney+ Hotstar at 37.6 million. Despite a strategy shift leading to a loss of 12.5 million Disney+ Hotstar subscriptions, Hulu reached 48.5 million subscribers, and ESPN+ rose to 26 million.

Disney’s streaming business reported a year-over-year improvement, with a 74% decrease in losses, totaling $387 million in Q4 2023 compared to $1.4 billion in Q4 2022.

During the earnings call, Iger revealed ongoing talks to license some Disney content to Netflix but emphasized that core brands such as Disney Pixar, Marvel, and Star Wars would not be included in any licensing deals.

The company’s financial restructuring also led to revised projections, with content spend for 2024 expected to be $25 billion, down from $27 billion in 2023.

Disney last traded at $84.50 on the NYSE.

Information for this story was found via CNBC, Variety, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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