A statue of Walt Disney and Mickey Mouse stands in a garden in front of Cinderella’s Castle at the Magic Kingdom Park at Walt Disney World on May 31, 2024, in Orlando, Florida.
Gary Hershorn | Corbis News | Getty Images
Disney reported fiscal fourth-quarter earnings on Thursday that topped analyst expectations for earnings but missed on revenue as the company’s entertainment business was weighed down by its TV networks and a lackluster theatrical film slate.
Disney stock fell more than 3% in premarket trading.
Here is what Disney reported for the period ended Sept. 27, compared with what Wall Street expected, according to LSEG:
- Earnings per share: $1.11 adjusted vs. $1.05 expected
- Revenue: $22.46 billion vs. $22.75 billion expected
Net income for the quarter was $1.44 billion, or 73 cents a share, more than double the $564 million, or 25 cents per share, that Disney reported in the same period last year. Adjusting for one-time items Disney reported earnings per share of $1.11.
The company’s overall revenue for the quarter was nearly $22.5 billion, slightly less than the same quarter last year.
“Overall we’re leaving the year with a lot of momentum,” Disney CFO Hugh Johnston told CNBC’s “Squawk Box” regarding the company’s streaming and experiences businesses.
Revenue for the entertainment unit fell 6% from last year to $10.21 billion, dragged down by the linear TV networks and theatrical releases.
Streaming remained the bright spot in the business as consumers continued to turn away from the pay TV bundle. Operating income for the linear networks dropped 21% to $391 million while it rose 39%, to $352 million, for streaming. The higher operating income for streaming occurred as prices increased for Disney’s streaming services.
Advertising revenue for the networks, which includes broadcast network ABC and pay TV channels like FX, also suffered.
DIsney’s TV networks, including ESPN, have been unavailable for customers of Google‘s YouTube TV, a streaming provider of the pay TV bundle since Oct. 31 due to an ongoing carriage dispute between the two companies.
The flagship streaming service Disney+ added 3.8 million paid subscribers, bringing its total to 131.6 million, while Hulu had 64.1 million customers. Disney has been in the process of integrating Hulu — which it took full control of earlier this year — into the Disney+ app.
This marks the last time the company will report subscriber numbers and the average revenue per unit, or ARPU, for its streaming services, which includes Disney+ and Hulu.
Instead, Disney will follow in the footsteps of streaming behemoth Netflix, which earlier this year stopped updating investors on its subscriber count.
Revenue for Disney’s sports division, namely ESPN, was up 3% to roughly $4 billion, while operating income was flat at $898 million when compared with the same period last year. ESPN’s domestic operating income in particular decreased due to costs associated with the launch of the ESPN direct-to-consumer streaming app in August, as well as higher programming costs.
Meanwhile, revenue for the experiences segment, which consists of theme parks, resorts and cruises, as well as consumer products, rose 6% to $8.77 billion. Operating income for the segment was up 13% to $1.88 billion.
Disney attributed the growth in its cruise business to its gains, despite being offset by higher fleet expansion costs. Disney’s fleet will expand once again later this month.