Walt Disney Co. reported strong earnings for its fiscal fourth quarter, exceeding analyst expectations and sending its shares up more than 3% in after-hours trading on Wednesday. Disney said diluted net income attributable to the company jumped 63% to $264 million in the quarter that ended September 30, up from $162 million a year earlier.
The entertainment giant also posted revenue of $21.4 billion, up 6% from a year ago, beating the Wall Street consensus of $21 billion2. The company attributed the growth to its media and entertainment distribution segment, which includes its streaming services, linear networks, and content sales and licensing.
Disney+ shines amid streaming slowdown
One of the highlights of Disney’s earnings report was the performance of its streaming service, Disney+, which added 9.1 million subscribers in the quarter, reaching 118.1 million globally. This was above the analyst estimate of 116.4 million and a significant improvement from the previous quarter, when Disney+ added only 2.1 million subscribers.
Disney+ was a bright spot amid a slowdown in the streaming sector, as rivals like Netflix and HBO Max saw lower subscriber growth in the quarter. Disney said that its streaming service benefited from the launch of popular original content, such as Marvel’s Loki and What If…?, Star Wars’ The Bad Batch, and Pixar’s Luca.
Disney also announced that it will raise the price of Disney+ by $1 in the U.S. and Canada, and by €1 in Europe, starting in March 2023, reflecting the value and quality of the service. The company said that it expects to reach 230 million to 260 million subscribers by the end of fiscal 20242
Disney cuts costs and vows to resume dividend
Another positive news for Disney shareholders was the company’s plan to slash costs by $2 billion more by the end of fiscal 2023, on top of the $1 billion it already cut in 2022, The cost reduction plan involves streamlining its operations, optimizing its workforce, and divesting non-core assets.
Disney also said that it intends to resume paying a dividend in fiscal 2023, after suspending it in 2022 due to the pandemic. The company said that it will balance its capital allocation between investing in growth opportunities, paying down debt, and returning cash to shareholders.
Disney faces challenges in parks and ESPN
Despite the strong earnings, Disney still faces some challenges in its other segments, especially its parks, experiences, and products division, which saw a 6% decline in revenue to $4.3 billion in the quarter. The company said that the delta variant of the coronavirus impacted its domestic and international park attendance and operating income.
Disney also acknowledged the difficulties in its sports network, ESPN, which has been struggling with cord-cutting, lower ratings, and higher rights fees. The company said that it is exploring various options to revitalize ESPN, including partnering with outside investors, launching a direct-to-consumer service, and selling some of its assets.
Disney remains optimistic about the future
Despite the headwinds, Disney expressed optimism about its prospects, citing its strong content pipeline, its diversified portfolio, and its loyal fan base. The company said that it will continue to innovate and adapt to the changing consumer preferences and market conditions.
Disney also announced some upcoming projects and events, such as the theatrical release of Marvel’s Eternals and Encanto, the streaming debut of Hawkeye and The Book of Boba Fett, and the celebration of the 50th anniversary of Walt Disney World Resort 2.
Disney CEO Bob Chapek said that he is confident that Disney will emerge stronger and more resilient from the pandemic, and that he is excited about the opportunities ahead.
