Disney beat Wall Street forecasts for its fiscal second quarter and moved ever closer to its long-awaited streaming profitability milestone.
Revenue for the quarter ended March 30 rose to $22.1 billion from $21.8 billion in the same period last year. Excluding items, diluted earnings per share for the quarter increased from 93 cents to $1.21. Analysts had expected revenue of $20.53 billion and earnings per share of $1.02.
The entertainment direct-to-consumer division, consisting of Disney+ and Hulu, ended the quarter with an operating profit of $47 million. The two had a loss of $587 million in the same period in 2023.
ESPN+ reported a loss of $18 million, which was significantly smaller than last year’s loss of $659 million.
The company said it still expects its combined streaming businesses to be profitable in the fiscal fourth quarter, consistent with forecasts first set at the start of the streaming wars in 2019. While the company has had to adjust some of its subscriber forecasts during streaming, profitability by the end of fiscal 2024 remains an important goal.
Disney+’s “core” subscriber count (i.e. the number excluding Disney+ Hotstar) rose 6.3 million to 117.6 million, with the gain better than analyst forecasts. Hulu, which recently became fully owned by Disney following its acquisition of longtime joint venture partner Comcast, broke through the 50 million subscriber barrier and ended the quarter with 50.2 million.
Disney+ Core’s average revenue per user increased 44 cents compared to the previous quarter. A deal with Charter Communications to integrate Disney streaming platforms into Spectrum’s pay-TV and broadband plans took effect during the quarter, accelerating subscriber growth.
The sports division, recently created to differentiate ESPN, saw revenue rise 2% to $4.3 billion, while operating profit fell 9% to $799 million. The company blamed the weakness on continued subscriber losses in the U.S. and one fewer College Football Playoff game than in the same quarter last year.
Experiences, the division that includes theme parks and consumer products, reported a 10% increase to $8.4 billion, while operating profit rose 12% to nearly $2.3 billion.
“It is clear that the turnaround and growth initiatives we initiated last year continued to deliver positive results,” CEO Bob Iger said in the earnings release.
Moving its quarterly results and analyst conference call to this morning ahead of Disney’s launch marks a departure from the company’s longstanding pattern of releasing results in the afternoon after the close of trading. The quarterly report also follows a heated voting rights dispute that was resolved at last month’s annual meeting, when activist investor Nelson Peltz and his supporters failed to secure the two seats they sought on the company’s board. Peltz had accused Iger of mismanagement and was responsible for the decline in Disney’s stock price. Shares started 2024 on a high note, gaining more than 30% so far this year.