Disney's latest quarter was mixed but strong with a big rise in studio profits led by… Deadpool Wolverine and Inside out 2. At a complicated time for a media outlet and a company with many moving parts, streaming at black and local theme parks has seen operating income soar.
Overall, Disney's fiscal fourth quarter, ending in September, saw revenue rise 6% from a year earlier to about $22.57 billion, beating Wall Street expectations, and operating income grew 23% to $3.65 billion.
The stock rose more than 6% from pre-market trading after the numbers.
entertainmentwhich includes content, streaming and linear TV, saw operating income rise to $1.1 billion from $236 million on revenue up 14% to $10.8 billion. Pixar Inside out 2 And Marvel Deadpool Wolverine It broke several box office records and helped generate operating revenues of $316 million.
“Our strong performance in the fourth fiscal quarter reflects the success of our strategic efforts to improve quality, innovation, efficiency and value creation,” said CEO Bob Iger. “In the fourth quarter, we saw one of the best quarters in our film studio history, improved profitability in our streaming business, a record 60 Emmy Awards for the company, continued strength in live sports, and the unveiling of an exciting pipeline of new projects coming to our Experiences segment.
DTC Disney saw the quarter end with 174 million Disney+ core and Hulu subscriptions, and more than 120 million paid Disney+ subscribers, an increase of 4.4 million from the previous quarter. The live broadcast turned into a profit of $253 million from a loss of $420 million in the previous year, and from $19 million in the previous quarter ending in June.
Hulu finished September with 47.4 million subscribers, up slightly. Hulu + Live TV subscribers reached 4.6 million, compared to 4.4 million in June. Disney is buying Hulu from its partner Comcast and has already paid an agreed-upon sum of $8.6 billion. They are still discussing how much is owed.
Broadcast revenue rose 15% to $5.78 billion. Ad sales increased by 14%. Disney cited gains from higher subscription prices and lower marketing costs.
Combining Disney+, Hulu and ESPN+ from the sports segment, total DTC revenue rose 13% and there was a profit for the second straight quarter – of $321 million, after a positive $47 million in June driven by ESPN+. The trio lost $387 million in the third quarter of 2023.
Disney agreed early this year to merge its Star India streaming operation with Reliance in an $8.5 billion deal.
The burning question regarding streaming — for Disney and other traditional media — is when, and if, it can be profitable enough to offset declines in linear TV.
Sports Revenues were flat at $3.9 billion. Operating income fell 5% to $929 million. ESPN's local ad revenue in the fourth quarter increased 7% sequentially.
Disney will launch a standalone ESPN+ streaming service in 2025, something Iger will likely be asked about on a call with analysts scheduled for 8:30 a.m. ET, along with its Venu Sports Streaming joint venture with Fox and Warner Bros. Fubo filed a lawsuit against him, and his fate was in the hands of a New York court.
Also of interest is the outlook for streaming, the timing of the theme park's revival, Disney's new contract with the NBA, its film slate, and of course, the succession. The board of directors, led by James Gorman, is searching for a new Disney CEO, and is eyeing internal and external candidates. Iger's contract expires at the end of 2026.
Experiences Revenue rose 1% to $8.2 billion with operating income of $1.6 billion, down 6% from the prior year.
Disney said operating income for its domestic parks increased in the fourth quarter based on similar attendance to the prior-year quarter, driven by higher guest spending, which was partially offset by higher expenses and costs related to new offerings offered by Disney Cruise Line. International Parks & Experiences' operating income decreased. The company did not specify its locations, but it said in the fourth quarter that it expected the Paris Olympics to impact Disneyland Paris.
US theme parks in particular have faced a whirlwind this year as frenzied post-Covid attendance has begun to moderate. Wall Street was very upset but settled for wariness of the dynamic that shook one of Disney's most reliable growth engines.
Also, what will happen when NBCUniversal's massive new Epic Universe theme park opens in May next year in Orlando across town from Walt Disney World? Iger said he was fine. Disney itself is in the midst of a multi-year, $10 billion investment cycle in its parks. Universal also noticed a decline in attendance at its parks this year.
Linear networkspart of the Entertainment division, saw revenues decline 6% to $2.46 billion with operating income of $498 million, down 38%. Local networks have been pressured by higher marketing costs from season premieres this year due to Hollywood strikes in 2023. Affiliate and advertising revenues have declined due to fewer subscribers.
Disney also noted “the impact of non-renewal of carriage of certain networks by an affiliate.” It was not specified, but the renewal with Charter in September 2023 resulted in the reduction of a few networks including Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo.
Disney took $1.5 billion in restructuring and impairment charges, including $69 million for severance. It was tough. Media companies have been aggressively firing employees to keep things simple as the entertainment industry and its contracts shift.
“This has been a pivotal and successful year for The Walt Disney Company, and thanks to the significant progress we have made, we emerge from a period of significant challenges and disruption well-positioned for growth and optimistic about our future,” Iger said.
“As a result of our strategies and focus on managing our business over the near and long term, we differentiate ourselves from traditional competitors, leveraging the deepest and broadest portfolio of entertainment assets in the industry to deliver attractive returns and further progress.” Promote our goals.”
