Disney Beats Earnings, Boosts Earnings as Streaming Losses Narrow

Disney (DIS) said it would boost its cash dividend by 50% on Wednesday as the entertainment giant reported fiscal first-quarter earnings that beat expectations while streaming losses narrowed.

Disney reported adjusted earnings of $1.22 per share — a big win compared to the $0.99 forecast of analysts surveyed by Bloomberg. The company is also targeting full-year fiscal 2024 earnings of $4.60 per share, an increase of at least 20% compared to 2023.

Revenue was $23.5 billion, a slight loss compared to the $23.8 billion expected.

It announced a cash dividend of $0.45 per share, an increase of 50% compared to the last dividend paid in January. The dividend will be paid on July 25 to shareholders of record at the close of business on July 8.

The Board of Directors also approved a new stock repurchase program, targeting purchases worth $3 billion in fiscal year 2024.

Disney faces challenges that include a declining linear TV business, slowing growth in its theme park business, and losses in streaming. Last year, activist investor Nelson Peltz renewed his push to change the board as the stock price reached its lowest levels in years.

CEO Bob Iger has committed to various cost reductions to address these challenges. The company said Wednesday that it is on track to meet or exceed its annual savings goal of $7.5 billion by the end of fiscal 2024, adding that it “will continue to look for more efficiency opportunities.”

Shares rose 7% in premarket trading Thursday after the results.

New ads: games, content and sports

Disney had a lot to say on Wednesday with a slew of new announcements.

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It is worth noting that the company said that it plans to invest $1.5 billion in Epic Games, the maker of Fortnite, and Iger described it as “Disney’s largest ever entry into the world of video games.”

“Our new relationship with Epic Games will create a transformative gaming and entertainment world that integrates Disney’s world-class narrative into Epic’s cultural phenomenon, Fortnite, enabling consumers to play, watch, create and shop for digital and physical goods,” Iger said. On the earnings call.

On the content side, the company said that Disney+ will be the exclusive streaming home for “Taylor Swift: The Eras Tour (Taylor Edition).” The concert film will feature five additional acoustic songs, including “Cardigan.”

Meanwhile, the animated sequel to “Moana” will hit theaters in November, as Disney leans deeper into sequels and franchises amid a faltering box office.

Disney also announced a more aggressive timeline for the company's over-the-top (OTT) streaming service ESPN, revealing the platform will launch in the fall of 2025.

espn He was mentioned in a social media post The service will be launched before the start of the football season next year.

This development comes after news emerged that Disney's ESPN will be teaming up with Warner Bros. Discovery (WBD) and Fox (FOXA) to launch a new sports streaming service, which is expected to debut sometime this fall.

Profitability flow in focus

Streaming losses within the entertainment division narrowed to $138 million from a loss of $984 million in the same period a year earlier after the company raised streaming prices. However, Disney+'s core subscriber count, which excludes its Indian product Disney+ HotStar, fell sequentially by 1.3 million due to those increases.

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The subscriber loss, in line with company guidance, was slightly higher than Wall Street had expected, with consensus estimates suggesting a loss of about 700,000 core Disney+ users.

The company said it expects to add between 5.5 million and 6 million core Disney+ users in the second quarter. It also expects continued positive momentum in average revenue per user, or ARPU, after Disney+'s core ARPU increased sequentially by $0.14 compared to Q4.

Including ESPN+, direct-to-consumer losses totaled $216 million versus $1.05 billion reported in the same period a year earlier.

“We continue to expect to reach profitability in our combined broadcast business in the fourth quarter of fiscal 2024,” the company said. “We believe this business will ultimately be a key driver of earnings growth for the company.”

Amid the recent price hike, the company will also begin cracking down on password sharing. Disney said it likely won't see “noticeable benefits” from these initiatives until the second half of this year.

Just before the earnings announcement, Disney sent notices to Disney+ users, warning that it would begin restricting account sharing starting in March. The announcement came just days after Hulu sent a similar notice to subscribers.

Iger, who previously said the number of subscribers to shared accounts was “significant,” first revealed that the company would address password sharing during its fiscal third-quarter earnings call in August.

A screen showing the logo and ticker symbol of The Walt Disney Company.

A screen showing the Walt Disney Company logo and symbol on the floor of the New York Stock Exchange (NYSE) in New York, on December 14, 2017. (Brendan McDermid/REUTERS) (Reuters/Reuters)

As a reminder, Disney recently revised its reporting structure after CEO Bob Iger reorganized the company into three core business segments: Disney Entertainment, which includes the entire media and streaming portfolio; Experience including gardening; and sports, which includes ESPN and ESPN+.

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Here's how these individual sectors performed this quarter versus consensus Wall Street estimates compiled by Bloomberg:

  • Entertainment revenue: $9.98 billion versus $10.54 billion expected

  • Sports revenue: $4.84 billion compared to $4.62 billion expected

  • Experience revenue: $9.13 billion Compared to the expected $9.03 billion

Total sector operating income reached $3.88 billion, an increase of 27% compared to the same period last year.

Entertainment operating income rose more than 100% year over year to $874 million, while the Experiences division achieved all-time records in revenue, operating income and operating margin in the first quarter.

The sports segment had an operating loss of $103 million but saw a 37% improvement compared to a loss of $164 million reported in the same period last year.

Meanwhile, linear networks continued to struggle. The segment declined 12% year over year to $2.8 billion, while linear operating income reached $1.2 billion, a decline of 7%.

Alexandra Canal He is a senior reporter at Yahoo Finance. Follow her on Twitter @allie_canal, linkedin, And email it to [email protected].

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