Disney’s Third Quarter Results
Disney’s third quarter results showed a solid growth of 2% with a total revenue of $23.7 billion, slightly behind expectations. The company’s streaming, parks, and experiences segments were the highlights of the quarter.
Streaming Segment
The streaming revenue rose 6% to $6.2 billion, with a gain of $346 million compared to a loss of $19 million in the previous year. Global Disney+ subscribers increased by 1% or 1.8 million to 157.8 million, while Hulu subscribers reached 183 million. The streaming profit gains were attributed to price increases, subscriber growth, and the lack of income from Star India after the joint venture with Reliance in November 2024.
CEO Bob Iger stated that the company would invest in selective international markets with potential for increasing subscriptions, advertising revenue, and the bottom line. However, he did not expect content expenditure to increase significantly. The company also plans to integrate Hulu into the Disney+ app, replacing Disney+ International in the autumn, while keeping Hulu as an independent app in the US.
Studio Results
The operational income in the entertainment segment, which includes streaming, studios, and linear television, was $1 billion, a decrease of $179 million compared to the previous year. The studio operating income fell by $275 million to $21 million due to the early days of "Inside Out 2" and its global box office success of $1.7 billion. However, Iger noted "renewed dynamics" in the studio after shifting focus from quantity to quality.
The CEO highlighted the success of "Lilo & Stitch," a live-action adaptation of an animated property, which has seen a 70% increase in merchandise sales and is the second-highest merchandise seller behind Mickey Mouse. Iger also mentioned the development of original properties in the 20th Century and Searchlight Pictures studios, as well as the strong reviews for Marvel’s "The Fantastic Four: First Steps" and "Zootopia 2."
Experiences Segment
The sales in the domestic parks and experiences rose by 10% to $6.4 billion, while international sales increased by 6% to $1.7 billion. The domestic operating result rose by 22% to $1.7 billion, while international operating result decreased by 3% to $422 million.
Sports Segment
There was significant activity in the sports segment, particularly with ESPN, as media titans compete for major land grabs. Disney announced that ESPN and the NFL have concluded a contract to bring NFL programming to ESPN’s upcoming independent streaming service and Disney+, with the NFL taking a 10% stake in ESPN. The streaming service, which starts on August 21, will offer various features, including betting and multi-view options, and will be bundled with Disney+ and Hulu with ads for $29.99 per month.
The domestic revenue at ESPN rose by 1% to $3.9 billion, while international revenue increased by 2% to $379 million. However, the domestic operating result decreased by 7% to $1 billion due to increased programming and production costs. The Disney share fell by 2.7% to $115.17 at the end of trading.
