Disney (DIS) reported positive news in its fiscal third quarter, with its total streaming division turning a profit for the first time. The direct-to-consumer (DTC) streaming business, which includes Disney+, Hulu, and ESPN+, posted operating income of $47 million, a significant improvement from the $512 million loss in the prior-year period. This achievement was ahead of the company’s expectations, as Disney had previously aimed to achieve total streaming profitability by this quarter.
In addition to the success in its streaming division, Disney reported adjusted earnings of $1.39 per share, surpassing analyst expectations of $1.19 and higher than the $1.03 reported in the same period last year. Revenue also exceeded consensus estimates, coming in at $23.2 billion compared to the expected $23.1 billion. The company raised its guidance for full-year adjusted earnings growth to 30%, up from the previous 25%.
Despite these positive results, Disney’s parks division experienced weakness in the quarter, with domestic operating income declining by 6% to $1.35 billion. The company noted a „moderation of consumer demand“ towards the end of the quarter and warned that this trend could continue over the next few quarters. Disneyland Paris was specifically mentioned as being impacted by reduced consumer demand due to the Olympics and cyclical softening in China. However, Disney highlighted that demand for its cruises remained strong.
Looking ahead, Disney remains optimistic about its trajectory, with plans to improve margins over the coming years. One of the strategies to achieve this is through new price hikes for its streaming services. The company announced that it would raise prices across its Disney+ and Hulu plans, with these changes set to take effect in October.
Disney stock initially rose by 3% in premarket trade following the earnings report before giving up these gains. Despite the fluctuations, Disney stock has remained relatively unchanged throughout the year. The company expects streaming profitability to continue to improve in the fourth quarter, with both DTC entertainment and ESPN+ anticipated to be profitable.
Overall, Disney’s third-quarter results reflect a mix of positive developments in its streaming division and challenges in its parks business. The company’s ability to adapt to changing consumer trends and implement strategies to drive profitability will be key factors to watch in the coming quarters.