Disney (DIS) is set to report its fiscal third-quarter earnings before the bell on Wednesday, with investors eagerly awaiting updates on the company’s efforts to achieve sustained profitability in its streaming division and stabilize demand within its parks business.
In a recent move, Disney adjusted its reporting structure following CEO Bob Iger’s reorganization of the company into three core business segments: Disney Entertainment, which includes its entire media and streaming portfolio; Experiences, which encompasses the parks business; and Sports, which includes ESPN networks and ESPN+.
Over the past year, Disney has faced challenges such as a declining linear TV business, slower growth in its parks business, and profitability hurdles in streaming. CEO Bob Iger has been working on an aggressive turnaround plan to address these issues and recently emerged victorious from a high-profile proxy fight against activist investor Nelson Peltz. However, investor caution has led to shares falling more than 20% over the last three months.
Wall Street analysts have set their expectations for Disney’s performance in the upcoming earnings report. According to consensus estimates compiled by Bloomberg, total revenue is expected to reach $23.08 billion, up from $22.33 billion in the third quarter of 2023. Adjusted earnings per share are forecasted to be $1.19, compared to $1.03 in the same period last year.
Revenue breakdown is expected to be as follows: Entertainment revenue at $10.37 billion, Sports revenue at $4.40 billion, and Experiences revenue at $8.61 billion. Disney+ subscribers are projected to reach 154.55 million, up from 146.10 million in the third quarter of 2023.
Investors will be closely watching for guidance from Disney after last quarter’s disappointing forecast raised concerns about the company’s long-term outlook. In May, Disney announced that a significant part of its streaming business had turned a profit for the first time, but weaker results were expected in the third quarter. Achieving sustained streaming profitability is a key priority for Disney as its linear TV business continues to decline.
To boost profitability, Disney recently announced price hikes for its various streaming services. The monthly cost of the Disney+ ad tier will increase by $2 to $9.99, while the ad-free version will rise by $2 to $15.99. Similarly, Hulu’s ad-supported tier will go up by $2 to $9.99 per month, with the ad-free version increasing by $1 to $18.99. The Disney Bundle, which includes both ad tiers of Disney+ and Hulu, will now cost $10.99 per month.
Additionally, ESPN+ and Hulu with Live TV will see price increases of $1 and $6, respectively. ESPN+ will cost $11.99 per month, while the ad-supported version of Hulu with Live TV will be priced at $82.99. The ad-free version of Hulu with Live TV will now cost $95.99 per month. These price changes are set to take effect on October 17, with Disney expecting full streaming profitability by the fourth quarter of this year.
As Disney prepares to release its earnings report, investors and analysts will be closely monitoring the company’s progress in achieving profitability in its streaming division and navigating challenges in its parks business. With the streaming landscape evolving rapidly, Disney’s ability to adapt and innovate will be key to its long-term success.