In the last fiscal quarter ended June 29, 2024, the Entertainment segment Disney (The Walt Disney Company) generated $10.58 billion in revenue, up 4% from a year earlier. This division includes all non-sports content, mainly films, series and programs, on television, on the Internet and in cinemas.
The company’s linear television had another falling quarter: prevenues from these stations decreased 7% year-on-year to $2.66 billion, and operating profit – from $1.02 billion to $966 million. In the last three quarters of the current fiscal year, the negative dynamics were even greater.
Disney TV declines
The reasons, at least in the US and Canada, which Disney classifies as its home markets, have not changed for a long time: linear TV viewership is declining, also because some viewers are dropping TV packages. As a result, the broadcaster gets lower advertising reach and viewership among cable operators, which is not fully offset by price increases and marketing savings.
Disney+ and Hulu are cutting their losses
Disney’s non-sports streaming platform segmenti.e. Disney+, its Indian version Hotstar and Hulu, and achieved a 15% quarterly revenue increase to $5.8 billion, and its operating loss narrowed from $505 million to $19 million.
Revenues increased, among other things: thanks to subscription price increases on Disney + and, to a lesser extent, Hulu. In addition, Hotstar, which offers more than just movies and series, recorded higher viewership because it broadcast the T20 cricket World Cup, which is very popular in India.
Over the past three quarters, revenues from non-sports streaming platforms have increased 14% to $16.99 billion, and their operating loss has narrowed from $2.08 billion to $110 million.
How many subscribers does Disney+ have?
As of June 29 of this year, Disney’s basic version had 118.3 million subscribers, up 0.7 million from the previous quarter. This is the result of an increase in the US and Canada from 54 to 54.8 million, while in the remaining markets there was a minimal decrease – from 63.6 to 63.5 million.
On Hotstar, the number of paying users decreased from 36 to 35.5 million, and on Hulu it increased from 50.2 to 51.1 million. But average Hotstar’s monthly subscriber revenue jumped quarter-on-quarter from $0.7 to $1.05.
At the end of last year, access to Disney+ became more expensive in many European countries, including: Poland. In markets outside the US and Canada, this translated into an increase in average revenue from $6.66 to $6.78 (already weakened by the strengthening of the US dollar during the year against many local currencies).
Hulu’s average subscriber revenue also increased, especially for options without streaming TV stations (from $11.84 to $12.73). This is the result of higher advertising sales.
Disney’s Sports Stations and Platforms segment generated $4.56 billion in revenue last quarter (after growing 5% year over year) and $802 million in operating profit. (52 million less than last year). Profitability was mainly affected by the loss of the Indian broadcaster Star, which increased from 216 to 314 million dollars.
Sports streaming is profitable for the first time
Disney’s entire streaming business, i.e. Disney+, Star, Hulu and the sports platform ESPN+, saw revenues increase 15% in the last quarter, to $6.38 billion and achieved positive operating profitability for the first time: Profit of US$47 million, compared to a loss of US$512 million the previous year.
Over the three quarters, profitability remained negative, but also improved significantly: the loss was reduced from $2.22 billion to $187 million.
Disney CEO Bob Iger recalled in the report that the streaming area achieved operational profitability one quarter earlier than announced by the company. “Our third quarter results demonstrate the progress we have made across our four priorities of labels, streaming, sports and experiences,” he said.
In the latter segment, which mainly comprises amusement parks, quarterly revenues rose 2 percent to $8.39 billion, while operating profit fell from $2.3 billion to $2.22 billion. However, the division still provides more than half of the group’s total operating profit.
Overall, Disney grew its revenue 4% year over year in the most recent quarter to $23.15 billion. The company’s operating income increased from $3.56 million to $4.23 billion, and its net income increased from a loss of $153 million to a profit of $2.84 billion. (per share: from US$0.25 loss to US$1.43 profit).
Over the past three quarters, with revenue growth of 2%, the company’s net income has nearly doubled, from $2.7 billion to $5.21 billion (profit attributable to shareholders of the parent company increased from $2.09 billion to $4.51 billion).
For stock market investors, this is not enough. Disney shares were down more than 3.5% in early trading on Wednesday, trading at around $87, similar to last year. However, after the surges at the turn of last year and this year, it briefly rose above $120 in the spring.
