The Walt Disney Company’s entertainment streaming segment, including Disney+, has had its first profitable quarter for the first three months of 2024, but stock tumbled by 10%, its deepest one-day drop in over a year.
To be sure, Disney’s overall streaming business was still in the red for the quarter when factoring in ESPN+, which had an operating loss of $65 million. The company reiterated its expectation that its combined streaming operations will achieve profitability in the September 2024 quarter.
Overall, Disney revenue for the quarter ended March 30 was in line with Wall Street expectations, while it beat on adjusted earnings per share. The Mouse House’s results got their biggest lift from the theme parks division, where revenue rose 10% and operating income was up 14%. Disney’s theatrical revenue dropped year over year “as there were no significant titles released” in the quarter, and revenue in the linear networks segment declined 8%.
Disney’s entertainment direct-to-consumer business, encompassing Disney+, Hulu and Disney+ Hotstar, turned a profit in the quarter: Operating income was $47 million (compared with a loss of $587 million a year ago) on revenue of $5.64 billion (up 13%) for the period, which was the company’s Q2 of fiscal 2024.
“While we are expecting softer Entertainment DTC results in Q3 to be driven by Disney+ Hotstar, we continue to expect our combined streaming businesses to be profitable in the fourth quarter, and to be a meaningful future growth driver for the company, with further improvements in profitability in fiscal 2025,” the company said.
Disney credited the improved DTC entertainment results to subscription revenue growth — driven by price hikes for Disney+ and Hulu, as well as subscriber growth in Disney+ Core — along with higher ad revenue and lower distribution costs. Average monthly revenue per subscriber for Disney+ Core globally rose 6% sequentially to $7.28 while it dropped 2% in the U.S./Canada to $8.00. Subscriber growth jumped 17% sequentially in the U.S./Canada region, which netted 7.9 million new Disney+ customers to reach 54.0 million — helped by its deal with Charter to offer Disney+ to select Spectrum TV customers for no additional charge. Meanwhile, Disney+ Core lost 1.6 million paid users in the rest of the world (-2% quarter over quarter) to sit at 63.6 million.
We will be watching the share price closely today.
