Disney Earnings Surge with Cost-Cutting Drive
Disney earnings soared on the back of increased profits in ESPN+ and continuous growth in theme parks. However, the weight of reduced advertising revenue remains significant in overall earnings.
Disney earnings received a boost as the company declared its intention to “aggressively streamline” its cost structure, with initiatives to cut costs increasing from $2 billion to a target of $7.5 billion. After the closing bell on Wednesday, Disney earnings surged and the company’s shares saw an increase of more than 4%.
Disney Earnings: Ad Revenue Drop, Disney+ Surges
The decline in advertising revenue, impacting Disney earnings, primarily came from Disney’s ABC network and other owned TV stations, which saw a decrease in political advertising revenue during the quarter. CEO Bob Iger suggested during the summer that the company could sell its TV assets.
In the meantime, Disney earnings received a significant boost as the company added 7 million new Disney+ subscribers in the past three months, bringing the total to 150.2 million, including Hotstar. The streaming business has also reduced its losses compared to a year ago.
Disney Earnings Forecast: Profitability and Growth
Wall Street had expected Disney earnings to report total revenues of $148.15 million for the quarter. The company emphasized additions to its theatrical titles such as “Eternals,” “Little Mermaid,” and “Guardians of the Galaxy: Volume 3,” along with new star-studded series like “Ahsoka” over the past three months.
The company anticipates Disney earnings reaching profitability in its streaming business by the fourth quarter of 2024. “As we set our sights on the future, four essential focal points will be pivotal to our achievements: establishing a robust and enduring profit margin in our streaming division and elevating ESPN’s prominent digital sports platform, enhancing our film studios’ output and economics, and turbocharging growth and the guest experience in our parks,” said CEO Bob Iger in a statement.
Disney’s Financial Success: EPS Beats, Disney+ Surpasses
Disney’s key financial numbers in the report include an EPS of 82 cents per share adjusted, compared to the expected 70 cents per share according to LSEG, formerly known as Refinitive. Revenue came in at $21.24 billion, slightly below the expected $21.33 billion.
Disney earnings showcased a significant achievement as Disney+ subscriber count reached 150.2 million, surpassing the expected 148.15 million. For the quarter ending September 30, the company reported net earnings of $264 million, or 14 cents per share compared to $162 million, or 9 cents per share, a year ago.
Disney Earnings Resilience and Strategic Restructuring
Despite setbacks, Disney earnings demonstrated resilience as the company earned 82 cents per share, exceeding Wall Street’s expectations of 70 cents per share. Revenue increased by 5% to $21.24 billion, slightly below estimates that called for $21.33 billion. This marks a sequential decline in Disney’s recurring revenue and the first time it has decreased in consecutive earnings reports since early 2018.
This quarter also marks a significant milestone for Disney earnings as the company utilizes its new financial reporting structure, dividing the company into three segments – entertainment, sports, and experiences. Disney’s streaming and media operations fall under entertainment, sports include ESPN, and experiences encompass the company’s theme parks, hotels, cruise lines, and commercial ventures.
Disney’s Experiences: 13% Revenue Surge
The experiences division of Disney saw a 13% increase in revenue to $8.16 billion during the quarter, driven by increased attendance and higher ticket prices at parks both domestically and internationally, contributing to Disney earnings. The company noted that hotel rates at its Florida resort remain low, and the region faces higher operating expenses. Parks represent nearly 66% of this division’s total revenue.
Conclusion
Disney Earnings soared on ESPN+ and theme park growth despite ad revenue challenges. Aggressive cost-cutting, targeting $7.5 billion, fueled a more than 4% surge in shares. The addition of 7 million Disney+ subscribers exceeded expectations, contributing to Disney Earnings. Boasting an EPS of 82 cents, Disney foresees streaming profitability by Q4 2024, emphasizing key growth areas. Despite a sequential revenue decline, strategic restructuring positions Disney for resilience and success, notably in the experiences division with a 13% revenue surge.
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