- Revenue: $20.15 billion vs. $21.26 billion expected
- Adj. earnings per share (EPS): $0.30 vs. $0.51 expected
- Disney+ subscriber net additions: 12.1 million vs. 9.35 million expected
- Parks, experience, and consumer products revenue: $7.43 billion vs. $7.59 billion expected
Disney reported a third-quarter surge of Disney+ subscribers (14.4 million) following new market launches and a strong slate of content. This led to a net addition rise to 12 million, beating expectations of just over 9 million.
Expectations are that core Disney+ subscriber growth, along with Hotstar subscriber numbers to be lower in the first quarter. For all of 2023, content spend was guided in the low $30 billion range.
Disney+, Hulu, and ESPN+ reported combined losses of $1.5 billion in the fourth quarter, versus a loss of 1.1 billion in the third quarter. Disney CFO Christine McCarthy said she expects peak Disney+ losses by this year, with management guiding that streaming losses will shrink by about $200 million in the first quarter of 2023. “We expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate.”
Disney CEO Bob Chapek offered his comments following the earnings report. “By realigning our costs and realizing the benefits of price increases and our Disney+ ad-supported tier coming December 8, we believe we will be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future,” he continued.
Disney+ dropped in revenue to $3.91 versus estimates of $4.29 despite recent price hikes. The company will roll out its $7.99 ad-supported tier in December, just a month after Netflix’s much-anticipated debut.
Park operations miss expectations amid recession fears
As recession fears pressured consumer demand, Disney theme parks saw quick COVID bounce backs amid increased attractions, price hikes, and updated technologies like the Genie+ app, but also fell short of expectations in the quarter.
Revenue from the company’s parks, experiences, and consumer products division came in at $7.43 billion, with operating income reaching $1.51 billion (vs. estimates of $1.9 billion). Shanghai’s Disney Resort remains closed amid strict COVID protocols. At this time the company revealed it has “no visibility on reopening date.”
Despite the losses, McCarthy said the media giant anticipates a “strong” holiday season at the parks in the first quarter of 2023. On the earnings call, the company touted its upcoming film slate, visioning “Black Panther: Wakanda Forever” and “Avatar: The Way of Water” driving movie sales. McCarthy revealed that she expects linear tv subscriber declines to turn around and accelerate in line with current industry trends.
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