Disney saw direct-to-customer losses shrink and adjusted EPS top estimates for the three months that ended in June. CEO Bob Iger reported the company is on track to exceed $5.5 billion in anticipated cost savings.
Total revenue of $22.3 billion (down 2%) was shy of forecasts. Mr. Iger, in a CNBC interview last month, called out the report that linear television was softer. About a third of Disney’s sales come from Parks & Experiences, which saw a jump driven by international parks and cruise lines. Domestic parks saw profit fall with lower attendance at Walt Disney World.
After Iger’s return to Disney’s helm last fall, a broad restructuring launch eliminated 7,000 jobs. In addition, a $2.44 billion content impairment charge related to its DTC service and terminating third-party licensing agreements.
Compared to a $4.1 billion profit in the previous year, the company swung to a net loss of $490 million for its fiscal fourth quarter.
Streaming service subscribers
Disney+ had 146.1 million total global paid subscribers at the end of June, down from last quarter. Excluding Disney+HotStar (which lost 12.5 million in June vs. the April quarter), core Disney+ subs rose, to 105.7 million from 104.9 million sequentially. The hit from HotStar was expected after Disney declined to renew its rights to hugely popular IPL cricket programming starting in the 2023 season.
ESPN+ subs were about flat at 25.2 million. Hulu’s 44 million SVOD subs were up from 43.7 million. Live TV+ SVOD was 4.3 million, for a 48.3M total Hulu.
At linear networks (U.S. and global) profit fell 23% to $1.9 billion on sales of $6.69 billion, down 7%. Stateside, Disney noted lower advertising revenue and viewership at ABC. Cable ad revenue rose, offset by higher sports programming costs for the NBA, and new motorsports programming.
“Our results this quarter are reflective of what we’ve accomplished through the unprecedented transformation we’re undertaking at Disney to restructure the company, improve efficiencies, and restore creativity to the center of our business,” said Iger in a statement. “In the eight months since my return, these important changes are creating a more cost-effective, coordinated, and streamlined approach to our operations that have put us on track to exceed our initial goal of $5.5 billion in savings as well as improved our direct-to-consumer operating income by roughly $1 billion in just three quarters. While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we now have in place, and because of Disney’s core foundation of creative excellence and popular brands and franchises.”
Iger’s return to the helm last fall was met with sighs of relief. Disney continues to struggle with a pivot to streaming, linear television woes and now a slowdown in U.S. parks amid strikes by Hollywood writers and actors.
Parks & Experiences saw sales up 13% at $8.3 billion — with increases of just 4% at domestic parks and 94% at international parks, some of which were still plagued by Covid-related closures or capacity limited in the year-ago period.
International parks swung to a profit of $428 million, while income was down 13% to $1.4 billion Stateside.
Are you encouraged by Mr. Iger’s projection that cost savings could top $5.5 billion?