While Disney’s fiscal fourth-quarter earnings exceeded expectations, the company still announced plans to increase its annual cost-cutting target to an impressive $7.5 billion, a notable increase from the previously set goal of $5.5 billion in February.
Improving Disney+ Numbers
Disney witnessed a remarkable surge in its streaming numbers, surpassing expectations by adding nearly 7 million core subscribers to Disney+. This figure greatly exceeded the consensus estimate of 2.68 million.
The company managed to narrow its streaming losses to $387 million, a significant improvement from the previous year’s loss of $1.41 billion. Disney achieved this by raising its streaming prices for the second time in the year, increasing the monthly fees for its ad-free Disney+ and Hulu plans by more than 20%.
This announcement comes shortly after Disney introduced its new CFO and confirmed the acquisition of Comcast’s 33% stake in Hulu. The positive news was reflected in the stock market, as Disney’s shares climbed approximately 2% in after-hours trading following the earnings release.
Iger’s Organization
These results mark the first time Disney reported earnings under its new structure, organized into three core business segments by CEO Bob Iger: Disney Entertainment, comprising the entire media and streaming portfolio; Experiences, which encompasses the parks business; and Sports, including ESPN networks and ESPN+.
Here’s a look at how each of these segments performed in the quarter, compared to Wall Street’s consensus estimates:
- Entertainment revenue: $9.52 billion vs. expected $9.77 billion
- Sports revenue: $3.91 billion vs. expected $3.89 billion
- Experiences revenue: $8.16 billion vs. expected $8.20 billion
Disney’s stock has faced challenges, declining by approximately 3% since the beginning of the year and hitting a nine-year low last month. Activist investor Nelson Peltz has also been critical of the company. However, former Disney streaming head Kevin Mayer believes that Disney is making strides in addressing uncertainties related to Hulu, ESPN, and linear networks, which could boost the stock’s performance.
What do you think about Disney’s decision to raise its cost-cutting goal to $7.5 billion?