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Disney earnings top estimates as direct-to-consumer business narrows losses

Published 11/08/2023, 04:26 PM
Updated 11/09/2023, 06:31 AM
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Investing.com - Walt Disney (NYSE:DIS) reported Wednesday fiscal fourth-quarter earnings that topped Wall Street estimates, as its direct to consumer business raked in more subscribers and narrowed losses. 

Shares in the entertainment giant jumped in premarket U.S. trading following the report, as investors were encouraged by Chief Executive Bob Iger's declaration that Disney is re-entering a "building" phase.

The company reported adjusted earnings per share (EPS) of $0.82 on revenue of $21.24 billion in the three months ended on Sept. 30. Analysts polled by Investing.com had anticipated EPS of $0.71 on revenue of $21.37B.

Disney added that it is on pace to deliver $7.5B in annualized savings, pointing to the impact of Chief Executive Bob Iger's ongoing push to rein in expenses.

"[W]hile we still have work to do to continue improving results, our progress has allowed us to move beyond this period of fixing and begin building our businesses again," Iger told analysts in a call following the results. Analysts 

Direct-to-consumer, which includes Disney+, Disney+ Hotstar, Hulu and ESPN+ streaming services, narrowed operating losses by more than half to $420 million in the quarter from $1.41B a year earlier.

Disney+, its streaming business, reported about 7M new core subscribers, taking its total subscribers to 150.2M, with domestic average monthly revenue rising to $7.50 per subscriber from $7.31, driven by higher advertising revenue. 

"We continue to expect that our combined streaming businesses will reach profitability in [the fourth quarter] of [its 2024 fiscal year], although progress may not look linear from quarter to quarter," Disney said in a statement.

Yasin Ebrahim contributed to this report.

ESPN, Disney's sports-focused network, reported a 15% rise in profit from a year earlier, driven by a jump in viewers and lower costs. Iger noted that Disney is "exploring strategic partnerships" to help ESPN focus on optimizing its streaming offerings.

"I can say that there's significant interest out there. There are obviously complexities to it, but not complexities there were not hurdles that are so high that we can't jump over them," Iger said.

Meanwhile, revenue at Disney’s newly-named experiences division, which includes its lucrative theme parks and cruise lines, rose by 13% to $8.16B. Higher attendance and elevated ticket prices at its resorts in Shanghai, Hong Kong and California helped account for some weakness at its Disney World location in Florida.

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