Disney profit misses estimates as streaming costs rise, ad sales soften
WALT Disney reported sales and profit that fell below Wall Street expectations, held back by weakness in advertising revenue and higher-than-expected losses in streaming TV.
Earnings in the last quarter of Disney’s fiscal year fell to 30 US cents a share, after excluding certain items, the company said on Tuesday (Nov 8). That missed the average estimate of 51 US cents from analysts surveyed by Bloomberg. Sales, at US$20.2 billion, came up about US$1 billion short of analysts’ projections.
Still, the company beat expectations for streaming subscriber additions in the period, signing up 12.1 million new customers for its flagship Disney+ service alone. Overall subscribers, including those for its Hulu and ESPN+ products, rose to almost 236 million. Those numbers come after rival Netflix beat internal forecasts as well as Wall Street expectations in the most recent quarter, adding 2.41 million customers.
Losses at Disney’s direct-to-consumer arm, driven by Disney+, more than doubled to US$1.47 billion in the period due to higher programming expenses and the cost of global expansion. chief executive officer Bob Chapek reiterated his forecast that Disney+ will be profitable in fiscal 2024, adding that he expected losses to narrow going forward.
“The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally,” he said in a statement.
Profit at Disney’s theme-park unit more than doubled to US$1.51 billion, due to higher attendance and increased guest spending. The company also benefited from the launch of a new cruise ship, the Disney Wish.
Disney has made streaming a major focus for growth. On Dec 8, the company will begin selling a version of Disney+ that includes ads at a monthly price of US$8. The price of its ad-free version will jump 38 per cent to US$11 per month. The company reported a decline in its average revenue per Disney+ subscriber, as more customers subscribed through a discounted bundle with the company’s other services.
Revenue from Disney’s traditional TV business, which includes networks such as ESPN and ABC, fell 5 per cent in part due to ad sales weakness. Profit rose 6 per cent to US$1.74 billion due to lower programming costs in cable TV, particularly for sports. Disney reduced the number of Major League Baseball games it aired this season under a new contract.
Shares of Disney fell in extended trading after the announcement. They had declined by more than a third this year through Tuesday’s close amid a broader sell-off of US stocks. BLOOMBERG
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