Q2 Revenue Gains at Disney

The Walt Disney Company reported improved revenues in the second quarter and a narrowing of streaming losses, despite losing subscribers at Disney+.

Revenues at the company in Q2 rose by 13 percent to $21.8 billion, with net income more than doubling to $1.3 billion.

“We’re pleased with our accomplishments this quarter, including the improved financial performance of our streaming business, which reflect the strategic changes we’ve been making throughout the company to realign Disney for sustained growth and success,” said Robert A. Iger, CEO. “From movies to television, to sports, news and our theme parks, we continue to deliver for consumers, while establishing a more efficient, coordinated and streamlined approach to our operations.”

At Disney Media and Entertainment Distribution, revenues rose 3 percent to $14 billion, with an operating income that fell by 42 percent to $1.1 billion. Revenues at the linear networks were down 7 percent to $6.6 billion, with the U.S. networks down 4 percent to $5.6 billion and international dropping 18 percent to $1 billion. Content sales/licensing revenues improved, rising by 18 percent to reach $2.2 billion. Direct-to-consumer revenues increased by 12 percent to $5.5 billion, with the segment posting a narrower loss of $659 million. The company ended Q2 with 46.3 million Disney+ customers in the U.S. and Canada, down 1 percent, and 58.6 million internationally, a 2 percent gain. Subscribers to Disney+ Hotstar (available in India and Southeast Asia), meanwhile, fell by 8 percent to 52.9 million. ESPN+ had 25.3 million customers, a 2 percent gain. Hulu’s subs base for SVOD only and live TV was stable at 48.2 million.

Disney Parks, Experiences and Products reported revenues of $7.8 billion, a 17-percent gain, with operating income rising by 23 percent to $2.2 billion.

Speaking on the Q2 conference call, Iger announced the impending launch of single-app experience for Disney+ and Hulu, a move intended to “provide greater opportunities for advertisers, while giving bundled subscribers access to more robust and streamlined content.” Iger also noted that an ad tier is coming to Disney+ in Europe by the end of the year. Iger then spoke about the importance of “rationalizing the volume of content we’re creating, and what we’re spending to produce our content, maximizing windowing opportunities, recalibrating our investments internationally, perfecting our pricing model and consolidating our global streaming business under the leadership of Alan  Bergman and Dana Walden.”

Addressing the company’s plans to streamline content spend, Iger noted: “We made a lot of content that is not necessarily driving subs growth, and we’re getting much more surgical about what it is we make.”

As part of the cost-cutting exercise, some content will be removed from the company’s streaming services.