The Walt Disney Company Posts Rise in Quarterly Profits

The Walt Disney Company has reported solid results for its first quarter, which ended December 30, with earnings of $1.91 billion.

This compares to the year-ago’s $1.27 billion in net income attributable to the company.

Revenues for the quarter were comparable to the prior-year quarter at $23.5 billion.

“Just one year ago, we outlined an ambitious plan to return The Walt Disney Company to a period of sustained growth and shareholder value creation,” said Robert A. Iger, CEO of The Walt Disney Company. “Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences.

“As we build for the future, the steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content. Looking at the renewed strength of all of our businesses this quarter—from sports to entertainment to experiences—we believe the stage is now set for significant growth and success, including ample opportunity to increase shareholder returns as our earnings and free cash flow continue to grow.”

The results reflect significant cost reductions across businesses, with over $500 million in selling, general and administrative and other operating expense savings across the enterprise in the first quarter. Disney says it is on track to meet or exceed its $7.5 billion annualized savings target by the end of fiscal 2024.

An increase in entertainment operating income was due to improved results at direct-to-consumer, partially offset by a decline at content sales/licensing and other. At the linear networks, a decrease in domestic operating income in the current quarter compared to the prior-year quarter was due to lower advertising revenue and a decline in affiliate revenue. Lower programming and production costs attributable to a decrease at the ABC Network due to fewer hours of scripted programming in the current quarter, reflecting the impact of the strikes. The decrease in international operating income was due to lower affiliate revenue primarily attributable to fewer subscribers. Within direct-to-consumer, there was a 15 percent lift in revenue and an operating loss of $138 million, an improvement from the year-ago’s $984 million. This decrease in operating loss was due to subscription revenue growth attributable to higher rates due to increases in retail pricing across our streaming services, and subscriber growth at Disney+ Core and, to a lesser extent, Hulu, as well as an increase in advertising revenue due to higher impressions across our streaming services, partially offset by lower rates at Hulu. There was also a decrease in programming and production costs attributable to lower average costs per hour of non-sports content, partially offset by more non-sports programming, higher subscriber-based fees for programming the Hulu Live TV service and an increase in costs for ICC cricket programming.

Domestic Disney+ average monthly revenue per paid subscriber increased from $7.50 to $8.15 due to increases in retail pricing, partially offset by a higher mix of subscribers to promotional offerings. International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber decreased from $6.10 to $5.91 due to a higher mix of subscribers to promotional offerings. Disney+ Hotstar average monthly revenue per paid subscriber increased from $0.70 to $1.28 due to higher advertising revenue and increases in retail pricing, partially offset by a higher mix of subscribers from lower-priced markets. Hulu SVOD Only average monthly revenue per paid subscriber increased from $12.11 to $12.29 due to increases in retail pricing, partially offset by lower per-subscriber advertising revenue and a higher mix of subscribers to promotional offerings. Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $90.08 to $93.61 due to increases in retail pricing.

Within content sales/licensing and other, an operating loss of $224 million was due to the performance of The Marvels and Wish in the current quarter compared to Black Panther: Wakanda Forever, Avatar: The Way of Water and Strange World in the prior-year quarter.

In sports, ESPN saw a 1 percent gain in revenue and Star (India) a 4 percent lift. ESPN posted higher operating results, with gains of $199 million compared to a year-ago loss of $38 million. There was an operating loss at Star, due to the airing of the ICC Cricket World Cup in the current quarter compared to the ICC T20 World Cup in the prior-year quarter.

Experiences saw a 7 percent lift in revenue and 8 percent gain in operating income. A decrease in operating income at the domestic parks and experiences reflected lower results at our domestic parks and resorts, largely offset by higher results at Disney Cruise Line. Higher international parks and experiences’ operating results were due to growth at Shanghai Disney Resort, higher operating income at Hong Kong Disneyland Resort and consistent results at Disneyland Paris.

For the combined DTC streaming businesses, which consist of the direct-to-consumer line of business at the entertainment segment and ESPN+ at the sports segment, revenue was up 14 percent. An operating loss of $216 million compared with the $1.053 billion a year ago.