The chief financial officer of Walt Disney Co DIS, Hugh Johnston addressed the the company’s latest price increase during its fiscal third-quarter 2024 earnings call on Wednesday.
What Happened: During the call, Johnston responded to a question from Wells Fargo’s Steven Cahall about the company’s direct-to-consumer margins and the impact of the price increase.
“We’ve announced pricing, and we feel good with all of the value that we’re providing to consumers… We do feel like we’ve earned that pricing in the marketplace,” Johnston stated.
Johnston also spoke about the positive effect of bundling on churn and the potential growth from the rollout of password sharing. He noted that product improvements should reduce churn and retain consumers.
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The CFO did not provide a timeline for achieving double-digit margins, but stressed that the company is approaching the goal with “great urgency.” He also highlighted the company’s progress from losing $1 billion a quarter to now making a profit.
“Our expectation is we’re going to continue on that journey to making more money to get to and then ultimately well surpass the double-digit margins that we’ve talked about,” he stated.
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Why It Matters: On Tuesday, Disney announced that it is raising streaming prices by up to 25% for Disney+, Hulu, and ESPN+, while also introducing new programming options for subscribers.
Disney+ with ads will now cost $9.99 per month, marking a 25% increase. The ad-free version will rise by 14% to $15.99 per month, and the Disney+ and Hulu bundle with ads will increase by 10% to $10.99 per month. These changes will take effect on Oct. 17.
Meanwhile, Disney reported a 4% year-on-year revenue growth for fiscal Q3 2024, reaching $23.16 billion, slightly surpassing the analyst consensus estimate of $23.11 billion. The adjusted EPS of $1.39 also exceeded the consensus estimate of $1.20.
Price Action: Walt Disney shares fell by 4.43%, trading at $85.96, during the regular session on Wednesday. In the after-hours session, the shares dropped further by 0.65% reaching $85.40, according to the data from Benzinga Pro.
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