Streaming Profitability And Box Office Success Tell The Tale Of A Disney Renaissance

This week, The Walt Disney Corporation DIS and Warner Bros. Discovery Inc WBD issued their quarterly earnings and they told entirely different tales. Although quite small compared to Disney’s standards, the Mouse House reported its first ever streaming profit and a few months ahead of schedule. On the other hand, the struggling Warner Bros. Discovery reported a $10 billion loss, owed to a $9.1 billion write-down related to its TV networks division. Already anemic, second quarter showed the fast deterioation of its television business, causing stock of Warner Bros to plummet on Wednesday after the results. Along with the rapid decline of its legacy business, Warner Bros is struggling to find its footing in an entirely different and changing landscape whose dynamic has been shaped by the Netflix Inc NFLX revolution. Unlike Warner Bros, Disney seems to have figured out its way in the Netflix era, with Iger’s leadership making its reneissance possible.

Disney’s Fiscal Third Quarter Highlights

For the quarter ended on June 29th, Disney reported its overall revenue rose 4% YoY to $23.155 billion. 

The highlight of the report was undoubtedly Disney's progress in its efforts to catch up to Netflix. While Disney+ and Hulu already reported a profit in the previous quarter, this was the first profit for the combined streaming service of ESPN+, Disney+, and Hulu that posted an operating profit of $47 million, turning things around from last year’s $512 million loss. But, ESPN now belongs to the sports unit while Disney+ and Hulu are part of the direct-to-consumer entertainment segment.

The entertainment segment brought in $10.58 billion as revenue rose 4%.

On the other hand, falling U.S. park sales harmed the experience segment more than expected. The division’s operating income shrank a bit less than 4% to $2.22 billion with U.S. parks recording a 6% drop, overshadowing the 2% growth reported by international parks and cruise lines. The revenue of experiences unit that covers domestic as well as international parks and experiences, along with consumer products, still rose 2% to $8.386 billion.

Disney also succesfully rebuilt its box office glory with Inside Out 2 during the quarter, notching $1.6 billion in global ticket sales.

Getting down to the bottom of things, Disney reported a profit of $2.62 billion, which is a significant improvement from last year’s $460 million loss. Adjusted earnings-per-share reached $1.39, topping LSEG’s estimate of $1.19.

The Tale Of A Disney Renessaince

It took five years, but Disney reached the profitable shore in streaming. As Disney leverages tech across this division, raises prices of streaming services and follows the footsteps of Netflix like cracking down on password sharing, Iger added that this momentum is expected continue to grow nicely in fiscal 2025. Although the Park division reported a decline in operating profit, Disney did restore its blockbuster magic with Inside Out 2 and Deadpool&Wolverine, with the latter having its more than $850 million debut in the current quarter. That means that only within 90 days, Disney released both the highest grossing animated film of all time and reported the largest ever opening for an R-Rated film. Now, all it takes for Iger to do is find a suitable successor so he can retire in peace and for good in 2026. 

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