Disney beat Wall Street’s earnings expectations on Wednesday and said it is on track to achieve $7.5 billion in annualized savings, $2 billion more in cuts than CEO Bob Iger had initially announced in his turnaround plan.
Shares of the company rose 3.6 percent after the closing bell, as higher attendance at its theme parks and narrowing losses on Disney+ offset a decline in advertising revenue at television network ABC.
Disney reported net income of $264 million for the quarter that ended September 30, up from $162 million a year ago and beating analyst estimates. Quarterly revenue of $21.2 billion was largely in line with consensus estimates.
The company said it added nearly 7 million Disney+ subscribers in the quarter, which saw the addition of Guardians of the Galaxy Vol. 3 and the original series ‘Star Wars: Ahsoka.’
Disney+ ended the quarter with 150.2 million subscribers, ahead of Visible Alpha’s estimate of 147.4 million.
Disney beat Wall Street’s earnings expectations on Wednesday in a key test for CEO Bob Iger
Disney stock is down more than 15% over the past year, as the company pursues a turnaround
The earnings came at a key moment for Iger, who was brought out of retirement to right the ship one year ago, after his hand-picked successor Bob Chapek lost the confidence of the company’s board.
‘Our results this quarter reflect the significant progress we’ve made over the past year,’ Iger said in a statement.
‘While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again.’
Iger has pursued an aggressive restructuring at Disney, as he contends with continuing losses from Disney+, an ongoing actors strike, declining attendance at the flagship park in Orlando, and legal battles with Florida Governor Ron DeSantis.
The 100-year-old entertainment giant is also once again under pressure from activist shareholder Nelson Peltz, whose Trian Fund Management is expected to seek board seats.
Trian had pushed for one board seat in January, but ended its proxy fight a month later, after Iger laid out his restructuring plans, which were aimed at saving $5.5 billion per year.
Quarterly losses across the company’s streaming services, which also include Hulu and ESPN+, narrowed to $387 million from $1.47 billion a year earlier, due to pricing increases and higher ad revenue.
Disney said its streaming business remains on track to reach profitability by September 2024.
Disney World is seen in a file photo. Disney’s newly named Experiences group, which includes its theme parks and resorts, and cruise lines and consumer products, reported nearly $1.8 billion in operating income in the quarter, up 31% from a year ago
Disney’s newly named Experiences group, which includes its theme parks and resorts, and cruise lines and consumer products, reported nearly $1.8 billion in operating income in the quarter, up 31 percent from a year ago.
Higher attendance at Shanghai Disney, Hong Kong Disneyland and Disneyland resorts, and growth of the cruise businesses, helped offset lower results at Walt Disney World in Florida.
Disney’s Entertainment unit, which includes its television networks, its films studio and its Disney+ and Hulu services, posted operating income of $236 million in the quarter, compared with losses of $608 million a year ago.
ABC network and Disney’s owned TV stations reported a drop in advertising revenue amid declining viewership.
The summer movie ‘The Haunted Mansion’ underperformed, compared with last year’s ‘Thor: Love and Thunder.’
The company’s sports business, which includes Disney’s ESPN-branded television channels, its ESPN+ streaming service and the Star-branded sports channels in India, reported operating income of $981 million, up 14% from the same period a year ago.
The results reflected lower programming costs, as ESPN walked away from renewing its contract with the Big Ten college football conference.
The unit was also helped by a rise in subscription revenue from ESPN+, as the result of a price increase and subscriber gains.