Source: AFP
Disney reported higher revenue on Tuesday due to strong performance by its theme parks division and improved streaming activity, but a decline in the company’s India operations resulted in a small loss.
The company achieved profitability in the entertainment streaming sector after adding more than six million subscriptions to Disney+, a milestone after years of losses.
But company officials said they expect the division to make a loss in the current quarter, in part because of weaker subscriber numbers.
The entertainment giant also offered a close look at its parks division.
While Disney is still seeing “healthy” demand, “we are seeing some evidence of a global softening from the post-Covid travel peak,” Chief Financial Officer Hugh Johnston said on a conference call.
Disney shares fell sharply on the results, although analysts noted that the company’s share price has risen significantly so far in 2024 ahead of the report.
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For its fiscal second quarter ended March 30, Disney reported a quarterly loss of $20 million after a $2.1 billion impairment charge on Star India. Revenue rose 1.2% to $22.1 billion.
The big cut at Star India is related to the combination of its India operations with India’s Reliance Industries, a deal announced in late February.
Disney said it was on track for a full-year profit across its streaming business after years of losses. That includes the ESPN+ sports network, which pushed the combined business into a loss in the quarter just completed.
Disney CEO Bob Iger expressed confidence in streaming, in part because of the impending crackdown on inappropriate password sharing.
“This will roll out in earnest around the world in September,” said Iger, who described feeling “pretty bullish” in light of Netflix’s success in tackling the issue.
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Benefits of sequels
Iger pointed to a number of high-profile upcoming movie releases, including sequels to “Inside Out,” “Moana” and a new film in the “Alien” franchise.
Source: AFP
“We’re going to balance sequels with originals, particularly in animation,” said Iger, who described the company as “leaning” somewhat toward sequels.
“There’s a lot of value in sequels, obviously, because they’re known and they need less in terms of marketing,” Iger said.
The entertainment giant cited Walt Disney World Resort, Hong Kong Disneyland and the company’s cruise division as areas of strength in parks and experiences, but saw lower results at Disneyland Resorts.
The numbers come after a high-profile proxy contest in which CEO Iger successfully fended off a challenge from activist Nelson Peltz, who had sought a seat on the board, arguing the company had shirked its responsibility to find a successor Iger.
Asked about the succession, Iger said the board is “very committed” to the process and that he is confident “they will choose the right person at the right time.”
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Disney shares were down 10.4% by midday. The stock is up nearly 30 percent so far in 2024 before the results are released.
Kathleen Brooks, director of research at XTB, said the sharp sell-off in the stock is likely due to the significant increase in the share price this year. But the market is now “recalibrating” after Disney’s mixed results, he said.
Source: AFP
