Disney shares jump after streaming losses narrow

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Walt Disney reported quarterly results on Wednesday that showed declines at its television and movie businesses but narrowing losses at its video streaming unit.

Bob Iger, Disney chief executive, said in a statement that the company was on track to exceed its goal of eliminating $5.5bn in costs amid a push to “restructure the company, improve efficiencies, and restore creativity to the centre of our business”.

Revenue of $22.4bn in Disney’s fiscal third quarter missed Wall Street forecasts by $100mn, but diluted earnings of $1.03 a share were above expectations of 96 cents. Its shares rose more than 4 per cent in after-hours trading.

Iger, who served as Disney CEO for 15 years before retiring in 2022, returned to the company in November following the ousting of his successor, Bob Chapek. Since then he has confronted myriad challenges, including a declining traditional TV business, box office disappointments and a strike by Hollywood writers and actors.

He is also pushing to achieve profitability at Disney’s streaming business by the autumn of 2024. The company said on Wednesday that the number of subscribers at its Disney+ service fell to 146.1mn, lower than expectations of 151.1mn.

The fall-off is due to the Disney+ Hotstar business in India, where it lost streaming rights to Indian Premier League cricket matches. However, it said its “core” Disney+ offering — which excludes the India business — added about 800,000 subscribers.

Disney cut losses at its streaming services by more than $500mn in the quarter to $512mn, more than Wall Street had expected, thanks to higher subscription prices and lower marketing spending. Revenues rose 9 per cent to $5.5bn at the streaming division, which includes Disney+, Hulu and ESPN+.

But sales and profits fell at Disney’s traditional TV networks, which have been suffering from cord-cutting and a poor advertising market. Operating income fell 14 per cent at Disney’s US television channels, while revenue declined 4 per cent.

Iger recently said in an interview with CNBC that linear TV may no longer be “core” to Disney, giving rise to speculation that he may be looking to offload the businesses.

Disney’s recent box office performance has been the source of concern on Wall Street. It said its lower theatrical results in the quarter reflected the high marketing costs of Indiana Jones and the Dial of Destiny. The release of Pixar’s Elemental and Little Mermaid had also been less successful than some had hoped.

Revenue at Disney’s theme parks rose 13 per cent to $8.3bn, led by growth at Shanghai Disney, which has fully reopened after Covid-19 closures. But operating income fell at its US parks due to declines at Disney World in Florida, which was the first to reopen following pandemic closures.