Disney beat its own timeframe to reach streaming profits in an upbeat June quarter that also saw a big contribution from Inside Out 2. For well over a year, the company’s promised a streaming swing to the black in the 2024 fiscal fourth quarter but nailed it earlier, reporting $47 million in DTC operating income in Q3 (vs a $512 million loss the year before).
Disney+ and Hulu actually lost $19 million (on $5.8 billion in revenue) but that was more than offset by ESPN+. Disney+ and Hulu should turn profitable and combined streaming income grow in the current September quarter.
Yesterday, Disney announced price hikes across most streaming plans starting in October.
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There’s been a sea change in how the industry looks at streaming, a pivot to profits over subscriber growth. Disney+ ended the quarter with 118.3 million core subscribers (domestic and international, excluding Hotstar) vs 117.6 million the year earlier.
Hulu had 46.7 million SVOD subs (vs 45.8 million), and 4.4 million for Hulu + Live TV.
Notably, Inside Out 2 led a booming box office that spread the joy.
The blockbuster opened June 14 for an explosive last two weeks of the quarter and the Pixar pic, now the top-grossing animated film of all time, has $1.56 billion in worldwide box office. It also helped drive 1.3 million Disney+ signups to watch the original 2015 Inside Out, which has nabbed 100 million views globally.
Inside Out 2 boosted content and licensing profits, which helped triple earnings at the entertainment segment – to $1.2 billion from $408 million — and showcased the studio’s renewed creative strength that CEO Bob Iger has been promising.
Disney also had a nice run with Kingdom Of The Planet Of The Apes in the quarter.
Right now, it’s having a massive moment with Deadpool & Wolverine.
Eyes are also on domestic theme parks, which saw post-Covid highs moderate this year to the dismay of Wall Street. That’s continued and profit dipped last quarter as inflation drove costs higher. Cruise lines, consumer productions and some international parks did better. Parks are in the midst of a $60 billion, 10-year investment push.
Total revenue across Disney rose 4% to $23.1 billion with operating income jumping 19% to $4.2 billion. Disney raised its full-year EPS growth forecast citing improved financials.
Sales rose across entertainment, sports and experiences – Disney’s three operating segments – by, respectively, 4%, 5% and 2%.
Within entertainment, linear networks saw revenue fall by 7% to $2.7 billion and income dip 6% to $966 million. Domestic ad revenue declined with viewership, offset partly by higher rates. Affiliate revenue eased on fewer subscribers, also partly offset by higher rates. Programming, production and marketing costs fell.
Sports, mostly ESPN, saw revenue of $4.5 billion, up 5% from the year-earlier quarter. Operating income dipped to $802 million from $854 million. Domestic ESPN saw more robust ad sales on higher rates and sponsorships. Lower affiliate revenue was partly offset by higher rates.
There’s much to discuss in sports, with Disney/ESPN having just re-upped with the NBA. The company noted an increase in programming and production expense on higher NBA rights costs. Venu, Disney/ESPN’s new streaming JV with Fox and Warner Bros. Discovery, will launch this fall.
“This was a strong quarter for Disney, driven by excellent results in our entertainment segment, both at the box office and DTC, as we achieved profitability across our combined streaming for the first time, and ahead of our previous guidance,” Iger said in a statement. “We are confident in our ability to continue to continue driving earnings growth through our collection of unique and powerful assets.”
Iger and Disney executives will field questions from analysts at a call set for 8:30 am ET.