WALT Disney reported better-than-expected earnings for its fiscal first quarter and issued an upbeat profit outlook for the year, citing cost-cutting benefits and the strong performance of its international theme parks.
Earnings rose to US$1.22 a share, excluding some items, Disney said on Wednesday (Feb 7). That beat the 99 US cent average of Wall Street estimates.
Revenue was little changed at US$23.5 billion in the period ended Dec 30 and fell short of the US$23.8 billion average of estimates compiled by Bloomberg, held back by Disney’s struggling TV business and two theatrical misses, The Marvels and Wish.
Thanks to cost cutting, Disney said profit this year will rise at least 20 per cent to about US$4.60 a share, topping estimates of US$4.27. That could help chief executive officer Bob Iger fend off activist investor Trian Fund Management, which has nominated its founder Nelson Peltz and former Disney finance chief Jay Rasulo to the entertainment giant’s board.
In a nod to investors, Burbank, California-based Disney raised its dividend by 50 per cent to 45 US cents a share and approved a US$3 billion stock repurchase programme for the year.
Shares of Disney gained as much as 8.7 per cent to US$107.75 in extended trading after the results were announced, their highest in almost a year. The company also announced it is acquiring a US$1.5 billion stake in Epic Games as part of a collaboration with the company that makes the popular Fortnite title.
Subscribers to the Disney+ streaming service fell to 149.6 million in the quarter, missing analysts’ projections of 151.2 million, while overall losses in streaming, including Hulu and ESPN+, shrank to US$216 million from US$1.05 billion a year ago.
However, the company expects to add as many as six million core Disney+ subscribers this period and continues to predict its streaming operation will reach profitability by the fourth quarter of the current fiscal year.
The bright spot for Disney last quarter was its international parks, where profit rose more than fourfold and sales increased 35 per cent from last year, when Covid closures were still in place. That more than countered a more modest 4 per cent gain in revenue at its domestic resorts and a 2 per cent drop in profit, with attendance falling at Walt Disney World in Florida.
Disney’s international parks also benefited from new a Frozen attraction in Hong Kong and Zootopia in Shanghai.
The company’s traditional media businesses continued to struggle, hurt by an accelerating decline in its broadcast and cable TV – led by ABC – and continued losses at the division that includes the film studio. The movie division has registered quarterly losses for most of the past two years.
Revenue from content sales and licensing – including the film studio – fell 38 per cent from a year earlier, while sales at Disney’s domestic TV networks slumped 14 per cent last quarter, worsened by strikes that shut down production in Hollywood.
On Tuesday, Disney announced plans to bundle ESPN content with programming from Fox and Warner Bros Discovery to create a new sports-focused streaming service.
Before that announcement, Trian’s plans for Disney included bundling ESPN’s streaming business with a larger player such as Netflix, Bloomberg reported. BLOOMBERG
