Disney narrowly beats estimates as streaming boosts entertainment segment

Disney reported its fiscal fourth-quarter earnings Thursday, narrowly beating analyst estimates as streaming growth helped propel its entertainment segment. 

Here is what Disney reported compared with what Wall Street expected, according to LSEG

• Earnings per share: $1.14 adjusted vs. $1.10 expected
• Revenue: $22.57 billion vs. $22.45 billion expected

Disney's net income increased to $460 million, or 25 cents per share, from $264 million, or 14 cents per share, during the same quarter last year. Adjusting for one-time items, including restructuring and impairment charges, Disney reported earnings per share of $1.14. 

Total segment operating income increased 23% to $3.66 billion compared with the same period in 2023.  

Revenue for the entertainment segment – which includes the traditional TV networks,  direct-to-consumer streaming and films – increased 14% year over year to $10.83 billion after a hot summer at the box office.

Disney Pixar's "Inside Out 2" became the highest-grossing animated movie of all time this summer, surpassing Disney's "Frozen II" at the box office. Meanwhile, its "Deadpool & Wolverine" became the highest-grossing R-rated film of all time, surpassing Warner Bros. Discovery's "Joker."

The films added $316 million of profit for the entertainment segment during the quarter. Overall, the entertainment segment reported nearly $1.1 billion in profit.

Revenue for Disney's sports segment, made up primarily of ESPN, was flat. ESPN's profit fell 6% due in part to higher programming costs associated with U.S. college football rights as well as fewer customers in the cable bundle. 

Disney's combined streaming business, which includes Disney+, Hulu and ESPN+, saw profitability improve during the quarter after turning its first profit during the fiscal third quarter, three months earlier than expected. The division reported an operating income of $321 million for the September period compared with a loss of $387 million during the same period last year. 

Disney joined its peers, including Warner Bros. Discovery, Netflix, Comcast and Paramount Global in adding streaming subscribers during the most recent quarter. 

Disney+ Core subscribers – which excludes Disney+ Hotstar in India and other countries in the region – grew by 4.4 million, or 4%, to 122.7 million. Hulu subscribers grew 2% to 52 million. 

Average revenue per user for domestic Disney+ customers dropped from $7.74 to $7.70, as the company had a higher mix of customers on its cheaper, ad-supported tier and wholesale offerings. 

Meanwhile the company's traditional TV networks business continued to decline as consumers leave pay TV bundles behind in favor of streaming. Revenue for the networks was down 6% to $2.46 billion. Profit for the segment sank 38% to $498 million. 

The experiences segment, which includes Disney's theme parks as well as consumer products, saw revenue grow 1% to $8.24 billion. 

The domestic parks' operating income rose 5% to $847 million, helped by higher guest spending at the parks and cruise lines. 

Operating income at the international parks, however, fell 32% due to a decline in attendance and in guest spending as well as increased costs. 

The company said Thursday it's "confident in the long-term prospects for the business," and provided an outlook that includes its fiscal 2025, 2026 and 2027.

Disney expects a "modest decline" in Disney+ Core subscribers during the fiscal first quarter of 2025 compared with the prior quarter.

Full-year profit in the entertainment streaming business, which excludes ESPN+, is expected to see an increase of roughly $875 million compared to the prior fiscal year and to increase by a double digit percentage in its fiscal 2026.

Disney also anticipates double-digit percentage growth in fiscal 2025 for its entertainment segment.

The experience segment, however, is expected to see just 6% to 8% profit growth in the coming fiscal year compared to the prior year. Disney noted the fiscal first quarter will see a $130 million hit due to the impact of Hurricanes Helene and Milton, as well as a $90 million impact from Disney Cruise Line pre-launch costs.

During Disney's fiscal 2025, the company expects high-single digit adjusted earnings growth compared to the prior fiscal year. The company expects double digit adjusted EPS growth in both fiscal 2026 and 2027.

This story is developing. Please check back for updates.