Streaming is fine. But if the traditional television business and the results at the cinema do not remain robust, even a giant like Disney has some problems. And big too. Today Disney shares are down more than 9% on Wall Street at $105.1 after a quarterly report in the red. Television revenues fell 8% to $2.77 billion and operating profits fell 22% from a year ago, despite rising revenues from its entertainment division, which includes streaming services Disney+ and Hulu . The latter recorded an operating margin of $47 million in the January-March period, compared to a loss of $587 million the previous year. But the streaming division as a whole, including ESPN+, lost 18 million. In short, the numbers for now show difficulties.
Like other media companies, Disney is trying to adapt to consumers’ migration from traditional cable TV to streaming entertainment and had promised it would be profitable by September. The division has been losing money since Disney+ debuted in 2019 as it struggled to compete with Netflix. “We said our path to profits would not be linear,” CEO Bob Iger tried to observe today. According to analyst Brian Mulberry of Zacks Investment Management, “the market reaction is showing that there are more questions than answers.”
Iger, who returned from retirement in November 2022 to try to revitalize the company, has enacted cost cuts that will reach $7.5 billion by September. He also announced a 60 billion dollar investment plan in the theme park sector. In general, the “experiences” division reported revenues of 2.3 billion, up 12% compared to a year ago.
In this first quarter, Disney+ grew by another 6 million customers and the average revenue per user increased by 44 cents. However, according to CFO Hugh Johnston, the company does not expect to see growth in Disney+ subscribers in the current quarter and streaming profitability will suffer due to additional spending on cricket rights in India. All this while the more “traditional” businesses are no longer as successful as they used to be. Disney shares, meanwhile, slipped to their lowest levels in a year and a half, after the stock had grown by 29% this year.
