The Walt Disney Co. added 7 million “core” Disney Plus subscribers in the fourth quarter and said it still expects its streaming business to break into profitability by the fourth quarter of fiscal 2024.
Disney’s direct-to-consumer business had a $420 million operating loss in the company’s fiscal fourth quarter, which was 70% smaller than the $1.4 billion loss posted a year ago. In the third quarter, Disney had $512 million in DTC losses.
DTC revenues were up 12% to $5.04 billion thanks mainly to higher subscription revenue because of price increases and subscriber gains. DTC ad revenue rose 4%.
Including ESPN Plus, Disney's streaming businesses lost $387 million.
At the end of the fiscal fourth quarter, Disney Plus had 112.6 million “core” subscribers, up from 105.7 million in the third quarter.
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Disney Plus Hotstar subscribers fell 37.6 million subscribers from 40.4 million subscribers in the third quarter.
Domestic Disney Plus subscribers rose to 46.5 million from 46 million at the end of Q3.
The ad-supported version of Disney Plus added 2 million subscribers in the quarter to reach a total of 5.2 million. More than 50% of subscribers signing up in the quarter signed up for the ad-supported version of Disney Plus, the company said.
ESPN Plus had 26 million subscribers, up from 25.2 million in the third quarter.
Hulu had 48.5 million subscribers, up from 48.3 million subscribers in the third quarter. Hulu’s SVOD-only subscribers dipped to 43.9 million from 44 million. Hulu Plus Live TV had 4.6 million subscribers, up 300,000 from 4.3 million subs last quarter.
On the company’s earnings call, CEO Bob Iger said Disney will launch a beta version of a Disney-Hulu bundle in December. A full version is expected to launch in March.
Iger also said Disney continues to “evaluate options for each of our linear networks.” The linear networks could be noncore assets, he said in July, targeted for a possible sale.
At present, though, “our review of the business thus far has uncovered significant long-term cost opportunities, which we're implementing while continuing to deliver high-quality content,” Iger said.
Interim chief financial officer Kevin Lansberry said Disney’s enterprise-wide content spent in fiscal 2023 was $27 billion, in line with guidance, and about $3 billion below the prior year as the company “significantly reduced our spend on entertainment content.” For 2024, content spending is expected to be $25 billion, he said.
Overall, Disney had fourth-quarter net income of $264 million, or 14 cents a share, compared to $162 million, or 9 cents a share, a year ago.
Fourth-quarter revenues rose 5% to $21.2 billion.
Disney’s entertainment segment posted operating income of $236 million after taking a $608 million loss a year ago. Revenues rose 2% to $9.52 billion.
Domestic entertainment affiliate revenue decreased by 4%, including a 1.5% hit because of the blackout with Charter Communications.
Disney’s sports businesses, including ESPN, had operating income of $981 million, up 14%. Revenues were flat at $3.9 billion.
ESPN had operating income of $953 million, up 15%. Revenues rose 1% to 3.8 billion, with domestic ESPN linear advertising up 1%, despite losing Big Ten football and the Charter blackout.
Disney’s Experiences business had operating income of $1.8 billion, up 31%. Revenues were up 13% to $8.2 billion.
“Our results this quarter reflect the significant progress we’ve made over the past year,” Iger said in the company’s earnings release. “While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again.”
Iger said the company is on track to achieve about $7.5 billion in cost reductions, about $2 billion more than initially targeted.
“As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios and turbocharging growth in our parks and experiences business,” Iger said. “We have already made considerable advancements in these four areas and will continue to move forward with a sense of purpose and urgency, and I’m bullish about the opportunities we have before us to create lasting growth and increase shareholder value.”
