Disney hiked streaming prices on Tuesday ahead of its Q3 results early Wednesday. Meanwhile, the Dow Jones entertainment behemoth is enjoying its first box-office success for the Marvel Cinematic Universe in years, and recently extended its deal with the NBA with a new sports streaming service to debut later this fall. Disney stock retreated Wednesday.
Disney on Tuesday announced plans to raise subscription prices for its various streaming platforms. Starting Oct. 17, basic Disney+ plans will increase to $9.99 per month from $7.99, while the ad-free plan will increase by $2 to $15.99 per month. Hulu with ads will cost an additional $2 per month at $9.99. The ad-free version of Hulu will cost $18.99 monthly, up from $17.99.
Disney also plans to raise the price of ESPN+ by $1 to $11.99 per month. The price for the basic Disney+ and Hulu bundle is increasing by $1 to $10.99 per month, but the price of the ad-free bundle will stay at $19.99 per month.
Hulu + Live TV plans with ads will increase to $82.99 per month from $76.99. The ad-free version of Hulu + Live TV will increase to $95.99 per month from $89.99.
Previously on July 25, Disney announced a Disney+, Hulu and Max Bundle via an agreement with Warner Bros. Discovery. Basic versions of the bundle with ads costs $16.99 per month while the bundle without ads runs for $29.99 per month. The plans offer a 38% discount compared with purchasing the services separately, according to Disney.
Disney stock traded near the bottom of the Dow Jones Industrial Average for the second quarter, ending with an almost 24% decline for the quarter.
Earnings Results
Disney reported adjusted earnings of $1.39 per share. FactSet expected a 16.5% increase in adjusted earnings to $1.20 per share.
Revenue came in at $23.16 billion vs. views for 3.3% revenue growth to $23.08 billion.
The company's combined streaming businesses posted a profit for the first time, ahead of its prior expectations of achieving profitability in Q4. Disney's direct-to-consumer streaming business recorded $47 million in operating income on 15% revenue growth.
Disney+ subscribership rose to 153.8 million while the number of Hulu subscribers increased to 51.1 million. FactSet expected 152.65 million Disney+ subscribers for the quarter and 51.3 million Hulu subscribers.
Total entertainment revenue climbed 4% to $10.58 billion, driven by DTC streaming growth. Linear network revenue and content and licensing sales declined in the single digits. Experiences revenue rose 2% as guest spending at domestic parks increased while international theme park attendance grew.
The Dow giant now forecasts full-year adjusted earnings increase 30%. That would put Disney's 2024 earnings at $4.88 per share, ahead of FactSet views of $4.77.
Disney says it's on track for streaming profitability to improve in Q4 and expects both its ESPN+ and entertainment DTC offerings to be profitable. Streaming margins should improve over the coming years, Disney said.
The company also predicts Disney+ Core subscribers grow modestly in the fourth quarter.
However, Disney forecasts Q4 operating income for its experiences business to decline in the mid-single digits due to moderation in domestic demand. For international parks, the Olympics are causing a reduction in traffic to Disneyland Paris and there's some cyclical softening in China. Disney said it is actively monitoring attendance and guest spending and managing its cost base.
Will TV Deals, Marvel Mojo Help Disney Stock?
The report comes after the July 26 release of "Deadpool & Wolverine," Disney's first R-rated flick that has already grossed more than $824 million worldwide, according to Box Office Mojo. The film has already made nearly $396 million in the U.S., surpassing Mel Gibson's "The Passion of the Christ" as the highest-grossing R-rated film of all time domestically, not accounting for inflation. Gibson's 2004 film generated $370 million at domestic box offices and held the title for 20 years.
The new Deadpool film is also on track to top the worldwide gross for Disney's "Inside Out 2," which generated $1.55 billion worldwide following its June 14 release.
Elsewhere, Venu Sports last Thursday announced it will cost $42.99 per month when it launches later this fall. The stand-alone streaming service is a joint venture between Disney's EPSN, Fox and Warner Bros. Discovery, and will offer thousands of live sports events from major pro leagues and top college conferences. The service will have 14 live channels and a library of on-demand content from the companies' network portfolios and ESPN+.
However, Disney is still looking to cut costs as its traditional TV assets struggle. Bloomberg reported Wednesday that Disney plans to cut 2% of the staff at Disney Entertainment Television, representing about 140 jobs.
On the theme-park front, Disney on July 29 avoided what would have been its first strike in 40 years at its Disneyland Resort after reaching a three-year contract with unionized workers. The deal includes a $24 hourly minimum wage, wage increases, flexible attendance and sick-leave policies, among other benefits. Disney Workers Rising, which represents 14,000 Disney employees across four unions, has been negotiating with Disney management since late April.
Battle Over NBA Rights
Meanwhile, Disney and ESPN on July 24 secured an 11-year media rights extension with the National Basketball Association and the Women's National Basketball Association. Comcast-owned NBCUniversal and Amazon.com also clinched broadcast rights as part of the deal, which is valued at around $77 billion.
ESPN will continue as the exclusive home of the NBA Finals. And the full package of NBA and WNBA events and programming will be available on ESPN's upcoming direct-to-consumer platform, which will launch fall 2025, Disney said.
But Warner Bros. filed a breach-of-contract suit against the NBA in late July, claiming the league violated its media-rights agreement with its TNT network, the Wall Street Journal reported. Warner sought to exercise a contract clause allowing it to match rival bids, but the NBA rejected that move, saying TNT's offer didn't match Amazon's.
Disney Stock Action
Disney stock fell 4.5% Wednesday. Shares on Tuesday swung 2.5% higher to mark their first gain after four straight daily declines.
DIS shares have weakened 4.8% in 2024.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
