The Walt Disney Co. reported a loss in its second quarter due to restructuring and impairment charges, but its adjusted profit exceeded expectations. The streaming business, including Disney+ and Hulu, turned a profit with a quarterly operating income of $47 million compared to a loss of $587 million the previous year. Disney+ core subscribers increased by more than 6% in the second quarter, and the company boosted its outlook for the year. CEO Bob Iger credited their growth initiatives from the previous year for the positive results.
Shareholders recently rebuffed efforts by activist investor Nelson Peltz to claim seats on the company board, showing support for Iger’s leadership as he seeks to energize the company. Thomas Monteiro, a senior analyst, noted that Disney has refocused on its core business model, which is more conservative by nature. The company’s efforts to make its streaming division profitable were successful, exceeding expectations and hinting at a shift towards a more global, low-production-cost model similar to Netflix.
Revenue from Disney’s domestic theme parks rose by 7%, while international theme parks reported a 29% increase. However, the company faced higher costs at its theme parks during the quarter due to inflation. Increased guest spending at Walt Disney World and Disneyland was attributed to higher ticket and hotel room rates. Overseas, Hong Kong Disneyland benefitted from the opening of the World of Frozen section in November. Despite a loss of $20 million in the quarter, Disney remains optimistic about its overall performance and adjusted earnings per share growth target of 25% for the full year.
Disney’s revenue for the quarter reached $22.08 billion, slightly lower than Wall Street estimates. Content sales and licensing revenue declined by 40% as the company did not release any significant movie titles during the quarter. Shares of the company dropped by 5% before the market open in response to the financial report. In February, Disney announced significant cost reductions and cut thousands of jobs in 2023. In March, a settlement agreement was reached in a state court fight over the development of Walt Disney World with the allies of Gov. Ron DeSantis.
Character performers at Disneyland in California, along with the union organizing them, Actors’ Equity Association, filed a petition for union recognition. Overall, despite some challenges and losses, Disney remains optimistic about the future growth potential of its streaming business and theme parks. With a focus on profitability and cost reduction, the company aims to continue its positive momentum and deliver strong results in the coming years.
