Disney’s Streaming Profit Surprises Amidst Decline in Traditional TV Business

Disney’s unexpected profit in its streaming entertainment division contrasted with a downturn in its traditional TV business and weaker box office performance, causing its shares to drop 6% before the market opening on Tuesday.

The company’s streaming division, including Disney+ and Hulu, reported operating income of $47 million for the January-March period, a significant improvement from a loss of $587 million a year earlier. However, the combined streaming business, including ESPN+, still reported a loss of $18 million, though narrower compared to the prior year’s loss of $659 million.

While streaming showed promise, revenue from Disney’s traditional television business declined by 8% to $2.77 billion, with operating profit falling 22% from a year ago. Despite this, CEO Bob Iger expressed confidence in the company’s direction, emphasizing the transition to a new era marked by solid performance and global content creation.

Iger, who returned from retirement in November 2022, implemented cost-cutting measures expected to reach $7.5 billion by September. Additionally, Disney announced a significant investment in theme parks and plans for a standalone ESPN streaming app.

The unexpected profit from streaming was attributed to aggressive cost management, with Disney+ adding over 6 million customers during the quarter. Despite streaming’s growth, costs associated with streaming cricket may lead to a loss in the current quarter but a return to profit in the following period.

Looking ahead, Disney anticipates that the combined streaming unit will generate a profit in the fiscal fourth quarter, becoming a significant growth driver for the company with improved profitability expected for fiscal 2025.

In summary, Disney’s latest earnings report reflects a mixed performance, with streaming showing promise amidst challenges in the traditional TV business. However, the company remains optimistic about its future prospects, buoyed by strong results in theme parks and ongoing efforts to enhance its streaming offerings.