By Thomas Buckley | Bloomberg
Walt Disney Co. in Burbank reported fiscal first-quarter results that topped analysts’ estimates, fueled by the blockbuster film Moana 2 and higher income from its streaming services.
Excluding some items, earnings rose to $1.76 a share, Disney said Wednesday in a statement, beating the $1.42 average of analysts’ estimates compiled by Bloomberg. Revenue in the period ended Dec. 28 came in slightly above expectations, increasing 5% to $24.7 billion.
The improved performances of Disney’s streaming operation and film studio led to a 31% gain in operating income for the quarter. Other Disney businesses struggled, with profit from TV networks slumping and theme park earnings little changed.
“Overall, this quarter proved to be a strong start to the fiscal year, and we remain confident in our strategy for continued growth,” Chief Executive Officer Bob Iger said in the statement. The shares were down less than 1% in New York, in line with the broader markets after weak earnings results from some big tech companies.
During the period, Disney raised the price of the Disney+ and Hulu streaming services by as much as 25%. That contributed to earnings of $293 million in the period, compared with a year-ago loss, along with a dip in Disney+ subscribers to 124.6 million accounts. Analysts were predicting a total of 119 million subscribers. In the second quarter, Disney predicts a “modest” sequential decline in Disney+ subscribers.
Chief Financial Officer Hugh Johnston chalked that up to seasonal effects and said consumers don’t seem to be pulling back despite the increased prices.
“The expectation is that we will continue to grow subscribers,” Johnston said in an interview on Bloomberg TV. He said Disney will improve margins and make more than $1 billion in that business this year.
“The streaming business is doing extremely well,” Johnston said. After years of significant investment, Disney is now seeing the benefits, he said. “We feel like the streaming business will be one of the big drivers for our company going forward.” Later this year Disney plans to roll out a direct-to-consumer ESPN Flagship product that would offer a full slate of TV programming available on the sports giant’s network as well as additional content.
Iger said on a conference call with investors that the company was pleased with the numbers of subscriptions to Disney+ and Hulu, as it had expected a “significantly higher” number of account closures after raising prices.
The quarter marked the third straight period of streaming profitability for Burbank, California-based Disney, helped by the introduction of an ad-supported tier and a crackdown on password sharing, as well as the higher prices.
The division that includes Disney’s film studio delivered earnings of $312 million, also reversing a year-ago loss, driven by Moana 2, a sequel to the Polynesian-themed film. The animated feature opened on Nov. 27 and generated $1.04 billion in global box-office sales.
Those gains countered a tough quarter for Disney’s parks and broadcast businesses.
Disney reported operating income of $3.11 billion from its experiences division, which includes theme parks and cruises. That’s little changed from last year and reflects the impact of hurricanes Milton and Helene, as well as expenses tied to launching the Disney Treasure cruise ship in the period.
The bad weather closed Disney’s Florida parks for a day and led to the cancellation of a cruise.
Johnston said bookings for Disney’s new Treasure cruise ship launched in the quarter were doing “terrifically well” with rooms selling out in line with the high demand across the company’s entire cruise business.
Disney’s broadcast and cable TV businesses suffered a drop in revenue and profit, the result of higher programming costs and fewer subscribers on channels devoted to entertainment. Sales grew at Disney’s ESPN sports business, while its domestic earnings declined due to higher costs.
Despite the clear shift to streaming offerings, Iger said Disney’s traditional TV networks are “not a burden, but an asset,” and that they provide an ability to enhance the company’s television business. Still, he said he “won’t rule out the possibility of smaller networks being configured differently in terms of how we bring them to market, maybe even ownership.”
Disney reiterated its forecast for high-single-digit growth in adjusted earnings in fiscal 2025 and has previously said it sees double-digit profit increases for 2026 and 2027 as a turnaround under Iger gains momentum.
Even with such a strong performance in the first quarter, Disney won’t amend its earnings forecasts prematurely given the uncertainties in the global business and trade environment, Johnston said, calling any potential tariffs the Trump administration is poised to put on Mexico and Canada and a 10% levy already in place on China “immaterial to us.” He said the management executives “aren’t afraid of over-delivering.”
For the current quarter, Disney said operating income in its sports segment would be adversely impacted by about $50 million from exiting the streaming joint venture it had planned with Fox Corp. and Warner Bros. Discovery Inc. called Venu Sports. The companies dropped the proposal in January amid rising legal challenges.
Overall, growth in operating income will be weighted to the second half of fiscal 2025, Johnston said at a UBS investor conference in December. He cited easier comparisons with late 2024 after contending with rising labor costs at Walt Disney World in Florida and competition for tourists in Europe as a result of the Paris Olympics.
While Disney expects an impact from the opening of Comcast Corp.’s Universal Epic Universe in Orlando May 2025, summer bookings at Walt Disney World are up, Johnston has said.
The company repurchased $794 million worth of stock in the quarter and plans to buy back $3 billion worth of shares in fiscal 2025. Disney will seek to increase its dividend in line with earnings.
The company’s other chief priority is finding a successor to Iger, whose contract ends in December 2026. Disney has pledged to announce a successor early in 2026. That effort is being led by former Morgan Stanley CEO James Gorman, who became Disney’s chairman in January.