Walt Disney Earnings Beat Estimates; Park Profits Drop

Walt Disney announced quarterly earnings on Wednesday that surpassed Wall Street expectations

The success of the animated Pixar film “Inside Out 2” contributed to the company’s ability to surmount a profit decline at its theme parks.

The Entertainment unit’s operating income nearly quadrupled from April to June, and the combined streaming businesses of Disney+, Hulu, and ESPN+ generated a profit for the first time.

However, the company’s shares experienced a 0.8% decline before the bell, as the experiences segment, which comprises consumer products and parks and accounts for just over half of the company’s revenue, experienced a 3% decline in operating income. “Moderation” of demand at Disney’s U.S. parks is anticipated to persist in the coming quarters.

Disney stated that the unit’s operating income is expected to decrease by “mid-single digits” in the July-September quarter compared to the same period the previous year.

According to LSEG data, Disney’s adjusted earnings-per-share for the fiscal third quarter reached $1.39, surpassing analyst expectations of $1.19. Revenue increased by 4% to $23.2 billion, surpassing the projected figure of $23.1 billion.

Chief Executive Bob Iger emphasized the success of the entertainment division, which achieved a profit a quarter ahead of its projections from the combined streaming businesses of Disney.

“We are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets,” Iger stated in a written statement.

After the decline of traditional television, billions of dollars in losses from streaming efforts, and a challenging period for its renowned film studio, Iger is reestablishing Disney.

It appears that the film studio is experiencing a resurgence.
“Deadpool & Wolverine,” which premiered in the current quarter, has grossed over $850 million, while “Inside Out 2” has generated $1.6 billion in global ticket sales.

Robert Fishman, a media analyst at MoffettNathanson, wrote in advance of Disney’s earnings release, “After several years of muted successes and misfires, Disney has now released the highest grossing animated film of all time and achieved the largest ever opening for an R-rated film.”
Fishman stated that the forthcoming film slate is “filled with highly dependable” titles, including “Moana 2” and “Mufasa: The Lion King,” directed by Oscar-winning director Barry Jenkins. However, it remains to be seen whether those successes represent a return to form.

In the quarter, the Entertainment division, which encompasses the film, television, and streaming industries, reported an operating income of $1.2 billion.

The Disney+, Hulu, and ESPN+ streaming services generated an operating profit of $47 million.
Operating income at the Sports unit, which encompasses the ESPN network and Star India business, decreased by 6% from the previous year to $802 million due to the escalating costs of airing cricket matches.

The Experiences unit disclosed an operating income of $2.2 billion. Disney stated that consumer products, cruise ships, and certain international parks “produced enhanced results despite a decrease in demand at domestic parks.”