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Disney’s streaming business has turned a profit for the first time since it launched Disney+ in late 2019, a milestone it achieved months earlier than expected thanks to cost-cutting and the popularity of Hulu programmes including “Shogun” and “The Bear”.
The streaming business has lost more than $11bn since its launch, but Disney has cut costs and raised prices in an aggressive push to achieve profitability. The streaming unit earned $47mn in its second fiscal quarter, compared with a $587mn loss a year earlier.
“Crossing the profitability threshold early is something that we can feel very good about,” Hugh Johnston, Disney’s chief financial officer, told the Financial Times.
The streaming business will lose money in the current quarter due to Disney+ Hotstar in India, but return to profitability in the autumn, he said. The company expects further improvements in streaming profitability next year.
The streaming news came as Disney reported a $20mn net loss during the second quarter, owing largely to goodwill impairments. Excluding those items, Disney’s adjusted earnings of $1.21 a share were up 30 per cent from a year ago and topped the $1.10 Wall Street had expected. The company also raised its adjusted earnings target for the full year.
Bob Iger, chief executive, said the strong results were due in large part to its experiences division, where theme parks outside of the US, including Shanghai Disney, performed well. “We are turbocharging growth in our experiences business with a number of near- and long-term strategic investments,” he said.
The earnings report was the first since Iger fended off a proxy challenge from Trian Partners’ Nelson Peltz, who was seeking two seats on the board. Iger said the latest results were proof that the “turnaround and growth initiatives we set in position last year have continued to yield positive results”.
Iger’s plan to reinvigorate the company’s movie studios will be put to the test with upcoming releases including Kingdom of the Planet of the Apes this month, Pixar’s Inside Out 2 in June and Marvel’s Deadpool & Wolverine in July.
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