Disney shares fall after reporting broader broadcast losses, earnings miss


Disney ( DIS ) reported fourth-quarter earnings on Tuesday after the bell, missing on both the top and bottom lines. Macroeconomic challenges, including a slowdown in global advertising, weighed on earnings as the company also grappled with higher-than-expected broadcast losses.

Disney shares were transferred Losses accelerated after the report – down as much as 10% – as investors digested the results in after-hours trading.

Disney’s fourth-quarter results compared with Wall Street consensus estimates compiled by Bloomberg:

  • Income: $20.15 billion vs. $21.26 billion expected

  • Adj. earnings per share (EPS): $0.30 vs $0.51 expected

  • Disney+ Subscriber Network Add-ons: 12.1 million vs. 9.35 million expected

  • Parks, experiences and consumer products revenue: $7.43 billion vs. $7.59 billion expected

Disney+ saw subscriber net additions rise to 12 million, beating expectations by just over 9 million. This comes after the company reported new market growth in the third quarter (14.4 million) and subscriber growth following a robust content plan.

The company warned that it expects the underlying growth of Disney+ subscribers to be lower than Hotstar subscribers in the first quarter. Content spending was guided in the low range of $30 billion for the full year of 2023.

Disney+, Hulu and ESPN+ lost a combined $1.5 billion in the fourth quarter (vs. a loss of $1.1 billion in the third quarter). Disney CFO Christine McCarthy said she expects Disney+ losses to peak this year, and management is guiding streaming losses to shrink by about $200 million in the first quarter of 2023.

“Assuming our DTC operating losses narrow going forward and we don’t see a meaningful change in the economic environment, we expect Disney+ to still be profitable in fiscal 2024,” Disney CEO Bob Chapek said in an earnings release.

“By realizing our costs and realizing the benefits of the price increases and Disney+ ad support that will take place on December 8, we believe we are on track to achieve a profitable broadcast business that will drive continued growth and create shareholder value long into the future.” ” he continued.

Despite recent price increases, average revenue per user for Disney+ has dropped $3.91 vs. estimates of $4.29 on the back of negative currency effects and a larger subscriber mix.

The company will launch the ad-supported service for $7.99 in December, a month after Netflix’s long-awaited debut. Despite the overall decline in ad spending, analysts are bullish on the profitability prospects of ad-supported plans – especially for broadcasters.

Park operations miss expectations amid recession fears

Disney’s theme parks also missed expectations, seeing a rapid spike in COVID amid increased attractions, price increases and updated technologies like the Genie+ app. Recession fears weighed on consumer demand in the quarter.

Revenue from the company’s parks, experiences and consumer products division was $7.43 billion, while operating income was $1.51 billion (estimated at $1.9 billion). The company announced that it was “out of sight on the reopening date” for the Shanghai location.

Even so, McCarthy said the media giant expects a “strong” holiday season at the parks in the first quarter of 2023.

On the earnings call, the company unveiled its upcoming slate of movies and saw “Black Panther: Always Wakanda” and “Avatar: Waterway” boost sales. Isn’t that good? His linear TV work. McCarthy announced that he expects the decline of linear TV subscribers to accelerate in line with current industry trends.

Disney’s theme parks are expected to post strong fourth-quarter results.

Alexandra is a Senior Reporter for Entertainment and Media at Yahoo Finance. Follow him on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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