Disney+ Reins In 7 Million Subscribers Amid Better Earnings

Topline

Disney beat expectations in its fiscal fourth quarter, according to a quarterly earnings report released Wednesday, as the entertainment conglomerate revealed an increase in streaming numbers and an even more aggressive cost-cutting goal. multi-billion dollar increase to its cost-cutting goal.

Disney+ increase the price of its ad-free tier from $10.99 to $13.99 per month in October. (Photo … [+] credit should read ROBYN BECK/AFP via Getty Images)

AFP via Getty Images

Key Facts

Disney raked in $21.2 billion in revenue, in line with analyst estimates, and $0.82 in earnings per share, exceeding analyst estimates of $0.71, according to Factset.

Disney increased its cost-cutting goal to $7.5 billion, according to the report, up from the $5.5 billion it set early this year.

The company reported 66.1 million international Disney+ subscribers—a nearly 7 million user increase from the previous quarter, in addition to an 800,000 user boost in ESPN+ subscribers, which totaled 26 million.

Disney’s linear TV network revenue dropped 9% domestically, a slump it attributed to a decrease in advertising revenue primarily experienced by ABC.

The company’s domestic parks and experiences unit generated $808 million in quarterly operating income, an increase from the same quarter last year it attributed to growth at its cruise line and an increase in sales at Disney Vacation Club, its vacation timeshare program.

Shares of Disney rose more than 3% in after-hours trading following the release of the earnings report.

What To Watch For

Disney will take full ownership of Hulu after announcing early this month it would buy Comcast’s 33% stake of Hulu for more than $8 billion. The entertainment giant will pay about $8.61 billion to Comcast’s NBCUniversal by December 1 following an appraisal process that will determine Hulu’s final value as of Sept. 30. The guaranteed floor value for the streaming service is $27.5 billion. Hulu subscriber numbers have stayed steady in recent months and recorded 48.5 million subscribers in the fourth quarter, according to Disney’s earnings report, a slight jump from the 48.3 million it had in the previous quarter.

Big Number

112.6 million. That’s how many total subscribers Disney+ has as of the company’s fourth quarter.

Tangent

Disney+, like Hulu and Netflix, upped the subscription cost for one of its plans, bumping its ad-free plan to $13.99 a month. However, the company has yet to crack down on password sharing like Netflix has—a move that appeared to reel in more subscribers for the latter platform, which has one of the most expensive streaming subscription plans.

Key Background

Disney has dealt with a litany of challenges this year ranging from the ongoing actors’ strike and streaming struggles to poor commercial performances from some of its films and decreasing linear TV subscriptions. Disney CEO Bob Iger has signaled plans to sell its TV assets, which include ABC, Disney Channel, FX and National Geographic. ESPN is also included in that roster but has proven to somewhat of a highlight for the company despite drops in linear viewership in the last decade or so likely due to cord cutting—though ESPN did manage to post its best overall viewership in four years during this fiscal year. The network also generated $2.9 billion in profit for Disney’s fiscal year 2022, nearly $1 billion more than what its entertainment business generated in that same window, according to Axios. ESPN could be valued at about $24 billion, according to a Bank of America analyst note. Such a sale could bring a capital infusion that strengthens ESPN’s offerings and gives Disney a chance to spin off ESPN at a later time, according to the note, which listed Amazon, Apple and Verizon as potential investment suitors.