Published - August 10th, 2023 @ 1:05 PM (GMT+2)

‍
Disney (NYSE:DIS), the global entertainment giant, has been in the spotlight with its recent Q3 earnings report. Here's a comprehensive look at the company's financial performance, focusing on its streaming services and overall revenue.

‍

Disney's Q3 Revenue Miss & Streaming Performance:
‍

Disney reported a miss on revenue for the third quarter. However, the company cut its streaming losses to $512 million, down from over $1 billion in streaming losses one year ago. Disney+ subscribers came in below expectations, with numbers at 146.1 million as opposed to the 154.8 million predicted by analysts. The Street was bracing for a loss of $777.7 million, so the narrower loss in the Direct-to-Consumer (DTC) business was seen as good news for investors.

‍

However, the subscriber numbers across the board were disappointing, with Disney Plus subscribers at $146.1 million, ESPN Plus subscribers just shy of the Street's expectations at $25.2 million, and Hulu subscribers coming in a bit light. The operating income at Disney's parks was $2.43 billion, up 11% on a year-over-year basis, with growth at Shanghai Disney Resort and Hong Kong Disney.

‍

Cost-Cutting Efforts & Price Hikes:
‍

Disney's focus on cost-cutting has been evident, with the company's streaming business losses narrowing to $512 million. The company also announced a 27% increase in the price of the ad-free tier of the Disney+ service to $13.99 and a 20% hike in the no-ad version of Hulu. These changes are part of Disney's strategy to attract and retain subscribers in a competitive streaming market. The company also plans to launch ad-supported streaming in Europe and Canada and provide U.S. subscribers with a new, ad-free package in the coming months.

‍

Disney's CEO, Bob Iger, has been emphasizing the company's cost-effective approach, highlighting $1 billion in operating-income improvement at the company's streaming business over the last three quarters. The company aims for profitability in 2024 and is on track to cut costs by more than the $5.5 billion promised to investors in February.

‍

Revenue & Subscriber Challenges:
‍

Despite the positive news on cost-cutting, Disney's revenue for the quarter ended July 1 rose only 4% to $22.33 billion, just short of Wall Street estimates. The company's traditional television business continued its decline, with TV revenue falling 7% to $6.7 billion and operating income falling 23% to $1.9 billion.

‍

Disney's streaming video services cut losses to $512 million in the fiscal third quarter from about $1.1 billion a year ago. However, it added only 800,000 Disney+ subscribers, 100,000 subscribers shy of analyst estimates, and shed 12.5 million subscribers to the Disney Hotstar service in India. The company also took $2.65 billion in impairment and restructuring charges in the quarter.

‍

Conclusion

Disney's Q3 report shows a mixed picture, with significant improvements in streaming losses but revenue and subscriber growth challenges. The company's focus on cost-cutting and price hikes reflects a strategic shift to enhance profitability. However, the pressure to improve the quality of films, position ESPN for direct streaming, and resolve industry strikes adds complexity to Disney's transformation journey.

‍

‍
The information on mexem.com is for general informational purposes only. It should not be regarded as investment advice. Investing in stocks involves risk. A stock's past performance is not a reliable indicator of its future performance. Always consult a financial advisor or trusted sources before making any investment decisions.

‍
‍