Disney warned during its fiscal fourth-quarter report in November that it expected a “modest decline” in subscriptions during the December period.
Disney posted fiscal first-quarter earnings Wednesday that beat on the top and bottom lines, but revealed the beginnings of expected streaming subscriber losses at Disney+.
The company’s streaming business reported another quarter of profitability despite a 1% decline in subscribers for Disney+, the company’s flagship service. While domestic subscriptions for the platform increased around 1%, international numbers declined around 2%.
Disney warned during its fiscal fourth-quarter report in November that it expected a “modest decline” in subscriptions during the December period. Disney told investors Wednesday that it expects another “modest decline” in subscribers during the second quarter.
Total paid Disney+ subscriptions stand at 124.6 million, compared to 125.3 million at the end of the company’s fiscal fourth quarter.Total Hulu subscriptions rose 3% during the period to 53.6 million.
The slowdown in streaming subscriber growth follows an increase in prices for its services last year. Disney+’s average monthly revenue per paid subscriber increased roughly 4% to $7.99 due to those price hikes, the company said.
Disney’s stock was up about 2% in premarket trading.
Here is what Disney reported for the period ended December 28 compared with what Wall Street expected, according to LSEG
- Earnings per share: $1.76 adjusted vs. $1.45 expected
- Revenue: $24.69 billion vs. $24.62 billion
Disney’s net income increased nearly 23% to $2.64 billion, or $1.40 per share, from $2.15 billion or $1.04 per share, during the same quarter last year. Adjusting for one-time items including restructuring charges and impairments related to intangible Hulu assets, Disney reported adjusted earnings of $1.76 per share.
Revenue increased 4.8% to $24.69 billion compared to $23.55 billion in the year-earlier period.
The company saw revenue gains across the board for its entertainment, sports and experience segments.
Its entertainment division saw a 9% jump in revenue, reaching $10.87 billion. Operating income for the unit, which includes its direct-to-consumer, linear and content sales businesses, increased 95% to $1.7 billion during the quarter thanks to higher content sales and licensing. Linear continued to drag on overall results.
Still, CEO Bob Iger remained positive on Wednesday’s call with investors when it came to the linear TV business, echoing similar comments made in November’s earnings call.
“They are not a burden at all. They are actually an asset,” Iger said Wednesday, noting that Disney is programming and funding the networks so they can feed into streaming.
While he said he wouldn’t rule out the possibility of changes to the TV networks in the future, he said that wouldn’t be now.
“We actually feel good about the hand that we have and the manner in which we’re managing both the linear and streaming businesses across the board,” Iger said.
Disney’s box office success helped lift the company’s results during the quarter.
The debut of “Moana 2” over Thanksgiving weekend helped push the box office to new heights. The animated sequel was still going strong at the box office through the new year, topping $1 billion during the Martin Luther King Jr. Day weekend. The company noted Wednesday its content sales/licensing and other operating income got a boost from “Moana 2.”
Overall, Disney dominated the box office in 2024, with the help of other films like Marvel’s “Deadpool & Wolverine” and Pixar’s “Inside Out 2.”