Los Angeles, California – Disney announced on Tuesday that its streaming business has finally turned a profit, marking a significant milestone. However, the company also projected weaker results in this segment for the current quarter, causing its stock to drop nearly 10% in early trading. This forecast underscores the challenges Disney faces in maintaining profitability in streaming, especially as its traditional TV business declines.
Under the leadership of CEO Bob Iger, Disney has implemented a recent turnaround plan that has garnered positive attention from investors. The company recently emerged victorious in a high-profile proxy fight against activist investor Nelson Peltz. In the fiscal second quarter, the direct-to-consumer (DTC) segment, which includes Disney+ and Hulu, reported operating income of $47 million compared to a loss of $587 million in the previous year.
While not all of Disney’s streaming services were profitable in Q2, the total direct-to-consumer losses decreased significantly from the year before, giving hope for full streaming profitability by the fourth quarter. Adjusted earnings for the quarter beat analysts’ expectations, and revenue also met consensus figures. However, Disney did face challenges after merging its Star India business with Reliance Industries, resulting in an impairment charge of more than $2 billion.
Disney’s Parks business saw a surge in domestic operating income, with theme parks like Walt Disney World Resort and Disney Cruise Line driving profits upward. However, operating income at ESPN fell due to lower affiliate revenue and decreased subscribership. The company is making strategic moves in the sports streaming arena, including a partnership with Fox and Warner Bros. Discovery, and plans to launch a standalone ESPN streaming platform in 2025.
Overall, Disney’s performance in the streaming and parks businesses in the second quarter showcased both successes and challenges. As the company navigates the evolving landscape of entertainment and media, it continues to make strategic moves to ensure sustained growth and profitability.