Disney’s Fiscal Fourth Quarter Earnings Soar
Strong Performance Driven by Direct-to-Consumer Business
Disney’s fiscal fourth quarter earnings report has sent shockwaves through the market, with the media giant’s adjusted earnings per share and revenue surpassing Wall Street estimates. The company’s direct-to-consumer (DTC) business, which includes Disney+, Hulu, and ESPN+, has been a key driver of this success, swinging to a profit and posting operating income of $321 million.
Revenue Beats Expectations
Disney’s revenue for the quarter came in at $22.57 billion, outpacing consensus expectations of $22.47 billion and the $21.24 billion reported in the prior-year period. This impressive performance has led to a significant jump in the company’s stock price, with shares rising almost 10% in premarket trading.
Direct-to-Consumer Business Thrives
The DTC segment’s operating income of $321 million marks a significant turnaround from the loss of $387 million reported in the prior-year period. This achievement is critical for Disney and other media companies, as they navigate the shift towards direct-to-consumer services and away from traditional pay-TV packages.
Price Hikes and Profitability
In mid-October, Disney hiked the prices of its subscription plans, a trend that has gained traction over the past year. This move is aimed at boosting margins on DTC offerings in the face of declining linear television revenue. The company expects DTC operating income to reach approximately $875 million in fiscal 2025.
CEO Search and Industry Challenges
As Disney searches for a successor to current CEO Bob Iger, the company faces several challenges, including a potential slowdown in its theme parks business. Revenue for the parks division rose 1% year over year, but operating income fell short of expectations. The company cited weak results overseas, driven by a decline in attendance and guest spending.
Bright Spots and Future Outlook
Despite these challenges, Disney’s domestic operating income rose 5% compared to the prior-year period, reversing previous declines. The company expects “high single-digit” adjusted EPS growth in 2025, beating estimates, and anticipates double-digit earnings growth in 2026 and 2027. In 2025, Disney is also targeting $3 billion in stock repurchases and “dividend growth that tracks our earnings growth.”
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