Disney’s Direct-to-Consumer Business Soars to New Heights
The media and experiences giant, Disney, has reported a stellar fiscal fourth quarter, surpassing Wall Street estimates with its earnings per share and revenue. The company’s direct-to-consumer (DTC) business has been a key driver of this success, swinging to a profit and posting operating income of $321 million.
Strong Guidance Fuels Investor Optimism
Disney’s strong guidance for the next two years has sent shares soaring over 10% in early trading. The company’s adjusted earnings of $1.14 per share exceeded analyst expectations of $1.10, while revenue came in at $22.57 billion, outpacing consensus estimates of $22.47 billion.
Direct-to-Consumer Streaming Business Takes Center Stage
Disney’s DTC streaming business, which includes Disney+, Hulu, and ESPN+, has been a significant contributor to the company’s success. After reaching its first quarter of streaming profitability in Q3, the business has continued to thrive, with operating income exceeding analyst expectations of $203 million.
A Shift to Direct-to-Consumer Services
As consumers increasingly abandon traditional pay-TV packages for DTC services, achieving consistent profits in streaming has become critical for Disney and other media giants. To boost margins, media companies are hiking prices on their subscription plans, a trend that has gained traction over the past year.
Looking Ahead: Fiscal 2025 and Beyond
Disney expects DTC operating income to reach approximately $875 million in fiscal 2025. The company is also projecting “high single-digit” adjusted EPS growth in 2025, beating estimates of a 4% uptick. Furthermore, earnings growth is expected to reach double digits in 2026 and continue through 2027.
Theme Parks Business Faces Challenges
While Disney’s theme parks business saw revenue rise 1% year over year to reach $8.24 billion, operating income fell short of expectations, dropping 6% compared to the prior year. Weak results overseas, driven by a decline in attendance and guest spending, contributed to this decline. However, domestic operating income rose 5% compared to the prior-year period, reversing previous declines.
New Leadership on the Horizon
As Disney searches for a successor to current CEO Bob Iger, the company faces a changing industry landscape. The next CEO will inherit a range of challenges, including a potential slowdown in the theme parks business. However, with strong guidance and a thriving DTC business, Disney is poised for continued growth and success.
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