Disney surprises with streaming profit, raises earnings forecast

Walt Disney's streaming entertainment division achieved profitability ahead of schedule, marking a major milestone for the media giant. The company announced its first-ever profit for the streaming unit, prompting an upward revision of its annual earnings per share outlook.

Disney now expects 25 per cent increase in adjusted earnings per share for the fiscal year, up from the previously forecasted 20 per cent. This positive adjustment is attributed to robust performance in theme parks and notable improvements in the streaming business.

The direct-to-consumer entertainment segment, encompassing Disney+ and Hulu, reported operating income of $47 million for the period spanning January through March. This achievement comes earlier than expected, as Disney had aimed to achieve profitability in streaming by September.

Chief Executive Bob Iger hailed the company's strong performance, declaring it the beginning of a new era for Disney. He stressed on the steps taken to solidify Disney's position as a global content powerhouse.

Disney, like its peers, has been navigating the shift in consumer preferences from traditional cable television to streaming platforms. Under Iger's leadership, the company implemented cost-cutting measures and unveiled significant investments in theme parks and streaming initiatives.

The streaming unit's earlier-than-expected profitability was driven by aggressive cost management, according to Chief Financial Officer Hugh Johnston. Despite incurring costs related to streaming cricket, the unit is expected to return to profitability in the following quarter.

Disney+ witnessed an increase of over 6 million subscribers during the quarter, contributing to a rise in average revenue per user. Additionally, the company highlighted the potential of its combined streaming unit, including ESPN+, as a meaningful growth driver in the future.

Overall, Disney reported diluted earnings per share of $1.21, surpassing analyst expectations, with quarterly revenue reaching $22.1 billion. The company's experiences division, encompassing Disney theme parks, reported a 12 per cent increase in operating income.

Disney's entertainment segment, which includes traditional TV, streaming, and film, saw a significant rise in operating income. However, the sports unit, including ESPN, experienced a slight decline attributed to the timing of college football playoff games.

(With Reuters inputs)