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Disney’s combined streaming business of Disney+, Hulu, and ESPN+ came close to profitability in the second quarter.
The entertainment giant on Tuesday reported second-quarter revenue of $6.19 billion, including its streaming business, and an operating loss of just $18 million. This operating loss decreased by 97% compared to the same period last year.
Shares fell in midday trading.
Things were looking rosy for Disney’s entertainment streaming businesses, Disney+ and Hulu. CEO Bob Iger said the company “achieved a significant milestone” in the quarter with operating income of $47 million.
Brazil – 2023/07/13: In this photo illustration, the Disney+ logo can be seen displayed on a smartphone. (Photo illustration by Rafael Henrique/SOPA Images/LightRocket, Getty Images) (Rafael Enrique/SOPA Images/LightRocket via Getty Images/Getty Images)
“This is especially noteworthy given that the company reported its peak loss just 18 months ago,” Iger said in a statement.
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Iger noted that Disney’s path to streaming revenue is “not linear.”
“While we expect a soft third quarter primarily due to the seasonality of sports products in India, we fully expect streaming to be a growth driver for the company in the future. We have prioritized the necessary measures to achieve this,” he added.
An attendee is seen in the Disney+ logo at the Walt Disney D23 Expo on September 9, 2022 in Anaheim, California. (Patrick T. Fallon/AFP via Getty Images/Getty Images)
Both Mr. Iger and Chief Financial Officer Hugh Johnston said Disney’s integrated streaming business returned to profitability in the fourth quarter and expects “further improvement in profitability” in the next year. Executives at the entertainment giant have said for some time that its streaming service, which currently has a total of 228.6 million subscribers, would reach that milestone in 2024.
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The company has several streaming initiatives underway.
As for Disney+, Iger said the company has begun cracking down on subscribers who lend their accounts to non-household members and plans to roll out a global password crackdown “in earnest” in September. The streaming service will also begin offering his ESPN tile within the platform in the US “by the end of this year.”
The addition of ESPN content to Disney+ comes after Disney already included a “Hulu on Disney+” feature for bundle subscribers in the U.S. in late March. Iger said the company was “encouraged by the early results” of Hulu Tiles.
Disney Chief Executive Officer Bob Iger and Chief Financial Officer Hugh Johnston said Disney’s overall streaming business was profitable in the fourth quarter and that they expect to see “further profitability in the coming year.” “Improvements are expected,” he said. ((Photo credit: Charley Gallay / Getty Images for Disney) / Getty Images)
Disney has previously said it envisions its streaming business eventually achieving double-digit profit margins.
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Speaking to analysts and investors during an earnings call Tuesday morning, Johnston did not provide a specific timeline for achieving the goal. Rather, he said, the streaming business is “doing great and we’re happy with our growth prospects.”
Overall, Disney earned $22.08 billion in the second quarter, up from $21.82 billion in the year-ago period but below Wall Street expectations.
The company reported adjusted earnings per share of $1.21, excluding certain items, exceeding expectations of $1.10.
