Walt Disney’s fourth quarter earnings exceeded Wall Street expectations. This was mainly due to the success of Marvel’s Deadpool and Wolverine, which is Marvel’s latest blockbuster summer film.
Disney’s Film Division saw a huge revenue increase from the R-rated superhero movie. Its unique style and approach not only appealed to global audiences, but it also attracted a wide audience.
Disney’s performance at the box office helped to counteract challenges that other divisions faced, including the Experiences and Sports unit.
Disney is optimistic about the fiscal year ahead, despite the fact that the adjusted earnings per share for the third quarter ended in September exceeded analysts’ expectations of $1.10 by $1.14.
In premarket trading, shares of the company rose over 10% on Thursday.
Disney is driven by film success
Disney’s revenues for the third quarter reached $22.6 billion. This was slightly higher than Wall Street’s prediction of $22.45 Billion.
The financial boom was fueled by the strong sales of Deadpool & Wolverine. This film grossed a staggering $1.3 billion worldwide, making it the first R-rated Marvel movie to do so.
The return of Hulu’s Emmy nominated comedy only Murders in Building also contributed to this success, as it continued to attract substantial viewing on streaming.
Disney’s entertainment segment (film, TV, streaming) posted an operating income increase of 23% over the previous year, reaching almost $3.7 billion.
Disney+ subscribers climb
Disney+’s streaming service saw a growth in subscribers of over 4.4 millions outside India. This brings the international base up to 122.7 million.
Disney+, Hulu and ESPN+ are all streaming services. They generated $321 millions in profit during the third quarter. This is the second quarter that the streaming units have been profitable.
Disney intensified its efforts in September to reduce password sharing, as part of a new strategy to increase revenue.
Theme park revenues are affected by lower attendance
Operating income for the Experiences segment (which includes parks and consumer goods) dropped by 6% to $1.66 Billion.
The international parks have been impacted by a decline of 32% in their operating income. This is attributed to the rising cost from new attractions, and an increase in competition.
While domestic theme parks were relatively stable in terms of attendance, the performance was affected by fluctuations.
ESPN faces challenges due to rising production costs
Disney’s Sports Segment, which includes ESPN and Star India, posted an operating loss of 5% to $929 millions.
ESPN was facing increased production and programming costs, particularly around college football broadcasts.
Disney Sports Media’s profitability is lower than expected due to higher costs. These increased costs have partially offset growth in its broadcasting agreements.
Star India was also affected by the local competition, and increased costs. This had an impact on overall profits within this division.
Disney predicts a high-single-digit growth of EPS in 2025
Disney’s outlook remains positive for the fiscal year 2025, with a projected high-single-digit increase in adjusted earnings despite capital expenditures expected to be around $8 billion.
Disney has announced a plan to buy back $3 billion worth of shares, in order to stabilize the stock and provide value for shareholders over time.
Disney, in a move designed to boost confidence, also predicted double-digit growth of EPS through 2026-2027. This highlights the power of Disney’s multi-year strategies.
Bob Iger, the returning CEO of Disney, has been focused on cost cutting measures and streamlining Disney operations.
Iger, who assumed his new role on November 20, 2022, has been leading initiatives to revive Disney’s television and film output after a period of volatility.
Disney’s recent success in film shows the effectiveness of this strategy, which positions the company to sustain growth in the core revenue-driving industries.
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