By Lisa Richwine
LOS ANGELES (Reuters) – Walt Disney’s streaming entertainment unit reported its first profit on Tuesday, two quarters ahead of schedule, and the media company raised its annual earnings per share outlook, saying its efforts to recovery bore fruit.
The company’s shares were down 1.4% premarket.
Disney now expects adjusted earnings per share to increase 25% this fiscal year, the company said, up from 20% previously forecast. He attributed the change to strong theme park results and improvements in the streaming industry.
The direct-to-consumer entertainment division – which includes streaming services Disney+ and Hulu – reported operating profit of $47 million from January to March.
Disney had promised Wall Street that the streaming operation would become profitable by September. The division had been losing money since Disney+’s debut in 2019 as part of the company’s major efforts to compete with Netflix.
“Our strong performance over the past quarter demonstrates that we have turned a corner and entered a new era for our company,” CEO Bob Iger, who overcame challenges from the company’s board of directors, said in a statement. activist investors last month.
“The steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content,” Iger added.
Like other media companies, Disney has attempted to adapt to the consumer migration from cable television to streaming entertainment.
Iger, who came out of retirement to revamp Disney in November 2022, has instituted cost cuts that are expected to reach at least $7.5 billion by the end of September. He also unveiled a 10-year, $60 billion investment in theme parks and announced plans for a standalone ESPN streaming app, among other efforts.
The faster-than-expected profit from streaming entertainment is due to aggressive cost management, Chief Financial Officer Hugh Johnston said in an interview. A year ago, the streaming unit lost $587 million.
Disney+ added more than 6 million customers during the quarter and average revenue per user increased 44 cents, outside of India. Disney offers a cheaper package in India that counts separately.
Due to the costs of streaming cricket, streaming entertainment will likely post a loss for the current quarter but return to a profit in the following period, Johnston said.
Disney also reports results from a combined streaming unit, including ESPN+. The combined unit is expected to generate a profit in the fourth quarter and become “a significant future growth engine for the company, with further improvements in profitability for fiscal 2025,” Disney said in its earnings release.
From January to March, the combined streaming business with ESPN+ lost $18 million.
During that period, Mouse House posted diluted earnings per share, excluding certain items, of $1.21, above analysts’ consensus estimate of $1.10, according to LSEG data. Quarterly revenue reached $22.1 billion, in line with analysts’ forecasts…
