Disney's Fiscal Q3 Sees Varied Results Amid Streaming Challenges and Overhaul Costs

In its fiscal third quarter, Disney encountered a mix of outcomes, as it grappled with ongoing issues in its streaming sector and substantial restructuring expenses linked to the removal of content from its platforms.

Substantial subscriber attrition persisted throughout the past quarter, with the corporation disclosing a count of 146.1 million Disney+ subscribers, marking a 7.4% reduction from the preceding quarter. This loss exceeded projections from Wall Street and raised concerns.

Disney+ Hotstar bore the brunt of the subscriber downturn, experiencing a notable 24% dip in its user base. This decline was precipitated by the forfeiture of rights to broadcast Indian Premier League cricket matches, impacting the platform's appeal.

In response to dwindling user figures and declining revenue within its media and entertainment distribution segment, Disney unveiled plans to implement a price hike on its ad-free streaming tier, set to take effect in October. Additionally, the company declared a heightened focus on curbing password sharing, following a similar move by streaming competitor Netflix earlier in the year.

The stock market responded positively to the streaming-related announcements, with Disney shares gaining 4% in extended trading on the day of the announcement.

CEO Bob Iger articulated his forward-looking perspective during the company's earnings call, emphasizing three core business areas poised to drive growth and value creation in the upcoming five-year period: film studios, the parks division, and streaming. Iger highlighted the interconnectedness of these sectors with Disney's renowned brands and franchises.

Key figures from Disney's report include:

Adjusted EPS of $1.03 per share, surpassing the Refinitiv consensus survey estimate of 95 cents per share.

Revenue of $22.33 billion, falling slightly short of the Refinitiv projection of $22.5 billion.

Disney+ total subscriptions totaling 146.1 million, below the StreetAccount forecast of 151.1 million.

The fiscal quarter also saw Disney grapple with substantial one-time charges and impairments amounting to $2.65 billion. The majority of these expenses were classified as "content impairments," associated with the withdrawal of content from streaming platforms and the termination of third-party licensing agreements.

The company's balance sheet reflected a rare quarterly net loss of $460 million, equivalent to 25 cents per share, for the period ending on July 1. This contrasted with a net income of $1.41 billion, or 77 cents per share, recorded during the corresponding period the previous year. Excluding the impact of impairments, Disney reported an adjusted earnings per share of $1.03.

Overall revenue experienced a modest uptick of 4% to reach $22.33 billion, slightly below the Wall Street prediction of $22.5 billion. The quarter's results underscored the intricate challenges and transformations Disney is navigating within its evolving media landscape.