Disney (DIS) is set to report its fiscal third-quarter earnings before the bell on Wednesday as it aims to achieve sustainable profitability in its streaming division and stabilize demand within its parks business.
Recently, Disney adjusted its reporting structure following CEO Bob Iger’s reorganization of the company into three core business segments: Disney Entertainment, which includes its entire media and streaming portfolio; Experiences, encompassing the parks business; and Sports, including ESPN networks and ESPN+.
Over the past year, Disney has faced several challenges, including a declining linear TV business, slower growth in its parks segment, and profitability issues in streaming. In response, CEO Bob Iger has implemented an aggressive turnaround plan and recently won a high-profile proxy fight against activist investor Nelson Peltz. Despite these efforts, investor sentiment has been cautious, with Disney shares falling more than 20% over the last three months.
Here are Wall Street’s expectations for Disney’s performance, according to consensus estimates compiled by Bloomberg:
– Total revenue: $23.08 billion versus $22.33 billion in Q3 2023
– Adjusted earnings per share: $1.19 versus $1.03 in Q3 2023
– Entertainment revenue: $10.37 billion
– Sports revenue: $4.40 billion
– Experiences revenue: $8.61 billion
– Disney+ subscribers: 154.55 million versus 146.10 million in Q3 2023
Investors will closely watch the guidance after last quarter’s disappointing forecast raised concerns about the company’s long-term outlook. In May, Disney reported that an important part of its streaming business turned a profit for the first time but projected weaker results in that segment for the third quarter, highlighting the challenges in achieving sustainable streaming profitability amid a declining linear TV business.
On Tuesday, Disney announced upcoming price hikes for its streaming services. The monthly cost of the Disney+ ad-supported tier will increase by $2 to $9.99, while the ad-free version will rise by $2 to $15.99. Hulu’s ad-supported tier will also go up by $2 to $9.99 per month, with the ad-free version increasing by $1 to $18.99. The Disney Bundle, which includes ad-supported tiers of Disney+ and Hulu, will be priced at $10.99 per month, up $1 from its previous price, offering a more attractive option compared to individual plans.
These price changes will take effect on October 17. Disney anticipates achieving full streaming profitability by the fourth quarter of this year.
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