Walt Disney Co.’s streaming service, Disney +, once again proved to be a major advantage during a pandemic that practically closed the other Magic Kingdom businesses. And that caused Disney shares to rise 2% in after-hours trading on Thursday.
An increase in Disney + subscriptions, to 94.9 million, led to a recovery in revenue compared to the previous quarter, as the media giant continues to double direct sales to consumers.
Disney DIS,
reported a surprising tax profit of $ 17 million, or 2 cents per share, on sales of $ 16.25 billion, up from $ 15.8 billion in the same quarter a year ago.
After adjusting restructuring charges and other effects, Disney reported earnings of 32 cents per share, down from $ 1.53 per share in the same quarter a year ago. Analysts, on average, expected Disney to post an adjusted loss of 34 cents per share on sales of $ 15.9 billion, according to FactSet.
“We believe that the strategic actions we are taking to transform our company will fuel our growth and increase shareholder value, as demonstrated by the incredible advances we have made in our DTC business, reaching more than 146 million paid subscriptions to our streaming services at the end of the quarter, ”said Disney Chief Executive Bob Chapek in a statement announcing the results.
“Disney + exceeded even our highest expectations,” Chapek said in a conference call with analysts later, noting that it had 26.5 million subscribers in the same quarter last year. He also noted spikes in the use of ESPN + (83% increase to 12.1 million) and Hulu (30% increase to 35.4 million).
Disney’s media and entertainment distribution, which includes Disney +, raised $ 12.66 billion in the quarter, down 5% from the same quarter a year ago, before the pandemic spread across the country. The Disney Parks, Experiences and Products unit raised $ 3.6 billion, down 53% year on year, as many Disney parks and its cruise line remain closed.
The sustained strength of Disney + impressed Wall Street analysts, despite the stiff competition from AAPL from Apple Inc.,
Apple TV +, Netflix Inc. NFLX,
AT&T Inc.’s T,
HBO Max, CMCSA of Comcast Corp.,
Peacock, AMZN of Amazon.com Inc.,
Main video and others.
“Disney + has been a huge success and is a testament to the Disney brand value and storytelling experience,” said Eric Haggstrom, forecast analyst at eMarketer. “This was one of the most successful consumer product launches in recent memory. Moving forward, Disney will continue to expand its streaming business, while its parks, television and cinema will benefit and recover quickly as a result of increased vaccination and huge pent-up demand. “
Since Disney is investing heavily in its streaming business – it plans to invest $ 14 billion to $ 16 billion in all of its services in 2024 – it is not expected to be profitable until at least 2023. Disney + is expected to generate more revenue in March, when tuition rises from $ 1 to $ 7.99 in the US and 2 euros to 8.99 euros a month in Europe.
Subscriber growth at Disney +, ESPN +, Hulu and Hotstar remains the focus – and for good reason. During the December 10 investor day, Disney management indicated that these services could reach some 350 million subscribers by 2024.
Disney shares improved by more than 35% last year, including 24% since the investor’s day in December. The Dow Jones Industrial Average DJIA,
– which counts on Disney as a component – advanced 7% last year.