Here\u2019s a surprise: Disney\u2019s media business isn\u2019t weighing down the company anymore.<\/p>\n
The primary Disney investor narrative since 2022 has been how streaming losses, combined with a declining traditional pay TV business and a string of box office failures, have been anchoring surging sales and profits at the company\u2019s theme parks and resorts. The result has been a company whose shares have fallen about 24% in the past two years, while the S&P 500 has gained 28% in the same period.<\/p>\n
The company\u2019s second-quarter results suggest a shift is happening. Disney\u2019s combined streaming businesses \u2014 Disney+, Hulu and ESPN+ \u2014 turned a quarterly profit for the first time ever, making $47 million. That\u2019s a significant improvement from losing $512 million in the same quarter a year ago.<\/p>\n
Disney\u2019s theatrical unit is also on a hot streak. \u201cInside Out 2\u201d became the highest-grossing animated film of all time in recent weeks. \u201cDeadpool & Wolverine\u201d has taken in $824 million after two weeks of global release. Disney has become the first studio in 2024 to top $3 billion in worldwide ticket sales.<\/p>\n
Meanwhile, Disney saw a \u201cmoderation of consumer demand towards the end of [fiscal] Q3 that exceeded our previous expectations\u201d for its theme parks division. That caused shares to slump about 3% in early trading.<\/p>\n
Disney Chief Executive Officer Bob Iger said during his company\u2019s earnings conference call that he expects the momentum for the media business will only gain steam. That\u2019s music to the ears of Wall Street, which wants both growth and profitability.<\/p>\n
\u201cWe feel very bullish about the future of this business,\u201d Iger said in reference to streaming. \u201cYou can expect that it\u2019s going to grow nicely in fiscal 2025.\u201d<\/p>\n
Iger referenced a planned crackdown on password sharing, which will begin \u201cin earnest\u201d in September, as a tool that will help generate new subscribers and added revenue for the company. A similar effort from Netflix has helped the world\u2019s largest streamer add new customers during the past year.<\/p>\n
Disney is also raising prices for its streaming services in mid-October. Most plans for Disney+, Hulu and ESPN+ will cost $1 to $2 more per month.<\/p>\n
Iger rattled off a list of movie titles that Disney hasn\u2019t yet released to emphasize the studio\u2019s solid positioning for the rest of 2024 and beyond.<\/p>\n
\u201cLet me just read to you the movies that we\u2019ll be making and releasing in the next almost two years,\u201d Iger said. \u201cWe have \u2018Moana,\u2019 \u2018Mufasa,\u2019 \u2018Captain America,\u2019 \u2018Snow White,\u2019 \u2018Thunderbolts,\u2019 \u2018Fantastic Four,\u2019 \u2018Zootopia,\u2019 \u2018Avatar,\u2019 \u2018Avengers,\u2019 \u2018Mandalorian\u2019 and \u2018Toy Story,\u2019 just to name a few. When you think about not only the potential of those in box office but the potential of those to drive global streaming value, I think there\u2019s a reason to be bullish about where we\u2019re headed.\u201d<\/p>\n
Disney isn\u2019t de-emphasizing the parks. The company said last year it plans to invest $60 billion in its theme parks and cruise lines in the next decade. But it\u2019s undoubtedly healthier for the company to persuade investors that the media units aren\u2019t weighing down the share price.<\/p>\n
Disney shares dropped Wednesday, likely because investors were focused on the parks. The next step is for shares to rise during a quarterly earnings report because investors are excited about the media units.<\/p>\n<\/p>\n
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