Disney+ Adds 14.4M Subscribers To 152.1M, Beating Forecasts; Revenue, Earnings Buoyed By Parks

·3 min read

Disney+ added 14..4 million subscribers, smashing past expectations for an add of about 10 million. DTC subs all in totaled 221 million for the company’s fiscal third quarter ended in June. The stock is up 6%.

Revenue and earnings also beat, driven by parks.

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“We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services. With 14.4 million Disney+ subscribers added in the fiscal third quarter, we now have 221 million total subscriptions across our streaming offerings,” said CEO Bob Chapek. “We continue to transform entertainment as we near our second century, with compelling new storytelling across our many platforms and unique immersive physical experiences that exceed guest expectations, all of which are reflected in our strong operating results this quarter.”

Revenue jumped 26% to $21.5 billion. Diluted EPS excluding certain items rose to $1.09 from 80 cents a share, both beating the Street.

Disney lumps its sprawling businesses into two main categories. The bigger from a revenue standpoint, Media and Entertainment, saw sales grow 11% to $14.1 billion. Operating income dropped 32% to $1.38 billion. Linear networks revenue and profit rose. Cable advertising rose, broadcast advertising fell. Affiliate revenue was up for both.

Direct to consumer, bundled in here, saw revenue gain 19% but losses balloon to over $1 billion from $293 million — the red ink due to higher programming, production, technology and marketing costs. Higher subscription revenue came from more subs and higher prices. Costs were also higher at Hulu and ESPN+

Content sales, licensing and other revenue — where theatrical lives – rose 26%, but swung to a loss of $27 million from a $132 million the year before. Theatrical distribution was driven by Dr. Strange in the Multiverse of Madness. Releases for the quarter also included Lightyear and The Bob’s Burger Movie.

In Disney Parks, Experiences and Products, revenue surged 70% to nearly $7.4 billion. Operating income of $2.1 billion surged from $356 million. Domestic parks drove the numbers higher. Guests are spending more per capital on tickets, food and hotels boosted in part by new services like Genie+ Lightening Lane. Comps were still easier year-on-year as Disneyland Resort wasn’t open for the full three months last year and Disney World was at at reduced capacity.

Disneyland Paris is growing. Shanghai was only open for three days in the latest quarter. Cruise ships are back — the company just launched a new one.

Chapek and CFO Christine McCarthy touched on the loss of India Premier League cricket, subscriber and profitability targets for Disney+ as well as upcoming programming and U.S. sports, including interest in a renewal with the NBA.

Chapek’s contract was recently renewed through 2024, eliminating some uncertainty around leadership but ratcheting up pressure for him to guide Disney forward smoothly after a serious of PR missteps in a complicated economic, political and media landscape.

The broader view of streaming has shifted as Netflix’ woes shook Wall Street into looking way more closely at streaming – namely at very high content costs and an uncertain path to growth and profitability. The newly minted Warner Bros. CEO David Zaslav last week was clear that WBD strategy is not about “overpaying and overspending” to drive subscriber growth at any cost — a mantra that is catching on.

Disney will be spending about $30 billion in content this fiscal year and for the next few,

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