Disney Lost $387 Million at Streaming This Summer

Disney+ gained 4.1 million global subscribers in the fourth and final quarter of fiscal 2023 (from an accounting standpoint, Disney’s reporting year ends September 30), which includes a loss of 2.8 million Disney+ Hotstar users. Core Disney+ additions were 6.9 million.

Still: Even the streaming segment’s loss was an overall gain. Direct-to-consumer streaming lost $387 million this summer, an improvement from prior quarters. (Without a helping hand from sports, the Q4 loss was $420 million.) See? Your price hikes are making a difference!

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Disney Chairman and CEO Bob Iger has long targeted 2024 as the year Disney+ would become profitable. He now says that swing will specifically come in its final fiscal quarter. Progress from now until then “may not look linear from quarter to quarter,” the earnings release cautioned.

For this quarter, Disney’s Q4 2023 revenue was $21.2 billion and adjusted earnings per share were 82 cents, both topping market estimates. Free cash flow was $3.4 billion, and with aggressive cost-cutting in the works, Disney says next year’s free cash flow will be “approaching” pre-pandemic levels.

If only ABC and Disney’s cable networks (and the rest of the linear-television ecosystem) weren’t getting killed on advertising.

Disney+ now has 150.2 million total streaming subscriptions (note: not subscribers; there is overlap due to the Disney Bundle). Core Disney+ has 112.6 million subs and Disney+ Hotstar claims the other 37.6 million. Hulu has 48.5 million subscribers and ESPN+ has 26 million.

The June 16 release of “Elemental” initially looked like a bomb but gained some steam this summer at the box office and then on Disney+. (“The Little Mermaid” and “Guardians of the Galaxy Vol. 3.” also made it to Disney+ this summer.)

Ultimately, “Elemental” will not lose money — especially when factoring in its significant streaming value. “Elemental” premiered on Disney+ September 13 and has been tearing up Nielsen’s Top 10 Streaming list ever since.

Most of the theatrical revenue for “Indiana Jones and the Dial of Destiny” was recorded in the summer quarter; that one was a sizable loss. Two more losses, “Haunted Mansion” (July 28) and “A Haunting in Venice” (September 15), were the only Disney theatrical releases during the quarter.

“The Marvels” (November 10) and “Wish” (November 22) should lead Disney’s fiscal first quarter of 2024. That’s when “Loki” Season 2 (October 5) also will be recorded.

In the prior quarter, core Disney+ added 800,000 subscribers. Hotstar really made things look horrible with a loss of 12.5 million subs, a mass exodus mostly due to the India streamer’s loss of IPL cricket rights. It’s not as meaningful as it looks, since Hotstar ARPU (average revenue per user) now stands at 70 cents.

Hulu ARPU at $12.11 is next level, and soon Disney will be the general-entertainment streamer’s sole owner. But first, it must come to an agreed-upon valuation with Comcast, which owns 33 percent of Hulu.

The floor valuation for the service, established years ago, was $27.5 billion. Comcast — somewhat conveniently, somewhat fairly — believes the value has gone way up since then. Separate investment banks hired by both parties are currently working out their own valuations, a process that will take months.

Simultaneously, Disney is seeking partners for its ESPN brand. (Hearst already owns 20 percent.) In doing so, it has steadily revealed more about the group’s financials. Disney plans to take ESPN direct to consumers on a much larger scale than what we’ve seen with ESPN+.

Wednesday was a busy day of earnings in the media space. The other prominent company to report was Warner Bros. Discovery; read those results here.

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