Walt Disney Co.’s broadcast service, Disney +, once again proved to be a great advantage during a pandemic that has nearly shut down the rest of Magic Kingdom’s business. And that caused Disney shares to rise 2% on Thursday after off-hours trading.
An increase in Disney + subscriptions, to 94.9 million, led to a rise in revenue over the previous quarter, as the media giant continues to double direct sales to the consumer.
Disney DIS,
reported a surprise first-quarter tax profit of $ 17 million, or 2 cents per share, on sales of $ 16.25 billion, up from $ 15.8 billion in the previous quarter.
After adjusting for restructuring expenses and other effects, Disney reported earnings of 32 cents per share, down from $ 1.53 per share in the previous year’s quarter. According to FactSet, analysts expect on average that Disney will report an adjusted loss of 34 cents per share on sales of $ 15.9 billion.
“We believe the strategic actions we are taking to transform our company will drive our growth and increase shareholder value, as evidenced by the incredible advances we have made in our DTC business, reaching over 146 million paid subscriptions in total to our broadcast services at the end of the quarter, ”Disney chief executive Bob Chapek said in a statement announcing the results.
“Disney + has exceeded even our highest expectations,” Chapek said in a conference call with analysts later, noting that it stood at 26.5 million subscribers in the same quarter last year. He also noted usage increases for ESPN + (an 83% increase, to 12.1 million) and Hulu (a 30% increase, to 35.4 million).
Disney’s Media and Entertainment Distribution, which includes Disney +, reported $ 12.6 billion for the quarter, down 5% from the same quarter last year before the pandemic swept across the country. Disney’s parks, experiences and products unit earned $ 3.6 billion, 53% less than the previous year, as many Disney parks remain closed.
The sustained strength of Disney + has impressed Wall Street analysts despite stiff competition from Apple Inc.’s AAPL.
Apple TV +, Netflix Inc. NFLX,
T from AT&T Inc.,
HBO Max, CMCSA of Comcast Corp.,
Peacock, AMZN of Amazon.com Inc.,
Prime Video and others.
“Disney + has been a massive success and is a testament to Disney’s brand equity and experience in storytelling,” said Eric Haggstrom, eMarketer forecast analyst. “This has been one of the most successful consumer product launches in recent memory. In the future, Disney will continue to grow its broadcasting business, while its parks, television and cinema will benefit and recover quickly as a result of increased vaccination and accumulated mass demand.
Because Disney is investing heavily in its streaming business (it plans to plow between $ 14 billion and $ 16 billion in all of its services by 2024), it is not expected to be profitable until at least 2023. Disney + is expected to get more income in March, when the monthly fee increases from 1 to 7.99 dollars in the US and from 2 euros to 8.99 euros per month in Europe.
The growth of subscribers to Disney +, ESPN +, Hulu and Hotstar remains the main focus, and for good reason. During the December 10 investment day, Disney management indicated that these services could reach about 350 million subscribers by 2024.
Shares of Disney have improved more than 35% in the past year, including 24% since its investor day in December. The Dow Jones Industrial Average DJIA,
– which has Disney as a component – has advanced 7% over the past year.