Streaming subscription lower than expected, profit outlook weak, Disney's stock price opens down 8% | Jianwen Financial Report

The financial report for the second quarter of the fiscal year 2024 released by Walt Disney Company on May 7 showed that the subscription numbers for its streaming service "Disney+" were lower than analysts' expectations, and the full-year profit outlook was also below expectations.

According to the disclosed financial data, Disney has raised its full-year profit growth forecast from 20% to 25%, but analysts originally expected a growth of 25.5%. In the three months ending on March 30, the total number of "Disney+" subscribers was 153.6 million, below Wall Street's expectation of 155.66 million.

As a result, Disney's stock price fell over 8% at the opening.

However, it is worth noting that despite the lower-than-expected streaming subscription numbers, the rest of Disney's performance was strong.

In the current quarter, Disney's adjusted earnings per share (excluding some special items) rose to $1.21, exceeding the average analyst expectation of $1.12. The revenue for the first quarter of this year was $22.08 billion, a year-on-year increase of 1.2%, slightly below analysts' expectation of $22.1 billion.

Media reports quoted Disney's Chief Financial Officer Hugh Johnston as saying that this was a "strong quarter for us," and highlighted the strong growth in the company's experiences division. The Disney division, which includes theme parks, saw a profit increase of 12%, and the loss in the streaming business decreased from $659 million last year to $18 million.

The financial data shows that Disney's theme park division had a second-quarter revenue of $2.29 billion, mainly driven by strong performance in international markets (especially Hong Kong). In the domestic market of the United States, Disney's cruise line and Disney World Resort in Florida saw revenue growth, but the performance of Disneyland in California was poor due to rising costs.

Johnston stated that due to new expenses such as new cruise ships, the profit for the theme park division in the third quarter is expected to remain flat, and then resume growth later this year.

The direct-to-consumer entertainment business segment of Disney, which includes the streaming business (Disney+ and Hulu, but not ESPN+), saw revenue growth outpacing the increase in programming and marketing costs, achieving a profit of $47 million.

Johnston said, "Due to costs being lower than expected, we achieved profitability earlier than expected." However, Johnston also mentioned that due to the provision of costs related to Indian cricket, the streaming business performance in the third quarter will be softer, but the company still expects the entire streaming business to be profitable in the fourth quarter.

Due to last year's double strike by writers and actors, Disney did not release any new theatrical films this quarter. Disney's CEO Bob Iger is currently trying to rejuvenate one of Disney's flagship businesses, the film business, by delaying the release of some movies to focus on film quality The department including the film studio incurred a loss of $18 million this quarter, with a 40% decrease in sales.

Traditional TV networks used to be Disney's growth engine, but this quarter saw weak performance. The department including the American Broadcasting Company (ABC), Disney Channel, and other TV stations experienced an 8% decrease in sales to $2.77 billion. Due to a decline in advertising revenue and a decrease in cable TV subscribers, profits fell by 22% to $752 million.

The sports department (including ESPN and related networks) saw a 2% increase in sales to $4.31 billion, with profits decreasing by 2% to $778 million, partly due to the rise in domestic broadcast rights fees in the United States