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Disney Earnings: Bob Iger Prepares to Fend Off Activists as Streaming Finances Improve

The Walt Disney Co. reaffirmed that its streaming business will be profitable this summer (its fiscal fourth quarter), as losses narrowed in the division thanks to higher revenue per user and efforts to control costs.

In a critical quarter for the company, which is facing proxy fights with a pair of activist investors (Nelson Peltz’s Trian Partners and Jason Aintabi’s Blackwells), Disney said that its streaming business lost $216 million in the quarter, including sports, down from $387 million last quarter, and from more than $1 billion a year ago.

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The company said that subscribers at core Disney+ fell slightly by 1.3 million, chalking up the adjustment to the price hike in the quarter (as it told analysts to expect in the fall). However, it expects subscribers to surge in its next quarter to 5.5 million to 6 million. The company saw its average revenue per user (ARPU) improve thanks to the price hike and better performance from the ad-supported tier of Disney+. Hulu saw its subscriber base rise by 1.2 million.

On the earnings call, Disney CEO Bob Iger, in what will likely be his biggest platform to send a message to Wall Street ahead of the company’s annual meeting in April, announced a slew of projects and deals, including a partnership and $1.5 billion investment in Epic Games that will bring Disney franchise IP to the Fortnite universe; a surprise Moana sequel, which will hit theaters this year; a deal to bring Taylor Swift’s Era’s Tour movie to Disney+ next month; and a fall 2025 launch date for ESPN’s direct-to-consumer flagship service.

Overall revenue was $23.5 billion, even from a year ago, but in a Wall Street beat, diluted earnings per share increased to $1.22, and operating income of $3.9 billion.

In its entertainment division, revenues were $10 billion, with operating income of $874 million. In sports, revenues were $4.8 billion with operating losses of $103 million. In experiences, revenue was $9.1 billion and operating income was $3.1 billion.

Iger addressed the parks and experiences business on the call, telling analysts that the company expects to expand in all of its current physical locations, as well as in its cruise line.

The company also announced a significant hike to its dividend, and a $3 billion share repurchase program. And it delivered guidance, telling investors that 2024 EPS will improve by 20 percent, and that free cash flow will be $8 billion for the year.

Disney earnings rose after the bell thanks to the beat and the flurry of announcements, though the activists do not seem swayed.

In a statement, a Trian spokesperson said “it’s déjà vu all over again. We saw this movie last year and we didn’t like the ending.”

In streaming, Disney CFO Hugh Johnston said on the call that the goal is to have double digit margins, comparable to Netflix, and that the company will embark on its password sharing crackdown later this year.

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