Disney Increases Cost-Cutting Goal to $7.5 Billion as Subscriber Numbers Soar

Disney (DIS) has reported fiscal Q4 earnings, surpassing expectations as it increases its annual cost-cutting goal to $7.5 billion, much higher than the previous $5.5 billion set in February. This includes a raised annualized cut to content spending, now at $4.5 billion, up from the prior $3 billion.

The company’s streaming figures were much stronger than expected with almost 7 million core Disney+ net additions, comparing to the consensus calls of 2.68 million.

Streaming losses narrowed to $387 million from a loss of $1.41 billion in the previous year period after the company raised streaming prices for the second time in 2023, increasing the monthly price of its ad-free Disney+ and Hulu plans by over 20%.

Analysts were expecting direct-to-consumer losses to mount to $454 million in the quarter. The company previously reported a loss of $512 million in Q3, and $659 million in Q2, as well as $1.1 billion in Q1.

Following the official reveal of Disney’s next CFO and commitment to purchase Comcast’s 33% stake in Hulu, shares climbed more than 3% in after-hours trading.

“We continue to expect that our combined streaming businesses will reach profitability in Q4 of FY24,” the company said in the release.

Adjusted earnings of $0.82 a share surpassed expectations of $0.69 per share, and was more than double the earnings per share of $0.30 from the prior year period. Despite slightly missing revenue estimates, the revenue still hit $21.24 billion, up 5% compared to the previous year quarter’s $20.15 billion.

Disney has also recently reorganized the company into three core business segments, leading to Wednesday’s results, which marks the first time the company delivered earnings under its new reporting structure.

Disney’s stock has been struggling, with shares hitting a nine-year low last month, and activist investor Nelson Peltz launching an attack on the media giant.

CEO Bob Iger said in an interview with CNBC that an integrated Hulu and Disney+ app will launch in March 2024, and that ESPN will transition to streaming no later than 2025.

CEO of The Walt Disney Company Bob Iger arrives for the screening of the film
CEO of The Walt Disney Company Bob Iger arrives for the screening of the film

CEO of The Walt Disney Company Bob Iger arrives for the screening of the film “Indiana Jones and the Dial of Destiny” during the 76th edition of the Cannes Film Festival in Cannes, southern France, on May 18, 2023. (LOIC VENANCE/AFP via Getty Images) (LOIC VENANCE via Getty Images)

The company is currently seeking strategic partners for ESPN to launch a new direct-to-consumer service, with ESPN generating an operating income of $953 in the quarter, up 15% compared to the prior year, largely driven by its domestic business.

The company credited higher domestic ESPN operating results to a decrease in programming and production costs, growth in ESPN+ subscription revenue due to price increases and subscriber gains, a modest increase in advertising revenue, and a decrease in affiliate revenue amid a Charter dispute in September.

Disney’s Experiences division saw revenue leap 13% year-over-year in the quarter to hit $8.16 billion. Operating income came in at $1.76 billion, below estimates of $1.87 billion but 30% above Q4 2022’s $1.34 billion total.

The company said lower results at its domestic parks and resorts stemmed from a decrease at Walt Disney World Resort due to inflation and lower guest spending.

Disney plans to invest $60 billion into its theme parks business over the next 10 years. Most of its full-year 2024 domestic parks growth will be in the second half of the year, the company said.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at [email protected].

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