Disney Earnings Boosted by ‘Moana 2,’ Disney+ Loses 700,000 Subscribers as Streaming Business Swings to Another Profit

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In the final quarter of 2024, the blockbuster animation “Moana 2” gave a boost to Disney’s sales. The sequel’s success at the box office, combined with another profitable quarter for Disney+ and Hulu, allowed Disney to surpass Wall Street predictions for both revenue and profits.

In the past two quarters, Disney’s streaming services, which include Disney+ and Hulu, have shown a profit, with an operating income of $293 million on total revenue of $6.07 billion (a 9% increase). The main Disney+ platform saw a decrease in subscribers by approximately 700,000 users worldwide, which was less than what analysts predicted, while Hulu added 1.6 million new subscribers following the price hike implemented in October. This performance exceeded expectations.

In summary, during the first quarter of 2025 (spanning from October 29, 2024 to January 2, 2025), Disney recorded a total revenue of approximately $24.69 billion, marking a 5% increase compared to the same period last year. This rise also led to a significant 31% jump in their overall segment operating income, reaching an impressive $5.1 billion. The company reported a net profit of $2.55 billion, which represents a 34% growth, and this translated into an adjusted earnings per share (EPS) of $1.76, a notable 44% increase compared to the previous year’s figures. Initially, analysts had anticipated revenue of around $24.55 billion and an adjusted EPS of $1.43, but Disney surpassed these expectations.

As a devoted cinephile, I’m thrilled to share that the accomplishments we’ve made this quarter showcase Disney’s unwavering creative and financial might. We’re not just talking about the past two years; we’ve been laying the groundwork for strategic moves that are now bearing fruit. This quarter served as a robust foundation for our fiscal year, and I can confidently say we’re on the right track for further growth.

In simple terms, Disney has confirmed that they aim to achieve a high-single digit increase in adjusted earnings per share (EPS) and provide around $15 billion in cash flow from operations during the financial year 2025. They also anticipate generating about $1 billion in operating income from their entertainment streaming services like Disney+ and Hulu by September 2025.

In Q4 2024, there was a notable success in Disney’s entertainment division as content sales and licensing revenue surged by 34% to $2.2 billion, with an operating income of $312 million (compared to a loss of $224 million the previous year). This positive change was attributed to the outstanding performance of “Moana 2,” which has already grossed over $1 billion worldwide at the box office. In their earnings announcement, Disney stated that the enhanced operating results were primarily due to the impressive theatrical distribution results from “Moana 2” in the current quarter. Additionally, the current quarter featured “Mufasa: The Lion King,” while the previous year’s quarter had “The Marvels” and “Wish.”

Robert Iger highlighted the exceptional earnings at the box office from our studios during the quarter, which included the year’s top three highest-grossing films: “Inside Out 2”, “Deadpool & Wolverine” and “Moana 2”. Furthermore, he mentioned that we have strengthened the financial performance of our entertainment streaming service. Additionally, Iger pointed out a significant move forward in ESPN’s digital strategy by incorporating an ESPN section on Disney+.

In Disney’s sports branch (ESPN), revenue increased by 8%, reaching a total of $4.81 billion, while operating income surged by 15% to $228 million in the second fiscal quarter. The company anticipates that the college sports and an extra NFL playoff game will negatively impact the sports segment’s operating income by roughly $100 million for the same period. Additionally, exiting the Venu Sports joint venture with Fox Corp. and Warner Bros. Discovery is expected to decrease revenue by approximately $50 million.

In the first quarter of fiscal year 2024-25, Disney’s Experiences division saw a 3% rise in revenue to $9.4 billion, with operating income staying steady at $3.1 billion. This was impacted by around $120 million in costs related to Hurricanes Milton and Helene, as well as $75 million in expenses for the launch of the Disney Treasure cruise ship. Domestic Parks & Experiences saw a 5% drop in operating income, while International Parks & Experiences witnessed a significant increase of 28%. In the upcoming March quarter, Disney Cruise Line is expected to incur approximately $40 million in pre-opening costs.

(Simplified): Disney’s first-quarter revenue for its Experiences division grew by 3%, reaching $9.4 billion, with operating income remaining constant at $3.1 billion. This growth was affected by costs from Hurricanes Milton and Helene ($120 million) and the launch of the Disney Treasure cruise ship ($75 million). While domestic Parks & Experiences saw a 5% decrease in operating income, international locations experienced a notable increase of 28%. In the next quarter, Disney Cruise Line will likely incur around $40 million in pre-opening expenses.

In his remarks, Iger noted that the Experiences segment “showed its lasting charm as we keep on making strategic investments worldwide.

In the last quarter, Disney ended its partnership with Reliance Industries in India by combining their Star and Hotstar assets with Viacom18’s television and streaming operations. As Disney holds a 37% stake in the Star India joint venture, this alteration affects how they report specific aspects of their business.

Initially, Disney has stopped including Disney+ Hotstar India under its direct-to-consumer streaming business. Now, the number of Disney+ subscribers includes customers from Southeast Asia who were previously reported separately with Disney+ Hotstar. This adjustment in reporting for Q3 2024 resulted in a transfer of about 2.6 million customers to Disney+’s international subscriber count.

In the final stretch of last year, Disney+ reported a global subscription count of approximately 124.6 million, marking a decrease of 700,000 from the previous quarter. This drop was seen primarily outside the U.S./Canada, where subscribers fell by 1.5 million to around 67.8 million. However, in the U.S./Canada region, the platform gained about 800,000 new subscribers, bringing its total to 56.8 million. For the quarter ending March, Disney+ is projecting a further “modest decrease” in total subscribers compared to the first fiscal quarter.

Disney’s first-quarter financial report encompasses approximately one and a half months of Star India’s operational data (up to November 14, 2024). For fiscal year 2025, it is projected that the India business will add around $73 million to Disney’s Entertainment division’s operating income (a decrease from $254 million in the previous year), and approximately $9 million to its Sports segment’s operating income (improving from a $636 million loss in the prior year). In the last quarter of 2024, Disney experienced a $143 million loss due to the Star India transaction.

Currently, Disney is still working on acquiring Comcast’s one-third ownership of Hulu. By the end of last year, Hulu boasted a total of 53.6 million customers, an increase from 52.0 million in the previous quarter. The number of Hulu subscribers with a live TV package has remained steady at 4.6 million. Recently, Disney announced a partnership with streaming service Fubo to merge Hulu + Live TV with Fubo’s services under a joint venture, which is expected to be finalized within the next 12-18 months.

Starting from the Q1 of 2025, Disney will no longer disclose financial data for its streaming services (Disney+, Hulu, and ESPN+) as a single unit, as it has been doing so far. Instead, ESPN+’s financial figures are now included in Disney’s Sports division. In the final quarter of the year, ESPN+ lost approximately 700,000 subscribers, leaving it with around 24.9 million active subscribers.

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2025-02-05 14:48