Disney beats on earnings, boosts dividend as streaming losses narrow

Disney ( DIS ) said Wednesday it would raise its cash dividend by 50%, after the entertainment giant beat expectations for its fiscal first-quarter earnings while streaming losses shrank.

Disney reported adjusted earnings of $1.22 per share, compared with the $0.99 analysts expected from Bloomberg. The company also guided for full-year 2024 earnings per share of $4.60, up from 2023.

Revenue came in at $23.5 billion, compared to an expected $23.8 billion.

It declared a cash dividend of $0.45 per share, a 50% increase over the last dividend paid in January. At the close of business on July 8, the dividend will be paid to shareholders on July 25.

The board also approved a new share repurchase program with a target to buy back $3 billion in fiscal 2024.

Disney's linear TV business has been struggling with challenges, including slower growth in its parks business and losses in streaming. Last year, activist investor Nelson Peltz renewed his push to shake up the board as the stock hit multiyear lows.

CEO Bob Iger has pledged various cost-cutting measures to combat those challenges. The company said Wednesday it is on track to meet or exceed its annual savings target of $7.5 billion by the end of fiscal 2024, and it will “continue to seek further efficiency opportunities.”

Shares rose 7% in premarket trading Thursday following the results.

New Updates: Games, Content, Sports

Disney had a lot to say on Wednesday with several new announcements.

Notably, the company said it plans to invest $1.5 billion in Fortnite maker Epic Games, which Iger called Disney's “biggest entry into the world of video games ever.”

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“Our new relationship with Epic Games will create a transformative games and entertainment universe that integrates Disney's world-class storytelling, enabling customers to play, watch, create and shop digital and physical products alongside Epic's cultural phenomenon, Fortnite,” said Iger. On the revenue call.

On the content side, the company said Disney+ will be the exclusive streaming home for “Taylor Swift: The Eras Tour (Taylor's Edition).” The concert film will feature five additional acoustic songs, including “Cardigan”.

Meanwhile, an animated “Moana” sequel will hit theaters in November as Disney leans deeper into sequels and franchises amid box office trouble.

Disney has announced a firm timeline for the company's over-the-top (OTT) ESPN streaming service, revealing that the site will launch in the fall of 2025.

ESPN mentioned in a post on social media The service will be launched before the start of next year's football season.

The development comes on the heels of news that Disney's ESPN will team up with Warner Bros. Discovery ( WBD ) and Fox ( FOXA ) to launch a new sports streaming service.

Profit from streaming in the spotlight

Streaming losses within the entertainment segment narrowed to $138 million from a year-ago loss of $984 million after the company raised streaming prices; However, core Disney+ subscribers, excluding its Indian product Disney+ Hotstar, fell by 1.3 million sequentially due to that increase.

The loss of subscribers, according to the company's guidance, was slightly higher than Wall Street had expected, with consensus estimates that Disney+ would lose about 700,000 core users.

The company said it expects to add 5.5 million to 6 million core Disney+ users in the second quarter. After Core Disney+ ARPU increased sequentially by $0.14 compared to the fourth quarter, it expects continued positive momentum in average revenue per user, or ARPU.

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Including ESPN+, total direct-to-consumer losses were $216 million, versus $1.05 billion reported in the year-earlier period.

“We continue to expect to achieve profitability in our combined streaming businesses in the fourth quarter of fiscal 2024,” the company said. “We believe this business will ultimately be a key revenue growth driver for the company.”

Amid recent price hikes, the company will begin implementing stricter measures on password sharing. Disney said it won't see “significant benefits” from these efforts until the second half of the year.

Just before the earnings call, Disney sent notices to Disney+ users warning them that it would begin restricting account sharing in March. The announcement comes days after Hulu sent out a similar notification to subscribers.

Iger, who previously said the number of subscribers sharing accounts was “significant,” first revealed the company would address password sharing during its fiscal third-quarter earnings call in August.

A screen displays the logo and ticker symbol for the Walt Disney Company.

A screen shows the Walt Disney Company logo and ticker symbol on the floor of the New York Stock Exchange (NYSE) in New York on December 14, 2017. (Brendan McDermidt/Reuters) (Reuters / Reuters)

As a reminder, Disney recently overhauled its reporting structure after CEO Bob Iger reorganized the company into three core business units: Disney Entertainment, which includes its entire media and streaming portfolio; Experiences involving park business; and Sports, which includes ESPN Networks and ESPN+.

Here's how those individual segments performed in the quarter against Wall Street consensus estimates compiled by Bloomberg:

  • Entertainment Income: $9.98 billion and expected $10.54 billion

  • Game revenue: $4.84 billion vs $4.62 billion expected

  • Experience Earnings: $9.13 billion $9.03 billion is expected

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Total segment operating income came in at $3.88 billion, up 27% from the prior-year period.

Entertainment operating income rose 100% year-over-year to $874 million, while the Experiences segment set all-time records for revenue, operating income and operating margin in the first quarter.

The sports division generated an operating loss of $103 million, but saw a 37% improvement compared to the $164 million loss it reported a year earlier.

Meanwhile, linear networks continued to struggle. The segment fell 12% year-over-year to $2.8 billion, while operating income for Linear came in at $1.2 billion, a 7% decline.

Alexandra Canal Senior reporter at Yahoo Finance. Follow her on Twitter @alli_kanal, LinkedIn, and email [email protected].

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