Disney expands cost-cutting plan by $2 billion, posts better-than-expected profit

LOS ANGELES — Disney earnings topped expectations thanks in part to profit at ESPN+ and continued growth at theme parks, but a decline in ad revenue weighed on the top line.

Disney also said it plans to continue to “aggressively manage” its cost base, increasing its cost-cutting measures by an additional $2 billion to a target of $7.5 billion.

Shares of the company rose more than 4% after the closing bell Wednesday.

The decrease in ad revenue was primarily from Disney’s ABC Network and other owned TV stations, which saw lower political advertising revenue during the quarter. Over the summer, CEO Bob Iger said the company could be open to selling its TV assets.

Meanwhile, the company added 7 million new core Disney+ subscribers from the previous quarter, bringing its total number of users to 150.2 million, including Hotstar. The streaming business also narrowed its losses compared with a year earlier.

Wall Street had expected Disney to report a total of 148.15 million subs for the quarter. The company touted the addition of theatrical titles such as “Elemental,” “Little Mermaid” and “Guardians of the Galaxy: Vol. 3” as well as the new Star Wars series “Ahsoka” as key streaming content during the last three months.

The company continues to expect that its combined streaming businesses will reach profitability in the fiscal fourth quarter of 2024.

“As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences business,” CEO Bob Iger said in a statement Wednesday.

Here are the key numbers from Disney’s report:

• EPS: 82 cents per share adjusted vs. 70 cents per share expected, according to LSEG, formerly known as Refinitiv
• Revenue: $21.24 billion vs. $21.33 billion expected, according to LSEG
• Total Disney+ subscribers: 150.2 million vs. 148.15 million expected, according to StreetAccount.

The company reported net income of $264 million, or 14 cents per share, for the fiscal fourth-quarter ended Sept. 30, up from a net income of $162 million, or 9 cents a share, during the year-ago period.

Excluding impairments, the company earned 82 cents per share, higher than the 70 cents per share Wall Street had expected.

Revenue increased 5% to $21.24 billion, just short of estimates, which called for revenue of $21.33 billion. This is the second consecutive revenue miss for Disney and the first time it has had a consecutive revenue miss since early 2018.

This is also the first quarter that Disney is using its new financial reporting structure, which segmented the company into three divisions — entertainment, sports and experiences. Entertainment contains all of Disney’s streaming and media operations, sports includes ESPN, and experiences includes the company’s theme parks, hotels, cruise line and merchandising efforts.

Disney’s experience division saw revenues jump 13% to $8.16 billion during the quarter as parks saw higher attendance and ticket prices domestically and abroad. The company reported that there are still lower hotel rates at its Florida resort and that area is experiencing higher operating costs. Parks represented around 66% of total revenue for this division.