Disney beats earnings estimates, hikes guidance as it slashes streaming losses

LOS ANGELES — The Walt Disney Company reported better-than-expected fiscal first-quarter earnings on Wednesday, as the media giant slashed costs while revenue stagnated. 

The company hiked its guidance, and now expects fiscal 2024 earnings per share of about $4.60, which would be at least 20% higher than 2023. 

Disney said it is on pace to meet or exceed its goal of cutting costs by at least $7.5 billion by the end of fiscal 2024. 

Here is what Disney reported compared with what Wall Street expected, according to LSEG, formerly known as Refinitiv:

• Earnings per share: $1.22 vs. 99 cents expected
• Revenue:$23.55 billion vs. $23.64 billion expected

Disney’s direct-to-consumer unit reported a $138 million operating loss in the quarter. Including the performance at ESPN+, losses for all its streaming businesses narrowed to $216 million, from $1.05 billion in the prior-year period.

Disney+ core subscribers shrank by 1.3 million from the prior quarter due to price increases, but the company saw a rise in average revenue per user because of those subscription cost hikes.

The company posted the improvements to its streaming business a day after it announced Tuesday that it will launch a new sports streaming venture among ESPN, Fox and Warner Bros. Discovery later this year. 

While no price has been determined, a logical starting point could be $45 or $50 per month with introductory pricing lower to entice signups, according to a person familiar with the matter, who asked not to be named because the discussions around the service have been private.

Disney’s earning results come as its board battles again with activist investor Nelson Peltz and Blackwells Capital.

While Peltz ended a previous proxy battle against Disney a year ago after the company committed to numerous cost-cutting initiatives, he revived his fight last fall, looking to shake up the board and earn himself and former Disney Chief Financial Officer Jay Rasulo a seat.

Peltz has cited the company’s stock plunge, a drop in consensus earnings estimates and disappointing studio content as he has pushed for a board shake-up.

CEO Bob Iger has publicly addressed Disney’s theatrical release woes and vowed to rely less on sequels and more on fresh, quality films. Of course, production timelines are often in the ballpark of 18 months, so Disney’s box office haul likely will not change until 2025 or 2026. At that point, Disney is slated to release four mega blockbusters: an Avatar film, two Star Wars features and an Avengers team-up flick.

Also of note to investors is this is the second 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.

Tune in: CNBC’s Julia Boorstin is set to interview Disney CEO Bob Iger at 4:05 p.m. ET on “Closing Bell: Overtime.”