Disney posted revenue for the quarter of $21.2 billion, up 5% from the year ago quarter, and a little shy of Wall Street’s consensus estimate of $21.4 billion. Profits were 82 cents a share, up from 30 cents a year earlier and above the Street’s 71 cents; earnings from continuing operations were 14 cents, up from 9 cents in the year earlier period.
The company said it now has 5.2 million subscribers for its ad-supported version of Disney+, with more than half of new domestic subscribers choosing the ad tier. Disney also said it doesn’t expect to focus on reducing password sharing until 2025. The company continues to expect streaming to reach profitability in the fourth quarter of fiscal 2024.
Disney reported 146.1 million Disney+ subscribers in Q3, and 164.2 million for Q4 2022.
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.
Disney previously announced 7,000 job cuts in February as part of a $5.5 billion cost saving plan. On Wednesday, the company said its efficiency target had grown to $7.5 billion.
Richard Greenfield outlined a dozen strategic questions for Disney heading into the quarter. Some of those are focused on the future of ESPN—and the company’s stated plan to launch a direct-to-consumer version of the channel given the shrinking base of cable TV subscribers. The core issue for ESPN, Greenfield wrote, is that the cost of sports rights is rising faster than the related revenue.
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