The Walt Disney Co. said Disney Plus subscribers rose to 103.6 million from 94.9 million when the company reported in February. The company said Disney Plus crossed the 100 million mark at its annual meeting in March.
The new total was lower than Wall Street expectations.
Disney’s direct-to consumer business cut its operating loss to $290 million from $805 million a year ago. Revenue rose 59% to nearly $4 billion.
The increase in subscription revenue at Disney Plus was offset by higher programming and production, marketing and technology costs.
Disney said it remains on track to reach its guidance of 230 million to 260 million Disney Plus subscribers by 2024.
“Results indicated a slowdown in Disney’s DTC ramp as it faces some short-term headwinds to growth,” noted analyst Steven Cahall of Walls Fargo. “However, we view this as an excellent opportunity to accumulate as this is a long-haul content story, and neither the TAM [total addressable market] nor strategy is at all impaired.”
Results were better at Hulu, which had higher subscription and advertising revenue, and ESPN Plus.
ESPN Plus subs rose to 13.8 million from 7.9 a year ago, more than analysts expected.
Total Hulu subscribers rose to 41.6 million from 32.1 a year ago. SVOD only subscribers were 37.8 million, up from 28.8 million a year ago. The Hulu virtual MVPD had 3.8 million subscribers, up from 3.3 million a year ago, but down 200,000 from last quarter. The company attributed at $10 a month price increase for the lost subs.
Overall, Disney reported net income for the company’s fiscal second quarter was $901 million, or 49 cent a share, up from $460 million, or 26 cents, a year ago. Income from continuing operations rose 1% to $1.2 billion.
Revenue fell 13% to $15.6 billion.
The profit number beat Wall Street forecasts, but revenue fell short.
Operating income rose 74% to $2.9 billion at Disney’s Media and Entertainment Distribution segment. As revenues edged up 1% to $12.4 billion. Income from equity ownership increased 24% to $220 million driven by higher income from A+E Networks.
Linear networks racked up a 15% increase in operating income to $2.8 billion despite a 4% decline in revenue to $6.7 billion.
Domestic channels’ operating income increased 12% to $2.3 billion, with increases at both the cable and broadcasting businesses. Revenue fell 4% to $5.4 billion.
The increase at Cable was due to lower programming and production costs and higher affiliate revenue, partially offset by lower advertising revenue.
The increase at Broadcasting was due to growth at ABC. The growth was partially offset by a decrease at ABC owned television stations. ABC had lower programming and production costs and higher affiliate revenue. Ad revenue was lower. The decrease in programming and production costs was primarily due to the shift in timing of The Academy Awards, which also affected ad revenue.
Disney’s Parks, Experiences and Products division lost $406 million as revenue dropped 44% to $15.6 billion.
“We’re pleased to see more encouraging signs of recovery across our businesses, and we remain focused on ramping up our operations while also fueling long-term growth for the company,” said CEO Bob Chapek. “This is clearly reflected in the reopening of our theme parks and resorts, increased production at our studios, the continued success of our streaming services, and the expansion of our unrivaled portfolio of multiyear sports rights deals for ESPN and ESPN Plus.”
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