Disney Shares Positive Quarterly Earnings but Faces $110M Impact from YouTube TV Dispute
Disney reported strong financial results for its fiscal first quarter, despite facing a $110 million setback due to a recent carriage dispute with YouTube TV. The company’s revenue for the quarter ending December 27 increased by 5% year-over-year, reaching $25.98 billion, while diluted earnings per share were $1.63, excluding non-recurring items. Analysts had anticipated revenue of $25.6 billion and earnings per share of $1.58.
These results were made public before trading commenced on Monday, a rare timing choice for media companies. Investors and industry insiders are now keenly focused on a significant upcoming announcement: the selection of a successor to CEO Bob Iger. The Disney board is set to convene its quarterly meeting this week, with Josh D’Amaro, chairman of Disney’s Experiences division, currently the frontrunner for the position.
In its Sports division, Disney reported an operating income of $191 million, a 23% decrease from the previous year. The company attributed this decline to rising programming and production costs, coupled with reduced subscription and affiliate fees, which overshadowed a 10% increase in advertising revenue. The controversy with YouTube TV led to a 15-day blackout of channels like ESPN and ABC during a pivotal football season, contributing to the $110 million loss in operating income.
Disney’s Experiences segment, encompassing theme parks, resorts, and cruise lines, achieved a significant milestone with $10 billion in revenue for the first time, alongside an operating income of $3.3 billion. Domestic park attendance saw a slight 1% increase, and per-capita spending rose by 4%.
Meanwhile, the Entertainment division, which includes theatrical releases, generated revenues of $11.6 billion, reflecting a 7% increase. However, the heightened number of theatrical releases also led to a 35% drop in operating income for this segment.
The quarter featured major releases such as Zootopia 2, Avatar: Fire and Ash, Predator: Badlands, and Tron: Ares, significantly boosting costs compared to only two releases in the same quarter the previous year. However, the box office success of these sequels is expected to yield benefits in upcoming quarters.
On the streaming front, operating income from Disney+’s subscription video on demand (SVOD) services, including Hulu, reached $450 million—surpassing internal expectations. Management anticipates this figure will climb to $500 million in the current quarter, bolstered by price increases introduced during the autumn months. Despite recent successes, Disney has followed Netflix’s lead by halting the quarterly disclosure of subscriber numbers and average revenue per user, creating a murky outlook for future growth.
In the earnings release, Iger reflected on his current term as CEO, which began in November 2022, following his previous stint from 2005 to 2020. "As we continue to manage our company for the future, I am incredibly proud of all that we’ve accomplished over the past three years," he stated.
