Video Source: CNBC Television on YouTube
Walt Disney Co (NYSE: DIS) reported a swing to lose in the fiscal 2023 third quarter, primarily due to on-demand streaming-related issues and huge restructuring expenses leading to content removal from its decks. The media and entertainment company also reported disappointing Disney+ subscriber losses and revealed an upward revision of its streaming subscription prices. The stock of Disney closed Thursday’s trading session at $91.76, up $4.27 or 4.88% from the prior close.
Burbank, California-based Walt Disney reported third-quarter revenues of $22.33 billion, up 4% from $21.50 billion in the third quarter of fiscal 2022.
For the third quarter, which ended July 1, 2023, the company posted a net loss of $460 million, or $0.25 per share, compared with a net profit of $1.41 billion, or $0.77 per share, in the quarter ended July 2, 2022.
During the quarter, Walt Disney recorded $2.440 billion in impairment charges associated with the termination of content from DTC services. Furthermore, the company also included $210 million in severance charges.
Excluding restructuring and impairment charges, amortization of TFCF and Hulu intangible assets, fair value step-up on film and television costs, and other expenses, Walt Disney recorded 3Q 2023 non-GAAP net income of $2.22 billion, or $1.03 per share, compared to $2.09 billion, or $1.09 per share in 3Q 2022.
Analysts surveyed by Refinitiv had anticipated Walt Disney to report adjusted earnings of $0.95 per share on revenues of $22.50 billion.
Commenting on the results, Robert Iger, CEO, The Walt Disney Company, stated: “Our results this quarter are reflective of what we’ve accomplished through the unprecedented transformation we’re undertaking at Disney to restructure the company, improve efficiencies, and restore creativity to the center of our business.”
Segment wise:
- Disney Media and Entertainment Distribution revenues fell by 1% y-o-y to $14 billion. Under this segment, Linear networks revenues declined 7% y-o-y to $6.69 billion. Likewise, Content sales/licensing revenues were $2.08 billion, down 1% from last year. However, Direct-to-consumer revenues rose by 9%y-o-y to $5.53 billion.
- Disney Parks, Experiences, and Products revenues were $8.33 billion, up 13% from last year. Under this segment, Parks and Experiences (domestic) revenues grew by 4% y-o-y to $5.65 billion. Parks and Experiences (international) revenues jumped 94% y-o-y to $1.53 billion. Consumer products revenues were $1.15 billion, a decrease of 3% from last year.
At the end of Q3 2023, Disney+ total subscriptions were 146.1 million, missing StreetAccount forecasts of 151.1 million. Compared with the second quarter, the company lost 7% of subscribers in 3Q 2023.
Specifically, Disney+ Hotstar recorded a 24% decline in subscriptions. Notably, the company lost broadcasting rights for Indian Premier League (IPL) cricket matches.
With a decline in revenue and streaming subscribers, the company revealed its intention to increase subscription prices for its ad-free package in October. Furthermore, Walt Disney also plans to put an end to password sharing, similar to the strategy adopted by Netflix a few months ago.
The quarterly earnings beat is expected to keep Disney’s stock slightly bullish in the short term.
The historical price chart indicates that the stock of Disney is rising after consolidating at 87.50 levels. The next resistance is anticipated only near 98. Additionally, the stock has closed above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate that Disney’s stock will remain in an uptrend in the short term.
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