Long-awaited, the streaming services of American entertainment giant Disney have become profitable for the first time, with an operating result finally positive, while the group saw its profits confirm their good trajectory in the third quarter of its staggered financial year.
Between April and June, the group in fact achieved a positive net result of 2.6 billion dollars, compared to a net loss of 460 million over the same period a year earlier, but also a strong improvement compared to the 216 million net profits in the previous quarter.
Turnover increased by 3.6% over the year, reaching 23.2 billion dollars, slightly exceeding the 23.1 billion expected by analysts.
A figure that is particularly closely watched by investors in the United States, earnings per share reached $1.43 for the quarter, compared to a loss per share of $0.25.
The good performance of streaming services is good news for the group, which has invested heavily in this segment, after starting late compared to its competitor Netflix in particular.
“Disney has finally found the formula to make the streaming “profitable,” Third Bridge analyst Jamie Lumley said in a note, “this finally puts Disney on the list of companies streaming who are, with Netflix.”
These services include Disney+, ESPN+, which focuses on sports, and Hulu, of which Disney has held the majority since 2019, before purchasing the remaining 33% of capital from the operator Comcast last November.
The segment’s revenue rose 15%, including the full integration of Hulu sales. Operating income showed a slight profit of $47 million, compared with a loss of $512 million a year earlier.
And it’s set to continue: the group announced Tuesday a new increase in its basic subscriptions, which are going from $7.99 per month to $9.99 in the United States.
“Every time we’ve raised prices, we’ve seen a very small rate of subscriber attrition, nothing that we would consider significant,” CEO Bob Iger said on a conference call with analysts.
Cinema party, not parks
Mr. Iger also welcomed having retained the rights to broadcast the NBA in the United States, on its ESPN and ABC networks, estimating that “it had enormous value to us”, in particular because of the duration of the contract, which allows the group to keep the NBA for the next 12 seasons.
On the cinema side, Disney is also benefiting from the excellent reception of Inside Out 2, still showing, and whose global revenues now exceed $1.5 billion, only a portion of which is attributable to the past quarter.
For the current quarter, the group should also benefit from the release of its latest Marvel film, Deadpool and WolverineJuly 26.
However, the results did not impress the markets: the share price was down 1.33% at 10:50 a.m. to $88.78, with investors particularly disappointed by the performance of amusement parks.
This segment “is showing signs of weakness, with profitability declining compared to previous quarters. This is a warning sign as the outlook is for a slow end to summer, normally the busiest season for Disney parks,” Lumley said.
The parks are indeed experiencing a drop in their revenues, partly due to the results of Disneyland Paris. The latter is suffering the backlash from the Paris Olympics, which have created an avoidance effect of the French capital, classic for this type of major event for a certain number of tourists.
But that’s not all: in the United States, too, park attendance was not as expected, with domestic revenues falling by 6% over the year, and the group expects the trend to continue for several more quarters.
“40% of our income [dans ce segment] “They’re not domestic, they’re either the overseas parks or the spin-offs. Overall, I think it’s a slight slowdown that’s more than offset by the results in our entertainment segment,” Iger said.