Disney's Q3 Earnings Soar to $23.65 Billion on Streaming and Theme Parks

Streaming Services Drive Growth for Disney

Disney's streaming services have become a major revenue driver, with Disney Plus and Hulu reaching a combined 183 million subscribers. This growth has translated into increased streaming-related income, which rose to $346 million during the third quarter. The company’s direct-to-consumer segment reported earnings of $6.18 billion, a 6% increase from the previous year, driven by healthy subscriber growth.

Disney Plus ended the quarter with over 128 million subscribers, adding 1.8 million new customers during the period. Meanwhile, Hulu reached approximately 55 million paying subscribers after gaining nearly 800,000 new users. Moving forward, Disney plans to shift its focus from subscriber counts to revenue growth and user engagement, similar to strategies adopted by other streaming giants like Netflix and Roku.

The company also announced plans to fully integrate its Disney Plus and Hulu platforms, effectively winding down Hulu as a standalone app. However, Hulu will continue to exist within the Disney Plus platform, and separate subscriptions for both brands will remain available in the foreseeable future.

Strong Performance in Theme Parks and Experiences

Disney’s theme parks, cruise lines, and other "experiences" business saw a 13% increase in income, fueled by strong performance in the U.S. Domestic Parks & Experiences, which includes theme parks and the cruise line business, generated $1.65 billion in operating income, up 22% compared to the previous year. This growth was supported by higher per capita guest spending and expanded cruise operations.

The overall "experiences" segment reported operating income of $2.52 billion, reflecting continued strength in this area. Disney CEO Robert Iger emphasized the company’s focus on streaming integration, cost efficiency, and international expansion in parks and experiences as key strategic priorities moving forward.

ESPN and Sports Business Gains

The sports business, which includes ESPN, earned Disney $1.02 billion during the quarter, marking a 29% increase compared to the previous year. However, domestic operations at ESPN saw a 7% decline in operating income due to higher costs associated with college sports and NBA rights.

Disney is set to launch ESPN Unlimited on August 21 for $30 per month. Additionally, the company announced it will acquire NFL Media and its television channels, NFL Network and NFL RedZone, in exchange for the NFL taking a 10% equity stake in the sports brand.

Challenges in Linear Networks

Despite strong performances in streaming and theme parks, Disney’s linear broadcast and cable networks segment faced challenges. Revenue from ABC, the Disney Channel, FX, and other linear networks totaled $2.27 billion, a 15% decrease from the previous year. Segment operating income dropped 28% year-over-year, largely due to ongoing churn in the cable and satellite TV industry as more consumers cut the cord.

Financial Highlights

Disney’s overall earnings for the fiscal third quarter (Q3) reached $23.65 billion, up from $23.16 billion in the same period last year. Income before taxes rose 4% to $3.21 billion, while segment operating income increased 8% to $4.58 billion. Diluted earnings per share (EPS) climbed 16% to $1.61.

Despite these positive results, Disney’s stock price declined by around 3% by Wednesday afternoon, reflecting market concerns about the long-term sustainability of its current business model and the challenges facing traditional media segments.

Future Outlook

As Disney continues to navigate the evolving media landscape, the company remains focused on expanding its streaming offerings, integrating its digital platforms, and investing in global growth. With the upcoming launch of ESPN Unlimited and the continued development of its theme park and cruise line businesses, Disney is positioning itself for sustained success in the years ahead.