Disneyland Paris is part of the division that accounted for more than half of Disney\u2019s profit last quarter. – Martin Sekanina\/CTK\/ZUMA PRESS <\/p>\n
Disney shares fell nearly 8% Thursday, as efforts to turn around a yearslong stock slump with growth in its streaming and experiences businesses failed to impress investors.<\/p>\n
The entertainment giant reported roughly flat revenues of $22.46 billion in its fourth quarter that ended in late September, short of Wall Street analysts\u2019 expectations. Companywide segment operating income fell 5% to $3.48 billion, driven by weakness in the television and movie businesses, while parks and streaming posted profit gains.<\/p>\n<\/p>\n
The company\u2019s shares have been hovering between about $80 and $125 since early 2022 after reaching nearly $200 in 2021. Its stagnant stock price has been a long-running concern for shareholders and employees about Disney Chief Executive Bob Iger\u2019s efforts to turn around the company since he returned in late 2022.<\/p>\n
Despite consistent profit growth, investors remain worried about Disney\u2019s ability to manage the transition from linear television to streaming and to execute on the multibillion-dollar investments it is making in theme parks and cruise ships. Disney\u2019s \u201cvaluation gap versus the market has widened even as [earnings per share] has continued to outpace the market in recent years,\u201d analysts at Bernstein wrote this week.<\/p>\n
In a move to return more cash to investors, Disney said Thursday it would double share repurchases to $7 billion in the current fiscal year and increase its dividend by 50% to $1.50 per share.<\/p>\n
The company also focused heavily on what it said were strong prospects for its streaming business. Iger said on a call with analysts that he sees Disney+ as not just a growing content platform, but as a way to use artificial intelligence to let people shop for products, engage with theme parks and cruise ships, play games, and produce and consume user-generated content based on Disney properties.<\/p>\n
\u201cThe opportunity here is enormous in terms of increasing our engagement with Disney fans,\u201d he said.<\/p>\n
Disney Chief Executive Bob Iger has been working to turn around the company\u2019s performance. – Gilbert Flores\/Variety\/Getty Images <\/p>\n
Total subscriptions to Disney+ and Hulu rose 12.4 million during the quarter to 195.7 million. About half of the increase came from a new deal offering Disney streaming apps to Charter\u2019s cable customers. Most of the rest came from overseas.<\/p>\n
The company said it expects profitability in its streaming business to grow to 10% in the current fiscal year from about 5% in fiscal 2025.<\/p>\n
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Direct-to-consumer revenue grew 8% last quarter to $6.25 billion. Operating income for the segment rose 39% to $352 million, nearly matching the $391 million profit from linear networks, which fell 21%.<\/p>\n
Disney\u2019s TV business was affected by a drop off in political advertising compared with last year\u2019s presidential election and a loss in revenue from India due to a merger of some of its assets there last year.<\/p>\n
Disney didn\u2019t provide data on the performance of a new ESPN streaming service that launched in August, but Iger said early signs were positive. He said 80% of subscribers got the new service through a bundle including Disney+ and Hulu. Disney has used discounts to push consumers to package its streaming services together, which makes cancellations less likely.<\/p>\n
The company\u2019s channels haven\u2019t been available on YouTube TV<\/a> for nearly two weeks due to a dispute with Google over the fees Disney charges to carry them. Chief Financial Officer Hugh Johnston told analysts Disney hedged its financial guidance in case of a prolonged blackout. \u201cWe\u2019re ready to go as long as they want to,\u201d he said on CNBC.<\/p>\n Experiences, including Disney\u2019s parks, accounted for more than half of the company\u2019s profits in the quarter, as that business\u2019s operating income increased 13% to $1.88 billion. Growth there came largely from overseas theme parks including Disneyland Paris, which is undergoing a significant expansion, and the cruise line business.<\/p>\n The company is in the midst of a $60 billion, 10-year investment in its parks and experiences business that includes new attractions and lands at its parks and a more than doubling its line of cruise ships<\/a> to 13.<\/p>\n Box office revenue dropped as Disney\u2019s biggest release in the quarter, Marvel\u2019s \u201cThe Fantastic Four: First Steps,\u201d proved to be a modest disappointment, particularly compared with 2024\u2019s summer hit \u201cDeadpool & Wolverine.\u201d<\/p>\n After starting the current quarter with the flop \u201cTron: Ares,\u201d Disney had a solid opening this past weekend for \u201cPredator: Badlands\u201d and has high hopes for Thanksgiving\u2019s \u201cZootopia 2\u201d and December\u2019s \u201cAvatar: Fire and Ash.\u201d<\/p>\n