By Christopher Palmeri | Bloomberg
Walt Disney Co. reported first-quarter sales and earnings that handily beat analysts’ forecasts, buoyed by its namesake theme parks.
Subscribers to the flagship streaming service Disney+ jumped to 129.8 million.
Earnings increased to $1.06 a share, the Burbank, California-based entertainment giant said Wednesday, beating the 57-cent average of analysts’ estimates. Sales in the period ended Jan. 1 increased to $21.8 billion, topping expectations of $20.8 billion.
The big surprise was new subscriptions to Disney+, which came in at 11.8 million, above the 8.17 million that Wall Street had projected. Disney shares tumbled in November after the company announced subscriber numbers that fell short of Wall Street projections. Netflix Inc. added to investor worries about streaming growth with a tepid outlook.
Shares of Disney rose as much as 10% to $162.10 in extended trading after the results were announced. The stock had declined 4.9% this year through Wednesday’s close in New York.
Disney’s theme parks also prospered in a big way, generating $2.45 billion in operating income, compared with a loss a year earlier. Park revenue doubled from lows during the pandemic and with the introduction of new services such as Genie+, a system that allows guests to pay an extra fee to jump in shorter lines for rides.
Like other media companies, Disney has made a big bet that streaming is the future, as consumers increasingly cancel traditional cable TV to watch movies and TV shows online.
Losses at the direct-to-consumer unit widened to $593 million due to increases in programming, marketing and technology costs. Still, the subscriber additions, along with upbeat results from AT&T Inc. HBO Max business, are likely to ease investor concerns that the streaming business is slowing,
Profit in Disney’s traditional TV units, including ESPN and ABC, fell 13% to $1.5 billion, with higher programming costs offsetting increased advertising and fees from cable TV distributors. Profit in Disney’s content sales unit, which includes films, dropped 44% to $808 million, with lower ticket sales at theaters and losses on pictures released outweighing revenue from home entertainment. Films released in the quarter included notable box office disappointments “West Side Story” and “The Last Duel.”
The Disney+ streaming service may have gotten a lift from the recent film “Encanto,” which was released for streaming on Christmas Eve. The animated musical delivered modest results at the box office but has really taken off online.
“Encanto” was the most-watched film on streaming in the two weeks after its release on Disney+, according to Nielsen. Both the soundtrack album and the song “We Don’t Talk About Bruno” are No. 1 on the Billboard charts.
The past quarter also saw streaming releases for “The Beatles: Get Back” and a new series based on the Star Wars character Boba Fett.