The Walt Disney Co. said that its direct-to-consumer business stopped bleeding red ink in the third quarter as the company posted $2.6 billion in net income, reversing a loss from a year ago.
The company said its streaming business was profitable for the first time in Q3, a quarter earlier than the company had forecast, with ESPN Plus contributing a profitable quarter. DTC streaming operating income was $47 million, compared to a year-ago loss of $512 million as revenue rose 15% to $6.4 billion.
Losses for Disney Plus and Hulu were reduced to $19 million from $505 million a year ago, with revenues rising 15% to $5.8 billion.
For the quarter, Disney Plus added 700,000 “core” subscribers, finishing with 118.3 million customers. Domestically, it added 800,000 subscribers, ending the quarter with 54.8 million customers.
Hulu added 900,000 subscribers, giving it 51.1 million customers at the end of the quarter. It added about 900,000 subscription VOD-only customers for a total of 46.7 million, while losing 100,000 Live TV Plus SVOD customers, to finish with 4.4 million,
The company said it was ‘on track” for streaming profitability to improve, with both its entertainment direct-to-consumer services and ESPN Plus being profitable in Q4, with Disney Plus core subscribers growing “modestly.”
Overall, Disney had third-quarter net income of $2.6 billion, or $1.43 a share, compared to a loss of $460 million, or 25 cents a share, a year ago.
Revenues rose 4% to $23.2 billion.
After warding off a proxy fight from investors complaining that Disney wasn’t as profitable as it should be, the company said it increased targets for adjusted earnings-per-share growth to 30% for the full year.
The company said that operating income at ESPN rose 4%, helped by a 17% increase in domestic advertising revenue. A drop in operating income at Star India resulted in Disney’s sports segment’s operating income declining by 6% to $802 million.
Operating income at Disney’s Entertainment segment more than doubled to $1.2 billion as revenues rose 4% to $10.6 billion.
Disney’s linear networks had operating income of $966 million, down 6% from a year ago. Revenue was down 7% to $2.6 billion.
Operating income at Disney’s Experiences division — theme parks and cruises —was down 3% to $2.2 billion, despite a 2% increase in revenue to $8.4 billion as consumer demand grew less than expected the company said.
“Our performance in Q3 demonstrates the progress we’ve made against our four strategic priorities across our creative studios, streaming, sports and experiences businesses,” CEO Bob Iger said. “With our complementary and balanced portfolio of businesses, we are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets.”
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