Disney Reports Strong Earnings

By Dawn Chmielewski and Lisa Richwine

LOS ANGELES (Reuters) – Walt Disney (NYSE:DIS) reported earnings that surpassed Wall Street's estimates on Thursday, driven by blockbuster ticket sales from the summer Marvel hit Deadpool & Wolverine, and provided an optimistic forecast for the upcoming year.

The company projected adjusted earnings-per-share (EPS) growth in the high single digits for fiscal 2025, even with capital expenditures of around $8 billion. Disney also plans to buy back $3 billion worth of stock.

The entertainment giant's recent box office success helped offset a decline in operating income in its Experiences and Sports divisions. Lower attendance at international locations negatively affected theme park revenues, while higher programming and production costs impacted ESPN.

Disney reported adjusted per-share earnings of $1.14 for its fiscal fourth quarter that ended in September, beating the consensus estimates of $1.10 per share, according to analysts from LSEG. Revenue reached $22.6 billion, slightly above Wall Street forecasts of $22.45 billion, with operating income up 23% from last year to nearly $3.7 billion.

CEO Bob Iger, who returned to the company from retirement in November 2022, enacted aggressive cost-cutting and worked to revitalize Disney's film and TV divisions after a challenging period. "Thanks to the significant progress we've made, we have emerged from a period of considerable challenges and disruption well positioned for growth and optimistic about our future," Iger stated.

Operating income for the Entertainment unit, which includes film, television, and streaming, more than doubled to $1.1 billion during the quarter, buoyed by the return of Hulu's Emmy-nominated comedy Only Murders in the Building and summer blockbusters like Deadpool & Wolverine, which earned $1.3 billion at global box offices.

Disney's flagship streaming service, Disney+, now has over 122.7 million subscribers outside of India, adding 4.4 million from the previous quarter. The company strengthened its efforts to combat password sharing since September.

Combined, Disney+, Hulu, and ESPN+ reported an operating profit of $321 million for the quarter, marking the second consecutive quarter of profitability for the streaming services.

However, Disney's Experiences segment, which includes parks and consumer products, saw a 6% decline to $1.66 billion. The international parks faced a 32% drop in operating income, partly due to costs associated with new attractions and competition in Paris ahead of the Olympics.

The Sports unit, which encompasses ESPN and Star India, reported a 5% decline in operating income to $929 million, primarily due to higher programming and production costs for college football broadcasts.

In addition to the fiscal 2025 outlook, Disney anticipates double-digit adjusted EPS growth in fiscal years 2026 and 2027. "If you add it all up, our strategies are working, working very well, and we've got good visibility on where those strategies are likely to lead us," noted Disney CFO Hugh Johnston in an interview.