Disney Q4 2023 Earnings: Streaming Losses Deepen as Costs Rise, Shares Drop 9%

The Walt Disney Company reported disappointing Q4 2023 earnings and revenue, missing analyst expectations due to escalating costs in its streaming segment.

Key Highlights

• Disney's Q4 earnings per share were $0.30, falling short of the $0.57 analyst consensus.
• Revenue increased 9% year-over-year to $20.15 billion but still lagged market predictions.
• Disney+ streaming losses more than doubled, reaching $1.5 billion despite a 39% subscriber growth to 164.2 million.
• Shares declined by 9% in after-hours trading following the earnings release.
• Theme park revenues surged, aligning with market expectations as travel restrictions eased globally.
• Disney projects Disney+ will turn profitable in fiscal 2024, assuming stable economic conditions.

Source: Visible Alpha analyst consensus data.

In-Depth Financial Analysis

Disney's fiscal Q4 results, ending October 1, 2023, revealed a larger-than-anticipated loss from Disney+, driven by increased spending on original and licensed content. This contributed to adjusted earnings per share of just $0.30 compared to the expected $0.57. Revenue growth was solid but insufficient to meet forecasts.

The direct-to-consumer segment’s losses surged, overshadowing gains from subscriber growth. Average revenue per domestic Disney+ subscriber declined by 10%, partly due to the absence of premium pay-per-view content like "Jungle Cruise" and "Black Widow" that boosted prior year revenue.

Conversely, Disney's Parks, Experiences and Products division performed strongly, benefiting from the reopening of global travel and full operational status of all travel-related businesses. Meanwhile, TV networks including ESPN and ABC experienced a 5% revenue decline amid ongoing cord-cutting trends but managed a 6% increase in operating income.

Disney CFO Christine McCarthy highlighted expectations for accelerated subscriber declines in linear TV consistent with broader industry trends.

Disney+ Outlook and Strategic Moves

Operating income from the Media and Entertainment Distribution segment plummeted 91% year-over-year to $83 million, largely due to Disney+ and Hulu losses.

CEO Bob Chapek emphasized plans to reduce direct-to-consumer losses and achieve Disney+ profitability in fiscal 2024, contingent on stable economic conditions. Key drivers include a planned price increase effective December 8, 2023, and the launch of a new ad-supported subscription tier.

The ad-free Disney+ monthly subscription price will rise by $3 to $10.99, while the new ad-supported option will be offered at $7.99 monthly, aiming to balance subscriber growth with improved revenue streams.

Explore useful articles in Company News as of 14-11-2022. The article titled " Disney Q4 2023 Earnings: Streaming Losses Deepen as Costs Rise, Shares Drop 9% " offers in-depth analysis and practical advice in the Company News field. Each article is carefully crafted by experts to provide maximum value to readers.

The " Disney Q4 2023 Earnings: Streaming Losses Deepen as Costs Rise, Shares Drop 9% " article expands your knowledge in Company News, keeps you informed about the latest developments, and helps you make well-informed decisions. Each article is based on unique content, ensuring originality and quality.