Disney: profitable streaming for the first time, after 5 years of losses

Streaming is finally profitable for Disney. The activities of the entertainment giant in the field - Disney but also Hulu in the United States - were profitable for the first time during this quarter, after several years of losses and colossal investments since the launch of Disney in November 2019, announced the group this Tuesday, May 7. They generated $47 million in profits in the first quarter, compared to $587 million in losses in the same period last year.

With 153.6 million subscribers across all services at the end of March, the entertainment empire, however, did less well than the 155.6 million expected. But excluding Indian assets, the subscriber portfolio is growing by 6%, supported by the dynamism of North America (17% over one year). The turnover of the streaming branch increased by 13% year-on-year.

Despite this good news, Disney saw its profit significantly reduced in the second quarter of its delayed financial year (January to March) due to depreciation, even if its turnover increased. Net profit fell to just $216 million, compared to $1.5 billion in the same period last year.

This air gap is mainly due to a depreciation of assets, linked to Disney's decision to merge its Indian television subsidiary with its competitor Viacom18, a subsidiary of the Indian conglomerate Reliance. The Californian group now only controls 36.8% of the new entity. In February, Disney announced that this operation would lead it to incur a significant exceptional charge. It reaches two billion dollars, according to the press release.

Reported per share and excluding exceptional items, the benchmark market indicator, net profit came to $1.21, above what analysts expected ($1.12). Based on these quarterly results, Disney now expects growth of 25% in its earnings per share excluding exceptional items, compared to 20% until now. In total, the company's turnover amounts to $22.1 billion, 1% better than the same period of 2023.

Another driving force of the group, amusement parks, cruises and related products, whose revenues increased by 10%, driven by international markets (29%). Disney mentions in particular an increasing income at Hong Kong Disneyland with an increase in attendance and an occupancy rate of hotels, driven by the inauguration of a new zone on the Frozen franchise at the end of 2023.

Disney's accounts, on the other hand, were tarnished by the fall in revenues from cinema, the group not having had a major release during the first three months of the year. Furthermore, the company also suffered from the slowdown in traditional television (-8%), an underlying trend. Disney controls several channels in the United States, including ABC, and the cable channels FX and National Geographic.

The group has made broadcasting rights to sporting events one of the strong elements of its offering, via ABC but especially the ESPN channel network. But ESPN, long the king of cable in the United States, faces subscriber attrition on traditional television.

To remedy this, Disney is preparing to launch, in the fall of 2025, a streaming platform in the colors of ESPN, which will feature the same content as on cable. During the past quarter, Disney's sports division saw its revenues increase (2%), but its profitability crumbled (-2%), particularly in the United States, where the cost of broadcasting rights increased while that the number of cable subscribers is contracting. Shortly after the opening of Wall Street, the group's stock dropped 8.28%.

For Kathleen Brooks of 29%).