Disney adds 5 million streaming subscribers
As Robert A. Iger approaches the first anniversary of his return as CEO of the Walt Disney Company, he delivered a strong earnings report Wednesday, telling investors that the company added about 5 million subscribers to its streaming services in the past three months.
In a statement, Mr. Iger acknowledged that Disney still had “work to do” but emphasized the “significant progress” the company has made in the past year in reorganizing itself.
“These efforts have enabled us to emerge from this period of recovery and rebuild our businesses,” said Mr. Iger.
The results for services like Disney+, Hulu and ESPN+ could help Disney stave off Nelson Peltz, an activist investor who has pushed the company to devise a plan to replace Mr. Iger, improve the streaming services’ profitability and dividend from the company.
The company said third-quarter profit rose to $694 million from $254 million a year ago. One bright spot was Disney’s experiences division, which includes parks and cruises. Operating profit grew by 30 percent compared to the same period a year ago.
The company also narrowed losses for its streaming services, thanks in part to price increases at Disney+ and Hulu and lower marketing and technology costs. The addition of seven million subscribers to the Disney+ service helped offset losses elsewhere.
Disney is at a crossroads. Mr. Iger, the pre-dawn face of the company, has shown a willingness to shake up the company’s traditional structure since his return last November. He said in an interview this year that the business model that supported Disney’s businesses such as broadcast network ABC was no longer working, a notable admission from a former weatherman who rose through the ranks of the company’s TV operations.
“The distribution model, the business model that is the foundation of that company and that has generated great profits over the years, is definitely broken,” Mr. Iger said. said during an interview with CNBC at the annual Sun Valley tycoon meeting. “And we have to call it what it is.”
Since then, Disney has attempted to sell a stake in ESPN — potential buyers include the National Football League and the National Basketball Association — and there are reports that the company is also exploring options for ABC, which has been synonymous with the company for decades. Disney also announced that it plans to buy out Comcast’s stake in Hulu for $8.61 billion, a long-awaited move that distances the company from traditional TV and increases its bet on streaming.
Disney has battled these headwinds while navigating twin strikes that brought Hollywood to a standstill. The Writers Guild of America and SAG-AFTRA, the union that represents about 160,000 actors nationwide, each went on strike this year, demanding, among other things, higher wages and the ability to participate in the success of streaming films and TV shows. Mr. Iger was among a group of executives who helped broker a deal with the writers, but the actors remain on the picket lines.
Media conglomerates like Disney spend billions of dollars on TV shows and movies every year, and the strikes allowed them to keep their money while the cameras were off. But some, like Warner Bros. Discovery, investors have also told the strikes will hurt future profits, draining the pipeline of shows and movies.
Disney in recent months has changed the way it reports its results to investors as it reevaluates its business. In October, after Mr. Iger announced that Disney was exploring options for ESPN, the company reported operating results for the sports division for the first time, telling investors that it had generated about $1.89 billion in the nine months leading up to July generated profit.
Disney’s new reporting segments have a “sports” unit that includes ESPN, an “experiences” segment that includes theme parks like Disneyland, and an “entertainment” unit that includes the Disney+ streaming service, Hulu and its traditional TV networks.