LOS ANGELES (Reuters) – Disney shares fell 8.58% at 1:40 p.m. after Wall Street opened on Tuesday, as the surprise profit recorded by the group’s streaming business in the second quarter was eclipsed by the decline in its unit bringing together television channels.
“The immediate market reaction shows that there are more questions than answers when it comes to earnings over the next two quarters,” said Brian Mulberry, client portfolio manager at Zacks Investment Management, adding that the key to earnings future will be to generate better results from the entertainment division.
Like other media companies, Disney is struggling to adapt to the flight of viewers to streaming content, and had anticipated that its live content division, loss-making since the launch of Disney+ in 2019 as part of its attempt to compete with Netflix, would be profitable by September.
Streaming, which includes the Disney+ and Hulu services, recorded an operating profit of $47 million between January and March, two quarters earlier than expected, compared to a loss of $587 million a year earlier. .
This activity combined with ESPN+, however, recorded a loss of $18 million, compared to a loss of $659 million in the same period of 2023, the group said.
The turnover of the unit bringing together the television channels fell by 8% to reach 2.77 billion dollars.
“Our strong performance over the past quarter shows that we have turned a corner and entered a new era for our business,” Chief Executive Bob Iger, who overcame investor pressure in April, said in a statement. activists unhappy with the group’s poor results.
Bob Iger instituted cost cuts expected to reach at least $7.5 billion by the end of September and unveiled $60 billion in investments over ten years in theme parks.
Hugh Johnston, Disney’s chief financial officer, said in an interview that streaming profit was tied to aggressive cost management.
Disney+ added more than 6 million customers during the quarter, and average revenue per user increased 44 cents, outside India, where the group offers a cheaper package that it accounts for separately.
Good results from theme parks and streaming also enabled the group to raise its annual targets. It says it now expects adjusted earnings per share to increase 25% during the financial year, up from 20% previously.
(Reporting by Lisa Richwine in Los Angeles; with contributions from Aditya Soni in Bangalore, Dawn Chmielewski in Los Angeles and Sheila Dang in Austin; French version Diana Mandiá, editing by Kate Entringer)
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