Disney Reports Strong Quarter, But Streaming Costs and YouTube Dispute Dampen Gains
Table of Contents
Disney’s fiscal first quarter results reveal a strong performance overall, yet were partially offset by expenses related to a recent streaming acquisition and a contentious dispute with YouTube TV. The Burbank-based media and entertainment giant reported approximately $26 billion in revenue for the three-month period ending Dec. 27, a 5% increase year-over-year.
Revenue and Profitability Overview
The company’s income before income taxes reached nearly $3.7 billion, marking a 1% increase compared to the same period last year. However, earnings per share dipped to $1.34 for the quarter, down from $1.40 in the prior year. Despite the slight decrease in per-share earnings, Disney’s Chief Executive Bob Iger expressed optimism, stating in a release that he was “pleased” with the company’s start to the fiscal year and acknowledged the ongoing transition toward a new CEO. “As we continue to manage our company for the future, I am incredibly proud of all that we’ve accomplished over the past three years,” Iger said.
Theme Park Success Drives Growth
A significant driver of Disney’s positive results was its experiences division, encompassing theme parks, cruise lines, and the Aulani resort and spa in Hawaii. This sector generated $10 billion in revenue, bolstered by a 1% rise in attendance at domestic theme parks and increased per-guest spending. The November launch of the new Disney Destiny cruise ship also contributed to a 6% increase in operating income, reaching $3.3 billion.
Box Office Hits Offset by Acquisition Costs
Disney’s entertainment division also saw success, with revenue climbing 7% to $11.6 billion, fueled by blockbuster films like “Zootopia 2” and “Avatar: Fire and Ash.” However, the division’s operating income declined by 35% to $1.1 billion. This decrease was attributed to costs associated with Disney’s majority stake acquisition in FuboTV, alongside increased marketing expenses for theatrical releases and streaming services.
YouTube TV Dispute Impacts Sports Division
The company’s total segment operating income fell 9% to $4.6 billion, further impacted by a nearly 15-day contract dispute with YouTube TV last fall, resulting in a temporary blackout of Disney channels. According to company reports, the suspension of Disney channels on YouTube TV cost the company $110 million in operating income within its sports division, which experienced a 23% decline to $191 million. Despite this setback, sports revenue for the quarter totaled $4.9 billion, representing a 1% increase year-over-year.
The results underscore the complex dynamics facing Disney as it navigates a rapidly evolving media landscape, balancing strong performance in its core businesses with the challenges of streaming and distribution partnerships.
