Disney reported its fiscal third-quarter earnings on Wednesday afternoon—showing poor revenue and growth but notable operating profit and narrowing losses.
- CEO Bob Iger’s leadership has begun to pay off for the company following 7,000 layoffs and cost-cutting measures improving revenues.
- The company is on track to decrease total expenses by $5.5 billion, successfully reducing Disney+’s losses from $1.06 billion this quarter last year to $512 million.
- Disney+ subscribers decreased by 1% last quarter due, in part, to a 24% decline in Indian subscribers and 300,000 fewer domestic subscribers.
- Domestic TV network revenue decreased 4% last quarter due to declining ad revenue, but overall revenue grew 3.8% year-over-year thanks to the parks and experiences division.
- Disney’s stocks are up 3.8% since the earnings were reported, although stocks dropped 1% briefly before Iger’s earnings call and the announcement of streaming hikes.
- In addition to hiking subscription rates, Disney+ will follow Netflix’s example and begin a password-sharing crackdown in 2024.
- Shares are down 19% year-over-year and fiscal quarter three marked the worst growth rate for Disney in four years at 4%.
Why It’s Important
The Disney Corporation faces a difficult series of decisions and choices going forward. While Iger was keen to shed light on the company’s plans for growth and improvements, the company remains unwieldy and continues to hemorrhage money, requiring massive cuts and restructuring to secure a future for a company that owns 27% of the entertainment industry.
There are any number of reasons for this continuous decline, from reports of declining park attendance to the company’s ongoing culture war feud with Florida Governor Ron DeSantis, issues with the 20th Century Fox takeover, Disney+’s poor profitability, and its repeated underperforming blockbuster releases—including Elemental, Ant-Man and the Wasp: Quantumania, The Little Mermaid, The Haunted Mansion, and Indiana Jones and the Dial of Destiny.
As we previously reported, Iger returned to his position as Disney CEO after then-current CEO Bob Chapek was ousted from power in November due to the company’s profitability issues. Iger has acknowledged the poor leadership of the company over the past several years, and his contract as CEO was extended through December 31, 2026.
Disney’s pathway back to profitability has been aggressive, beginning this year with mass layoffs and crackdowns on remote work. Iger has clarified that nothing is necessarily off the table regarding returning the company to a semblance of sanity. Disney has even begun looking for artificial intelligence solutions to reduce costs and is considering spinning off and selling parts of its legacy television division that are proving unprofitable.
Iger announced many of these plans on Wednesday. Disney+’s base subscription will be hiked from its introductory price of $6.00 to $13.99, while Hulu increases from $14.99 to $17.99. The combined bundle of Disney+, Hulu, and ESPN will cost $24.99 monthly.
Rumors have also swirled that Disney is considering privatizing and selling itself to Apple. The Hollywood Reporter noted this week that the tech developer, flushed with $62 billion in cash and a $2.8 trillion market cap, is in an ideal position to purchase the Disney Corporation, assuming it sells off some of its acquisitions beforehand and slims down to avoid FTC scrutiny.
Iger addressed these claims in Wednesday’s call, noting that the claims are baseless and that “anyone who wanted to speculate about such things would have to immediately consider the global regulatory environment, and I’ll say no more than that.”