Disney’s streaming business turns first profit

Disney on Wednesday reported a profitable third quarter after recent financial struggles, which included its streaming business turning a profit for the first time.

According to the Associated Press (AP), Disney’s direct-to-consumer division, which includes Disney+ and Hulu, reported a reduced operating loss of $19 million, significantly down from the $505 million loss the previous year. Revenue for this segment rose 15 percent to $5.81 billion.

This financial report followed Disney’s announcement of price increases for Disney+, Hulu and ESPN+ effective October 17. Prices for Disney+ and Hulu with ads will each increase by $2 to $9.99 per month, while the ad-free versions will see similar hikes.

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The AP cited Disney as reporting its combined streaming businesses achieved profitability due to a robust performance from ESPN+ and better-than-expected results from the direct-to-consumer unit. Disney CEO Bob Iger and CFO Hugh Johnston noted in prepared remarks that ESPN had its most watched third quarter in primetime in a decade among adults age 18-49, driven by major sports events.

In addition, Disney’s operating income nearly tripled to $1.2 billion as Disney’s box office success involved Inside Out 2, which recently became the highest-grossing animated film of all time with over $1.5 billion in global revenue, and the current success of Deadpool & Wolverine.

For the quarter ending June 29, Disney earned $2.62 billion, or $1.43 per share, reversing a loss of $460 million from the previous year. Adjusted earnings were $1.39 per share, and revenue rose 4 percent to $23.16 billion, surpassing Wall Street’s forecast of $22.91 billion, the AP reported.

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The company now anticipates a 30 percent growth in full-year adjusted earnings per share, the AP reported.

Newsweek reached out to Disney via email for comment.

However, the news comes as Disney’s theme parks have been underperforming. Experts cite price hikes and increased competition as reasons for the decline in visitors following the COVID-19 pandemic.

According to the AP, the company warned that reduced demand at U.S. parks might persist in the coming quarters as the fourth-quarter operating income for the Experiences division is expected to decline by mid-single digits.

Disney attributed the decline in domestic park operating income to increased costs from inflation, technology spending and new guest offerings. Revenue for domestic parks grew 3 percent in the third quarter, while international park revenue rose 5 percent, the AP reported.

According to Bloomberg UK, Disney is aiming to reduce costs by eliminating approximately 140 jobs—or about 2 percent of staff—at Disney Entertainment Television.

Bloomberg UK cited “people with knowledge of the matter” who did not want to be identified, the company’s ABC stations and networks like NatGeo and Freeform would be worst hit by the changes. NatGeo will allegedly lose 13 percent of its staff.

Disney is also reportedly eliminating jobs in its marketing and publicity teams.

This is not the first Disney has faced staff cuts. Since Iger returned to the entertainment conglomerate in 2022, he has cut billions of dollars in costs at Disney and eliminated over 8,000 positions as part of a plan to eliminate $7.5 billion in annual expenses.