Disney’s stock increased on Thursday following the release of higher-than-expected quarterly earnings. According to analysts, the company’s impressive performance could alleviate increasing pressure on the entertainment conglomerate to significantly change its operations.
Shortly after the market opened on Thursday, Disney stock surged more than 7% to over $90, reaching its highest-ever share price since August and registering its biggest daily increase since last November.
Disney went on to say that it plans to continue its “aggressive management” of its fundamental expenses and to add $2 billion to its cost-cutting efforts to meet its target of $7.5 billion.
Disney’s ABC Network and other controlled TV stations received lower political advertising revenues during the quarter, which was the main cause of the decline in ad revenue. CEO Bob Iger said that the business would consider selling its television holdings over the summer.
Disney reported sales for the quarter of $21.2 billion, slightly less than Wall Street’s consensus expectation of $21.4 billion but up 5% from the same period last year. Earnings per share increased to 82 cents from 30 cents a year earlier, above the Street’s 71 cents. The earnings from ongoing operations increased to 14 cents from 9 cents in the previous year.
Open a Walt Disney stock chart (DIS 7.36%). Rewind to May 10, 2023, which is almost six months ago. The media conglomerate’s shares haven’t traded in triple digits since then. Being a shareholder has been difficult these past few months, but it appears that Disney is finally turning the turnaround.
Last night’s financial report, which for the first time divided the group’s profitability into three main categories with the ESPN-led sports section reporting as a stand-alone division, made a significant portion of his turnaround work clear.
Sports-related income for the financial fourth quarter exceeded Wall Street estimates of approximately $862 million, rising 14% from the same period last year to $981 million. The estimated revenue was $3.91 billion.
Aside from experiences, there was little reason for sales increase. With a 12% increase in DTC sales more than offsetting a 9% fall in sales of linear networks and a minor decline in sales of content and licensing, fourth-quarter entertainment revenue increased 2% year over year.
The advertising on linear networks was poor, just like it has been with peers. But even with higher rates, affiliate revenue decreased, and as long as pay-TV subscribership and linear viewership keep falling, we don’t see much room for growth in any of these revenue streams.
Disney’s stock has been declining for a while now, and during that time, there have been calls for the company to fundamentally change its business model. These calls have included considering the sale of its majority-owned ESPN unit and dealing with an ongoing obstacle from a billionaire activist investor Nelson Peltz, who owns approximately 1% of Disney and has actively pushed for Disney to cut costs.
During the quarter, Disney’s experience segment witnessed a 13% increase in sales to $8.16 billion, driven by increasing park attendance and domestic and international ticket pricing. The business stated that although operating costs are higher in the Florida resort, hotel rates are still lower there. Approximately 66% of this division’s entire revenue came from parks.
Disney’s ESPN BET Launch And Hulu Deal
Subject to final permissions, Disney stated early on Thursday that it would start its ESPN BET online sportsbook throughout 17 U.S. states on November 14.
Furthermore, official odds from ESPN BET are now used by ESPN for editorial and other purposes. Additionally, as of November 10, ESPN’s Daily Wager program will become ESPN BET Live.
Disney stated last Wednesday that it would buy NBC Universal, which is owned by Comcast (CMCSA), for the remaining 33% of Hulu. According to the terms of a 2019 options agreement, The House of Mouse anticipates paying NBCU approximately $8.61 billion by December 1. Although the specific date is unknown, the acquisition is expected to be finalized in 2024.