Disney reports first profit in streaming business; sports revenue from Star India falls by 17%

Disney’s revenue for the quarter ended March 30 increased to $22.1 billion from $21.8 billion in the year-earlier period. The earnings per share for the quarter increased to $1.21 from 93 cents. Analysts had been expecting revenue of $20.53 billion and earnings per share of $1.02.

The Q2 FY 24 results further state a decrease in the operating loss (17%) at Star India due to lower programming and production costs attributable to the non-renewal of Board of Control for Cricket in India rights, partially offset by an increase in costs for Indian Premier League matches due to more matches aired in the current quarter compared to the prior-year quarter.

The company reported it's first ever profit in the streaming business. Disney further stated that it expects its combined streaming businesses to be profitable by the fiscal fourth quarter, in line with guidance first established at the start of the streaming wars in 2019.

“The Entertainment Direct-to-Consumer (D2C) business was profitable in the second quarter. While we are expecting softer Entertainment DTC results in Q3 to be driven by Disney+ Hotstar, we continue to expect our combined streaming businesses to be profitable in the fourth quarter,” it added.

The number of Disney + ‘core’ subscribers (without Disney+Hotstar) increased to reach 117.6 million versus 111.3 on December 30, 2023. Hulu on the other hand, reported 50.2 million subscribers.

However, paid subscribers for Disney+ Hotstar decreased to 36 million as of March 30, 2024, as compared to December 30, 2023, when the subscriber count was 38.3 million. Disney+Hotstar‘s average monthly revenue per paid subscriber also decreased from $1.28 to $0.70 due to lower advertising revenue.

Disney+ Hotstar has been losing subscribers for a while now. As per media reports the platform lost 12.5 million paid subscribers during the third quarter ending on July 1, 2023. Another 2.8 million left the platform in November 2023.

The company’s sports unit (ESPN) saw a 2% increase in revenue to reach $4.3 billion. The company’s experiences division (theme parks and consumer products) reported a 10% increase to reach $8.4 billion. However, it saw a 17% decline in sports revenue from Star Sports reaching $105 million in Q2FY24 vs $127 million in Q2FY23.

“Our strong performance in Q2, with adjusted EPS(1) up 30% compared to the prior year, demonstrates we are delivering on our strategic priorities and building for the future,” says Robert A. Iger, chief executive officer, The Walt Disney Company.

“Our results were driven in large part by our Experiences segment as well as our streaming business. Importantly, entertainment streaming was profitable for the quarter, and we remain on track to achieve profitability in our combined streaming businesses in Q4,” he added.

The CEO also stated that the turnaround and growth initiatives they set in motion last year have continued to yield positive results.

“We have a number of highly anticipated theatrical releases arriving over the next few months; our television shows are resonating with audiences and critics alike; ESPN continues to break ratings records as we further its evolution into the preeminent digital sports platform; and we are turbocharging growth in our Experiences business with a number of near-and long-term strategic investments,” he added.