Getty Images
- Disney are currently undertaking cost-cutting measures, with up to 7,000 jobs to be axed
- Disney+ loses four million subscribers during the quarter
- ESPN+ grows subscriber base by 400k
Disney has announced revenues for the fiscal second quarter of 2023 were up 13 per cent year-over-year (YoY) to US$21.82 billion, with its direct-to-consumer (DTC) segment narrowing its operating losses by 26 per cent YoY to US$659 million.
The media conglomerate is currently embarking on a series of cost-cutting measures, with up to 7,000 jobs to be eliminated as part of chief executive Bob Iger’s goal of achieving US$5.5 billion in savings, as well as making its streaming division more profitable.
Disney’s DTC segment posted US$5.51 billion in revenues for the quarter, which was a 12 per cent YoY increase. In terms of streaming subscriptions, ESPN+ increased its base by 400,000 for the quarter, improving its total to 25.3 million. Meanwhile Disney+ lost four million subscribers, with the platform now having 157.8 million global subscribers. Notably, Disney+ Hotstar, the company’s streaming service in India and parts of Southeast Asia, lost 4.6 million subscribers during the quarter.
The lower operating loss at Disney’s DTC subsidiary was credited to increased results at streaming services Disney+ and ESPN+, with both services having increased their subscriber revenue. Globally, Disney+ saw a 13 per cent increase in average monthly revenue per paid subscriber for the quarter, with ESPN+ also improving in the same metric by two per cent.
During the company’s earnings call, Iger also confirmed that Disney+ would incorporate content from Hulu, with the combined offering to launch by the end of the year. While calling the move a “logical progression of our DTC offerings,” he also reiterated that Disney+, Hulu and ESPN+ would remain being offered as standalone services. The chief executive also revealed that talks with Comcast were underway regarding a potential buyout of the rival network’s stake in Hulu.
Disney’s chief financial officer Christine McCarthy also announced on the call that the company intended to remove more content from its streaming platforms, which it projects will result in a writedown valued between US$1.5 billion and US$1.8 billion for the fiscal third quarter. Its plans also includes a smaller volume of content to be rolled out going forward on its streaming platforms.
Meanwhile, the media conglomerate’s linear networks revenue decreased by seven per cent YoY to US$6.6 billion. US-based Disney’s revenue from its domestic channels fell by four per cent to US$5.57 billion, while operating income dropped by 33 per cent to US$1.6 billion. The latter was partially credited to higher sports programming and production costs for the College Football Playoff and National Football League (NFL) games, as well as contractual rate increases for National Basketball Association (NBA) programming.
Disney’s content sales, licensing and other revenues for its media and entertainment distribution segment also increased its revenues by 18 per cent for the quarter to US$2.2 billion.
“We’re pleased with our accomplishments this quarter, including the improved financial performance of our streaming business, which reflect the strategic changes we’ve been making throughout the company to realign Disney for sustained growth and success,” said Iger.
“From movies to television, to sports, news, and our theme parks, we continue to deliver for consumers, while establishing a more efficient, coordinated, and streamlined approach to our operations.”
SportsPro says…
Narrowing DTC losses by 26 per cent and increasing revenue, despite losing subscribers, is a positive trend for Disney following the return of Iger last year. One of his major goals was improve the performance of that division which had seen costs spiral under the leadership of Bob Chapek.
In particular, the House of Mouse’s ability to start squeezing more revenue from Disney+ and ESPN+ will please more agitated shareholders, with average monthly revenue per paid subscriber up 13 per cent against the previous quarter.
However, there has also been a notable impact of the loss of the domestic digital rights to Indian Premier League (IPL) Twenty20 competition to the Disney+ Hotstar streaming service. This was just the first IPL season under the new broadcast deals and the Indian streaming platform shed 4.6 million subscribers during the quarter, making it very clear how important premium live cricket is to the business in that market.
