Walt Disney Co. has reported its first-quarter earnings, which have exceeded analysts’ expectations along with growth in streaming subscribers. The result has finally brought out the CEO from his predecessor’s shadow.
Bob Chapek has been CEO for the last two years of the world’s most extensive entertainment company. However, the current result is the first since Bob Igor retired as executive chairman in December after a long stint with Disney.
Disney reported earnings of $1.06 per share that was much above the 57-cent average prediction of the analysts. As discussed by Bloomberg News on Wednesday, sales increased to $21.8 billion for the quarter ending January and topped the Burbank California-based entertainment company’s expectations.
The Disney Parks and the new streaming service from Disney+ delivered a robust surprise with a huge upswing, providing a punch that cheered investors and took the stock up by 10% in extended trading Wednesday.
Disney Park division reported $2.45 billion in operating income compared to a previous year’s loss. Revenue from resorts doubled from the pandemic lows as it was helped by the introduction of a new service, Genie+ that allowed customers to jump the queue by paying an extra fee for rides.
Disney reported that new subscriptions were 11.8 million, up from 8.16 million analysts at Wall Street projected. Disney shares had crashed in November after reporting subscriber numbers that fell short of Wall Street expectations. After a tepid outlook in January, Netflix also added to the worries on streaming growth.
After the latest report, Disney’s share prices jumped to $162.10. The stock had declined 4.9% in 2022 till Wednesday’s close in New York.
Chapek’s becoming CEO just before the pandemic that spread through the U.S. could not have come at a more challenging time, according to Vontobel Asset Management, Money Manager, Markus Hansen. Vontobel held 1.77 million Disney shares as of September 30, 2021, as per Bloomberg data.
Chapek had helped the company with recovery with his expertise in running theme parks.
In a call with investors, Disney’s Chief Financial officer, Christine McCarthy, said that new technologies like mobile phones for hotel check-in and ordering food have helped reduce costs. Chapek noted that the staging of live events and the return of international visitors should boost attendance at the park in the future.
Like other media companies, Disney has also made a big bet on the streaming business. Consumers are increasingly canceling cable TV subscriptions to watch movies and TV online.
Streaming losses
The direct-to-consumer unit losses increased to $593 million due to higher marketing, programming, and technology costs. However, the additions to subscriptions and upbeat results from AT & T Inc. HBO Max business have helped ease concerns about the slowing down of the Streaming business.
Disney’s traditional TV division business profits fell to $1.5 billion, down by 13% as higher programming costs set off increased fees from cable TV distributors and advertisements.
Disney reported a loss of $98 million in its content unit sales, including films. With theatres still struggling, home entertainment revenue was not enough to outweigh the released pictures’ losses.
Encanto, the recently released film on the streaming platform on Christmas Eve, helped them lift the numbers. The animated musical movie performed well online though it delivered modest results at the theatres.
