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Disney's streaming services report first profit since 2019, earning $47M in Q2, amidst strategic revamps and hit shows.
By Bill Bullington
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Disney's streaming services, including Disney+ and Hulu, have reported a profit for the first time since the launch of Disney+ in late 2019. This achievement comes months earlier than anticipated, with the streaming unit earning $47 million in its second fiscal quarter, a significant turnaround from a $587 million loss the previous year. The success is attributed to strategic cost-cutting measures and the popularity of Hulu programs such as "Shogun" and "The Bear." Despite these gains, Disney's chief financial officer, Hugh Johnston, noted that the streaming business is expected to incur losses in the current quarter due to Disney+ Hotstar in India but will return to profitability in the autumn.
Disney reported a $20 million net loss during the second quarter, primarily due to goodwill impairments. However, when excluding these items, Disney's adjusted earnings were $1.21 a share, up 30 percent from a year ago and surpassing Wall Street's expectations of $1.10 a share. The company has also raised its adjusted earnings target for the full year. Bob Iger, Disney's chief executive, credited the strong results to the company's experiences division, highlighting the performance of theme parks outside the US, including Shanghai Disney.
Following the successful defense against a proxy challenge from Trian Partners’ Nelson Peltz, CEO Bob Iger emphasized the positive outcomes of the company's turnaround and growth initiatives set in place last year. Disney is focusing on turbocharging growth in its experiences business through strategic investments. Additionally, the company's plan to rejuvenate its movie studios will soon be tested with the release of several anticipated titles, including "Kingdom of the Planet of the Apes," "Pixar’s Inside Out 2," and "Marvel’s Deadpool & Wolverine."
Hugh Johnston, CFO of Disney:
"Crossing the profitability threshold early is something that we can feel very good about."
Bob Iger, CEO of Disney:
"We are turbocharging growth in our experiences business with a number of near- and long-term strategic investments." "The turnaround and growth initiatives we set in position last year have continued to yield positive results."
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