The Walt Disney Company (DIS) reported stronger-than-expected fourth-quarter earnings on Thursday, driven by its direct-to-consumer (DTC) business, which reached profitability amidst an industry-wide pivot to streaming. Disney posted adjusted earnings of $1.14 per share, above the forecasted $1.10 per share and a notable increase from $0.82 in the same period last year. Quarterly revenue reached $22.57 billion, exceeding analyst estimates of $22.47 billion and marking growth from the $21.24 billion reported a year ago.
In early trading, Disney’s stock rose over 5%, signaling investor confidence in the company’s growth trajectory, particularly in its DTC streaming sector. Disney+, Hulu, and ESPN+ collectively generated an operating income of $321 million for Q4, a dramatic shift from a $387 million loss in the same period last year. This result outpaced Bloomberg analysts’ projection of $203 million in DTC income, underscoring the importance of streaming profitability as consumers increasingly favor DTC services over traditional cable packages.
Mid-October price increases across Disney’s streaming platforms align with a broader strategy to boost margins amid declines in linear television, a trend across the media landscape. Disney anticipates DTC operating income reaching around $875 million by fiscal 2025.
The earnings report also comes as Disney faces leadership transitions. CEO Bob Iger, expected to step down by 2026, is actively engaged in succession planning, with Disney board member and former Morgan Stanley CEO James Gorman set to assume the role of board chairman in early 2025.
Revenue in Disney’s Parks, Experiences, and Products segment rose 1% year-over-year to $8.24 billion, narrowly surpassing forecasts. However, operating income in this segment dropped by 6% to $1.66 billion, primarily impacted by international challenges, including attendance declines during the Paris Olympics and a typhoon in Shanghai. U.S. parks offered a bright spot with a 5% income increase compared to the previous year, despite expected weather-related financial impacts in the upcoming quarter.
Disney forecasts a “high single-digit” EPS growth rate for 2025, surpassing prior projections of a 4% increase, and anticipates double-digit growth through 2027. As part of its fiscal strategy, the company targets $3 billion in stock buybacks and plans for “dividend growth aligned with earnings growth” in the coming years, further strengthening its position in a rapidly evolving entertainment market.
