Media giant Disney has posted mixed results for the fiscal third quarter (Q3) as the company continues to face subscriber losses and vast restructuring costs.
For Q3, Disney exceeded Wall Street’s targets on earnings per share but fell slightly short of the $22.5 billion expected revenue, which totaled $22.3 billion, up 4% year-on-year (YoY). Operating income came in at $3.6 billion, which was down 6% YoY.
Subscriber losses continued over the last three months, with the company reporting 146.1 million Disney+ subscribers during Q3, a 7.4% decline from the previous quarter.
Most subscriber losses came from India’s Disney+Hotstar, which saw a 24% drop after Disney lost out on rights to domestic cricket’s popular Indian Premier League.
Viacom18, the Indian media and entertainment heavyweight, holds IPL streaming rights for the 2023-27 cycle through a major deal struck in June last year – the first time the Board of Control for Cricket in India (BCCI) governing body has sold digital rights separately to domestic linear TV rights.
Viacom18 secured the IPL streaming rights for just over $3 billion, with Star India (owned by Disney) retaining linear rights. Disney had held streaming rights during the previous IPL cycle, covering the action on that front through the Hotstar service.
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However, Disney also gained 800,000 subscribers in other parts of the world. In the US and Canada, Disney+ lost 300,000 subscribers while the streaming-only side of the media giant’s Hulu platform gained a similar number.
Its sports streaming service ESPN+, meanwhile, posted 25.2 million subscribers, down from 25.3 million in the previous quarter.
To tackle the loss of subscribers and falling revenue in its media and entertainment distribution division, Disney said it would raise the price of its add-free streaming tier in October and it was cracking down on password sharing – a move that mirrors that of streaming rival Netflix earlier this year.
The company halved its losses in its direct-to-consumer unit compared to the same period last year with a $512 million loss, compared to $1 billion.
Operating income for Disney’s linear networks fell 23% to $1.9 billion on revenue of $6.7 billion – down 6%. Revenue for Disney’s Parks, Experiences, and Products division was up 13% to $8.3 billion and operating income gained 11% to $2.4 billion.
In a statement, Disney chief executive Bob Iger said: “Our results this quarter are reflective of what we’ve accomplished through the unprecedented transformation we’re undertaking at Disney to restructure the company, improve efficiencies, and restore creativity to the center of our business.
“In the eight months since my return, these important changes are creating a more cost-effective, coordinated, and streamlined approach to our operations that have put us on track to exceed our initial goal of $5.5 billion in savings as well as improved our direct-to-consumer operating income by roughly $1 billion in just three quarters.
“While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we now have in place, and because of Disney’s core foundation of creative excellence and popular brands and franchises.
He added on the company’s earnings call later: “Moving forward, I believe three businesses will drive the greatest growth and value creation over the next five years.
“They are our film studio, our parks business, and streaming, all of which are inextricably linked to our brands and franchises.”
On the sports side, Disney is in talks with sports leagues about partnering with ESPN, while the broadcaster announced a deal with Penn Entertainment to launch a sportsbook under the ESPN Bet brand that will bring it $2 billion over 10 years.
Iger added: “We're considering potential strategic partnerships for ESPN looking at distribution, technology, marketing, and content opportunities where we retain control of ESPN.
“We receive notable interest from many different entities, and we look forward to sharing more details at a later date when we are further along in this process.”
Image: Charley Gallay/Getty Images for Disney