Disney+ added 7.9 million subscribers in the last quarter for a total of 138 million worldwide, the company said on Wednesday, helping it avoid the slowdown in streaming that recently dragged the stock price down. action of Netflix.
Like most media companies, Disney’s stock took a beating following Netflix’s announcement last month that it had lost 200,000 subscribers in the first three months of the year and was expected to lose two million more this quarter. After years of applauding media companies for losing billions on streaming, investors are now pushing to find a path to profitability.
The release of films like Pixar’s “Turning Red” helped Disney+ attract subscribers in the first quarter, which ended April 2. Shares of Disney fell about 3% after hours after the earnings announcement.
Disney’s results are good news for CEO Bob Chapek, who has faced a public relations crisis stemming from the company’s response to Florida school legislation that, among other things, restricts discussions in class on sexual orientation and gender identity. (Disney is the state’s largest private employer.)
The company initially refrained from speaking out publicly against the bill, but backtracked after an internal revolt. Mr. Chapek later spoke out against the legislation, earning him the ire of conservatives, including Florida Governor Ron DeSantis. Last month, Republican lawmakers in Florida revoked a 1967 law that allowed Walt Disney World to operate as its own quasi-government. In the wake of the uproar, Geoff Morrell, who joined Disney in January as the most senior government relations and communications manager, resigned last month.
The race to rule TV streaming
Disney’s revenue rose 23% from a year ago to $19.2 billion, but beat analysts’ expectations. Disney said it was impacted by the decision to pull some of its content from other distributors in favor of its own channels, which meant a $1 billion cut in licensing revenue as part of a compromise to grow its direct-to-consumer business.
Disney reported earnings per share of $1.08, missing analysts’ expectations of $1.17.
Disney’s theme parks unit returned a year ago when the Covid-19 pandemic delayed in-person attendance. The division’s revenue doubled from the same period last year, with a new line-breaking system driving increases.
As streaming services seek more subscribers, India is shaping up to be an important market. Deep-pocketed media companies are preparing to bid for the rights to broadcast cricket matches from the popular Indian Premier League. Disney currently has the rights to show the matches on its Hotstar service, which it acquired as part of its 2019 mega-deal with 21st Century Fox. Losing these rights could be a blow. However, Chapek said Disney can meet its subscriber goals even if it doesn’t retain those rights.
In a call after the results were announced, Mr. Chapek said Disney would eventually become more aggressive in moving major live sports to the ESPN+ streaming service. Cash generated from ESPN’s lucrative cable channel portfolio currently makes that untenable, so the company is taking a measured approach to sports streaming, Chapek said.
“What we’re doing is kind of putting one foot on the dock if you will, and one foot on the boat,” Mr Chapek said.
Mr. Chapek also answered an analyst’s question about the lack of new Disney movies opening in the Chinese theatrical market, where the company has had a spotty track record in recent years. Mr Chapek said Disney films were doing well without the help of moviegoers in China, pointing to the success of ‘Doctor Strange in the Multiverse of Madness’.
“We’re pretty confident that even without China – if we continue to have difficulty securing titles there – it doesn’t really hinder our success,” Chapek said.