Disney Boosts Cash Dividend by 50% as Streaming Losses Narrow
Disney announced on Wednesday that it would be increasing its cash dividend by 50%, following the release of its fiscal first-quarter earnings report. The company reported adjusted earnings of $1.22 per share, surpassing analysts’ expectations of $0.99 per share. Additionally, Disney provided guidance for full-year fiscal 2024 earnings, projecting a 20% increase compared to 2023.
While revenue came in slightly lower than expected at $23.5 billion, Disney’s streaming losses narrowed significantly. The company has been facing challenges in its linear TV business, slower growth in its parks business, and losses in streaming. However, CEO Bob Iger has implemented cost-cutting measures to combat these issues, and the company is on track to meet its annualized savings target of $7.5 billion by the end of fiscal 2024.
As a result of the positive earnings report, Disney’s shares jumped about 7% in after-hours trading. The company also made several exciting announcements during the earnings call. Disney revealed plans to invest $1.5 billion in Epic Games, the creator of the popular video game Fortnite. This partnership aims to create a “transformational games and entertainment universe” that integrates Disney’s storytelling into Fortnite.
On the content side, Disney announced that its streaming platform, Disney+, will be the exclusive home for “Taylor Swift: The Eras Tour (Taylor’s Version).” The concert film will feature additional acoustic songs, including “Cardigan.” Additionally, a sequel to the animated film “Moana” is set to hit theaters in November.
In terms of streaming profitability, Disney reported that streaming losses within its entertainment division decreased from $984 million to $138 million compared to the prior-year period. This improvement can be attributed to price increases for streaming services. However, there was a slight decline in core Disney+ subscribers due to these price hikes. Despite this, Disney expects to add 5.5 million to 6 million core Disney+ users in the second quarter.
Disney also provided an update on its over-the-top (OTT) ESPN streaming service, revealing that it will launch in fall 2025. This announcement follows news of a collaboration between Disney’s ESPN, Warner Bros. Discovery, and Fox to launch a new sports streaming service later this year.
The company remains optimistic about the future profitability of its streaming businesses and expects to reach profitability by the fourth quarter of fiscal 2024. To further support this goal, Disney plans to crack down on password sharing among subscribers, although the impact of this initiative is not expected to be significant until the second half of this year.
In summary, Disney’s strong earnings report and increased cash dividend reflect the company’s efforts to overcome challenges in its linear TV and streaming businesses. With new partnerships, content offerings, and a focus on profitability, Disney is positioning itself for continued success in the evolving entertainment industry.
