Have we turned a corner?
The past few years have been difficult. the walt disney company (NYSE:DIS) has been marred by problems with its streaming business, high costs, political entanglements, and proxy wars. But the company’s shares soared Thursday after it reported strong first-quarter results and upbeat CEO Bob Iger said the media and entertainment giant had “turned the corner.”
Disney beat its revenue and profit forecasts, announced several new plans and issued strong guidance that sent its stock up 11% on Thursday, exceeding $110 per share.
Disney launches new streaming sports venture
During the fiscal first quarter, Disney’s revenue was little changed year-over-year to $23.5 billion, but operating income rose 27% to $3.9 billion and earnings per share (EPS) rose 49% to $1.04. This was primarily due to cost-cutting initiatives, which resulted in $500 million in cost savings in the quarter.
“Last quarter’s strong performance demonstrates that we have entered a new era for our company focused on strengthening ESPN for the future, building streaming into a profitable growth business, revitalizing our movie studios, and turbocharging growth in our parks and parks. We have experience,” Iger said on the earnings call.
Disney’s main revenue generator in the quarter was its experiences business, which includes its theme parks. The segment’s revenue increased 7% year-over-year to $9.1 billion. The sports segment, which includes ESPN, saw revenue rise 4% to $4.8 billion for the quarter, while the entertainment segment, which includes movies, streaming and TV, fell 7% to $10 billion.
The streaming business has been a major drag on Disney’s profits, and although it posted losses again last quarter, those losses were less steep. Overall, direct-to-consumer streaming services like Hulu and Disney+ posted a loss of $216 million, down from a loss of $1.1 billion in the same quarter a year ago. The number of Disney+ paid subscribers decreased by 1% to 111.3 million, but average monthly sales per subscriber increased by 2% due to an increase in subscription fees. Hulu subscriber count increased 2%, and average monthly revenue per subscriber increased 4%.
Another big news from Disney is that it is merging with ESPN, Fox, and Warner Bros. to create a direct-to-consumer streaming sports platform that will include sports content from all three companies. Discovery (NASDAQ:WBD) announced a joint venture.
The monthly fee has not been disclosed, but it is expected to be a paid service. Each company will own one-third of the joint venture and operate under its own brand and management team. We are aiming for a fall debut.
“The launch of this new streaming sports service is an important moment for Disney and ESPN, a huge win for sports fans and an important step forward for our media businesses,” Iger said. “This means we can offer consumers the full range of ESPN channels along with sports programming from other industry leaders as part of a differentiated sports-focused offering.”
Disney also partnered with Epic Games and purchased a $1.5 billion stake in the company to create a new world of games and entertainment tied to the popularity of Epic Games. fortnite Video games.
Stream to make money?
As Iger pointed out on the earnings call, this quarter was a turning point for the company, and that explanation may be based on its outlook for fiscal 2024.
On the cost savings front, the company said it is on pace to meet or exceed its annual savings target of $7.5 billion by the end of fiscal 2024. We also expect earnings per share to be approximately $4.60 by the end of fiscal 2020. % increase compared to 2023.
Additionally, Disney’s free cash flow is targeting to reach approximately $8 billion by the end of fiscal 2024. This is an increase from $4.9 billion at the end of last fiscal year.
It’s also worth noting that Disney expects its struggling streaming business to be profitable by the end of the fiscal year.
Disney’s price-to-earnings (P/E) ratio is currently high at 60, but its future P/E ratio is more reasonable at 21. There’s a lot to like about the direction Disney is headed, but investors may also want to: For now, turn your attention to seeking continued execution from management.
