Disney, the entertainment giant in the Dow Jones, exceeded earnings expectations on Wednesday and upped its cost-cutting goals. As a result, Disney’s stock soared after hours. Meanwhile, Warner Bros. Discovery, a streaming competitor, faced a downturn on Wednesday post its Q3 earnings.
The big player in the Dow revealed adjusted earnings of 82 cents per share, excluding some items—an impressive 173% jump from the 30 cents per share reported last year. Revenue also saw a healthy 5% increase, reaching $21.24 billion.
The earnings surpassed FactSet’s prediction of 71 cents per share, but unfortunately, the sales growth didn’t quite meet the expected $21.37 billion.
Disney’s experiences segment raked in a 13% revenue increase, reaching $8.16 billion, slightly surpassing the estimated $8.15 billion.
The Disney+ streaming service closed the quarter with a whopping 150.2 million subscribers, beating expectations set at 148.7 million. To put it in perspective, Disney had 146.1 million Disney+ subscribers in Q3 and 164.2 million in Q4 2022.
In the grand scheme of commerce, the revenue directly flowing from consumers experienced a commendable uptick of 12%, soaring to an impressive $5.04 billion.
ESPN’s financial standing remained static in a year-over-year comparison, maintaining its position at $3.91 billion.
Over the last four fiscal quarters, the colossal entity known as Dow witnessed a decline in earnings, coupled with a modest 8.5% uptick in sales during this period.
The esteemed CEO, Bob Iger, underscored Disney’s steady progress towards achieving a noteworthy $7.5 billion in cost reductions. This surpasses the initial restructuring goal of $5.5 billion, reflecting the company’s commitment to stringent cost-cutting measures.
Projections from Disney anticipate a substantial enhancement in free cash flows, reaching levels reminiscent of the pre-pandemic era, with a marked improvement expected in 2024 compared to 2023.
Venturing into strategic business maneuvers, Disney unveiled its intention to acquire the remaining 33% stake in Hulu from the Comcast-owned NBC Universal. The financial transaction, estimated at around $8.61 billion by December 1, as per the terms of a pre-existing options agreement from 2019, is slated to conclude in the calendar year 2024, although the exact timeline remains uncertain.
Adding another layer to its business portfolio, Disney disclosed plans to unveil ESPN BET, an online sportsbook, across 17 states in the U.S. on November 14, pending final regulatory approvals.
Furthermore, ESPN has integrated the official odds supplied by ESPN BET into its editorial content. Notably, ESPN’s Daily Wager program is set for a transformation, rebranding itself as ESPN BET Live, effective November 10.
In a strategic alliance formed in August, ESPN collaborated with Penn Entertainment for a gambling sportsbook venture. Under the terms of this agreement, Penn Entertainment rebranded its Barstool Sportsbook as ESPN BET. Simultaneously, ESPN commits exclusively to utilizing ESPN BET, with Penn disbursing a substantial sum of $1.5 billion in cash over the next decade, accompanied by $500 million in warrants for the acquisition of PENN stock. In reciprocity, Penn secures exclusive rights to the ESPN BET trademark in the U.S. for the ensuing decade.
Navigating the financial landscape, Disney Stock remains a focal point of interest amidst these dynamic business developments.
In a late Wednesday crescendo, Disney stock experienced a formidable surge of nearly 4%. The shares orchestrated an impressive rally of 7.2% the previous week, with Thursday and Friday witnessing the ascent fueled by the noteworthy Hulu and ESPN BET revelations.
The trajectory of Disney stock this year has been characterized by a persistent downtrend, grappling with burgeoning content costs while witnessing a rebound in theme park traffic from the aftermath of pandemic-induced closures.
As of Wednesday’s closing bell, Disney stock has ebbed 2.6% in the year 2023.
Earnings Unveiled by Warner Bros.
On the early hours of Wednesday, Warner Bros., the progenitor of Max, formerly known as HBO Max, divulged its Q3 results.
The media behemoth reported a deficit of 17 cents per share, a marked improvement from the previous year’s loss of 95 cents per share. The revenue exhibited an uptick of 1.6%, reaching $9.98 billion.
Anticipations by FactSet analysts foresaw Warner Bros. reporting a loss of 9 cents per share against a sales figure of $9.97 billion.
Direct-to-consumer subscribers tallied 95.1 million for the third quarter, a decrease of 700,000 from Q2. Simultaneously, the average revenue per user for the period clocked in at $7.82, marking a 6% surge from 2022, excluding the currency impact.
Warner Bros. underscored the prominence of the “Barbie” movie, attaining the status of the highest-grossing film in the company’s annals, amassing nearly $1.5 billion at the global box office.
WBD stock witnessed a precipitous 19% plunge on Wednesday, momentarily reversing premarket positivity following the release of results. The stock had witnessed an ascent in six of the preceding seven trading days.
The shares experienced an upsurge exceeding 23% the previous week, propelled by the robust performance of streaming platform Roku (ROKU) in its Q3 revenue report, which boasted 2.3 million new accounts for the period. This marked the most significant weekly gain for WBD stock since January 2022.
Despite reclaiming its 50-day line last week, WBD stock retreated below its technical moving averages.
For the current year, shares exhibit a marginal decline of less than 1%, descending from their pinnacle in late February 2023.