In its second quarter, The Walt Disney Co. reported a loss due to restructuring and impairment charges, despite its adjusted profit surpassing expectations and its streaming business turning a profit.
The company’s theme parks also continued to perform well, prompting Disney to raise its outlook for the year.
Although Disney anticipates a softening in its overall streaming business in the current quarter, primarily due to its platform in India, Disney+Hotstar, it expects its combined streaming businesses to be profitable in the fourth quarter and to serve as a significant future growth driver for the company, with further improvements in profitability expected in fiscal 2025.
The direct-to-consumer business, which includes Disney+ and Hulu, posted a quarterly operating income of $47 million, a significant improvement from the $587 million loss a year earlier. Revenue for this segment also increased by 13% to $5.64 billion. Disney+ core subscribers grew by more than 6% in the second quarter, while the company’s cable business saw an 8% decline in revenue.
CEO Bob Iger expressed confidence in the company’s turnaround and growth initiatives, highlighting plans to add an ESPN tab to Disney+ by the end of the year and to start cracking down on password sharing for its streaming service in some markets next month, with a global expansion planned for September.
Revenue at Disney’s domestic theme parks rose 7%, while its theme parks overseas reported a 29% increase. However, the company acknowledged higher costs at its theme parks during the quarter due to inflation.
For the period ended March 30, Disney lost $20 million, or a penny per share, compared to a profit of $1.27 billion, or 69 cents per share, a year ago. Restructuring and impairment charges surged to $2.05 billion from $152 million in the prior-year period. Adjusted earnings, which excluded these charges and other items, were $1.21 per share, beating analysts’ predictions of $1.12 per share.
Disney’s revenue rose to $22.08 billion from $21.82 billion a year earlier, slightly lower than Wall Street estimates of $22.13 billion. The company now has a full-year adjusted earnings per share growth target of 25%, up from its previous prediction of at least 20%.
The Associated Press contributed to this article.