New York (AFP) – Disney reported better-than-expected profits Wednesday, citing a strong performance in its theme park business amid lingering worries about macroeconomic weakness. While Disney executives acknowledged weakness at theme parks in Shanghai and Hong Kong, the company’s press release described Walt Disney World in Florida as having enjoyed a “standout quarter,” adding that forward bookings at the US theme park “remain robust.” Disney also reported solid results in its streaming business, where it pointed to less “churn” from customers coming and going. The company has begun weighing a complementary offering that could be built around advertising sales. Overall profits were above analyst expectations, lifting shares.
Disney’s third-quarter profits came in at $2.6 billion, about half the level compared with the year-ago period, which was boosted by a large one-time tax benefit. Revenues rose 6.8 percent to $25.2 billion, a bit under analyst forecasts. “Demand is strong across domestic parks and cruises,” said Chief Financial Officer Hugh Johnston. Johnston said the company is “not immune” to effects from higher fuel prices, pointing to a “weaker consumer” at Asian parks. He reiterated that the ongoing US-Iran war in the Middle East had no impact on plans for a major new park in Abu Dhabi. While attendance at US parks rose three percent, Disney acknowledged a slowdown in the number of international visitors to its US venues.
Disney scored higher revenues in its entertainment business behind growth in streaming subscriptions. Chief Executive Josh D’Amaro said on an earnings conference call that the company was exploring a free streaming product for consumers, viewing the option as “way to expand our reach to a customer segment that’s more price sensitive.” While Netflix does not offer a free service, the streaming giant in October 2022 began offering a lower-priced ad-supported option, later attributing the offering with a boost in subscription counts. While the company praised the box office performance of “Toy Story 5” and “The Devil Wears Prada 2,” it saw “Star Wars: The Mandalorian and Grogu” underperform. However, Disney cited upside in theme park attendance and retail products built around the franchises.
In its sports division, Disney saw a bigger operating profit decline than it previously forecast due to four-game sweeps in the NBA basketball playoffs. Results were also dented due to higher sports rights costs. A note from Briefing.com said the results showed improved profitability in its streaming business, concluding that Disney’s “major earnings drivers are improving simultaneously.”
In parallel with the earnings, Disney announced a new venture with TikTok that will allow fans and creators to use Disney content to make short videos that will be broadcast on both TikTok and Disney’s streaming platform. Disney said in a statement it will make available Marvel, Star Wars and other content comprising “memorable scenes and moments from Disney movies and shows.” The agreement will “pilot in the US in the coming months with the intention of other markets to follow.” Shares of Disney rose 1.9 percent shortly after midday.
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