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Disney+ Adds 6 Million Q2 Subs, Streaming Biz Posts First-Ever Operating Profit

Disney+ Adds 6 Million Q2 Subs, Streaming Biz Posts First-Ever Operating Profit

The Walt Disney Co. May 7, in a switch, reported quarterly earnings ahead of the market open. The media giant said its branded Disney+ subscription streaming video service added 6.3 million net subscribers in its second quarter (ended March 31), to end the period with 117.6 million subs, excluding Disney+ Hotstar in India. The tally was up from 111.3 million subs at the end of 2023.

Disney+ Hotstar lost 2.3 million subscribers to end the quarter with 36 million. Disney+ ended the period with 153.6 million global subs, up from 149.6 million subs in the prior year period.

Hulu added 700,000 net subs to end the period with 45.8 million compared with 45.1 million a year ago. The online TV service, Hulu + Live TV, lost 100,000 subs to end the period with 4.5 million.

More importantly, the direct-to-consumer business segment, which includes Disney+, Hulu, ESPN+ and Hulu + Live TV, reported its first-ever operating profit of $47 million on revenue of $5.64 billion. That was up from an operating loss of $587 million on revenue of $4.98 billion in the previous-year period. ESPN+ reported a standalone operating loss of $18 million.

Disney attributed the revenue growth to higher subscription revenue from higher rates due to increases in retail pricing across the streaming services, and subscriber growth at Disney+.

“Entertainment streaming was profitable for the quarter, and we remain on track to achieve profitability in our combined streaming businesses in Q4,” CEO Bob Iger said in a statement.

On the fiscal call, Iger said that select ESPN programming would be coming to Disney+ in the form of a branded button on the service at the end of the year, ahead of Disney’s co-launch in 2025 of a branded sports app with Fox and Warner Bros. Discovery.

“We see this as a first step to bring to ESPN-Disney+ viewers as we ready the enhanced stand-alone ESPN streaming service in the fall of 2025,” Iger said, adding that the programming would help condition viewers that “sports is going to be there.”

The CEO reiterated that he has no plans taking ESPN away from legacy pay-TV distribution.

“ESPN is going to make a pivot toward digital, but without abandoning linear,” he said. “If people want to get ESPN … through a cable or a satellite subscription, that’s fine.”

Separately, Disney is forecasting an operating loss in the streaming business in the current third quarter, ending June 30, which is largely due costs surrounding Disney+ Hotstar’s ICC cricket rights in India.

“We also do not expect to see core subscriber growth at Disney+ in the third quarter, but anticipate sub-growth will return in Q4,” CFO Hugh Johnston said on the call. “We continue to expect our combined streaming businesses to be profitable in the fourth quarter and expect further improvements in profitability in fiscal 2025.”

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