The Walt Disney Company released its fiscal third quarter earnings on Wednesday, surpassing Wall Street estimates with key performance indicators such as revenue and earnings per share. Disney reported quarterly revenue of $23.2 billion, a 4% year-over-year increase, bringing its nine-month total to $68.8 billion. Total quarterly income for the company finished in the green at $3.093 billion after the media conglomerate had reported a loss at this time last year. The nine-month total profit of $6.62 billion is up 76% from the same time in the previous year.
Earnings per share for the third quarter finished at $1.39, indicative of a 35% year-over-year increase. While the company reported gains in these categories, its free cash flow diminished to $1.24 billion, down 24% from last year. Yet within the nine months of the current fiscal year, the company has $4.53 billion in this category, up more than 100% from last year.
Disney had several victories across its divisions, including Inside Out 2 becoming the highest-grossing animated film of all time. The company’s total segment operating income increased by 19% year-over-year to $4.225 billion, which includes a strong quarter for streaming. Disney+, Hulu and ESPN+ collectively attained a profit for the first time one quarter earlier than the company had expected, securing a boon of $47 million. ESPN+ brought in $66 million of the aforementioned revenue, offsetting the $19 million lost from the company’s other streaming services.
Subscribers for Disney+ in the United States and Canada augmented by 1% to 54.8 million; however, the average monthly revenue per paid subscriber of $7.74 is a 3% quarterly drop. Disney is engaging in a price hike for its streaming services beginning in October concurrent with new bundling options.
For the third fiscal quarter, ESPN generated $4.28 billion in revenue, which is representative of a 5% year-over-year increase. Throughout the quarter, the company attained several viewership milestones, including the largest P18-34 share for the NBA Finals in over 20 years. The WNBA season has included six of the most-watched league games ever on ESPN platforms, and the league is averaging 1.3 million viewers on these networks through the first 20 games, a 183% year-over-year increase. Furthermore, the Stanley Cup Playoffs on ESPN finished with the most-watched NHL game since 2019 and a 60% increase compared to Warner Bros. Discovery’s presentation on TNT last year.
Disney reported $1.09 billion in operating income for ESPN, a 4% increase compared to the conclusion of last year’s fiscal third quarter. The company attributes the operating results to growing advertising revenue due to increased rates and sponsorship revenue, growth in subscription revenue and an increase in programming and production costs. ESPN is in approximately 66.5 million homes, according to data from Nielsen Media Research, and has endured lower affiliate revenue which is partially offset by higher effective rates.
The Walt Disney Company (ESPN/ABC) recently announced that it reached an 11-year media rights deal to continue broadcasting National Basketball Association games for a reported $2.62 billion per year. Aspects of this new media rights deal include retaining the NBA Finals, broadcasting one of two conference final series over the next 11 years and regular-season broadcast windows, including games on Christmas Day. With the bolstered value of women’s sports and the ability to leverage ESPN into the digital age, especially ahead of the planned 2025 launch of its direct-to-consumer streaming service, the company is optimistic about the long-term benefits of the deal.
“And so, we believe that by the time this kicks in a year from now that a lot of the pieces will be in place in terms of driving more advertising revenue, more distribution revenue moving to digital,” Iger said. “And another thing that we’ve done here is we’ve secured international rights, particularly to the Finals, not in every market around the world, but in most markets, and that will drive some added revenue as well.”
Iger announced last year that Disney was looking for a strategic partner to take a minority equity stake in ESPN. Subsequent reports divulged that some of these conversations have taken place with telecom brands, technology firms and sports leagues. While the company has yet to reach an agreement in this area, the conversations remain ongoing.
“The only thing I can say is, believe it or not, we’re still having conversations about it,” Iger said. “We thought and continue to believe there may be opportunities to partner with others, particularly on the content side. And that’s why we’ve continued to explore it, but nothing more to add.”
