Disney’s streaming and theme park businesses had a strong quarter, but soaring movie costs and a standoff with YouTube TV pulled down the company’s overall profitability.
The Walt Disney Company said on Monday that streaming profit (Disney+, Hulu and an ESPN service) increased 72 percent, to $450 million, partly because of higher prices. Disney no longer reports subscriber numbers for its streaming services, but the company said that it had lower cancellation rates from customers who bought the services as a bundle.
Disney’s popular cruise business also did well in the quarter, contributing to an 8 percent increase in operating profit at the company’s Experiences division and record quarterly revenue of $10 billion. Disney said total attendance at its theme parks in the United States increased 1 percent. Spending per visitor rose 4 percent, reflecting higher sales in merchandise and food.
But weaker results in movies and television hurt Disney’s overall profitability. Adjusted earnings per share receded 7 percent, to $1.63, and operating profit decreased 9 percent, to $4.6 billion. The declines came despite healthy overall revenue growth of about 5 percent. (The results beat analyst expectations.)
Disney shares fell roughly 6 percent at the start of trading.
In the most recent quarter, Disney released nine movies, up from four in the same period a year earlier, resulting in a significant increase in costs. “Avatar: Fire and Ash” alone cost an estimated $500 million to make and market. (Because it was released near the end of the quarter, almost all ticket revenue will be recorded in the next period.) “Tron: Ares” cost at least $320 million and managed only $142 million in ticket sales.
Also in the quarter, an estimated 10 million subscribers to YouTube TV lost access to ESPN, ABC and other channels under Disney’s umbrella for 15 days in the quarter as contract-renewal talks collapsed. Disney said the standoff with YouTube, which is owned by Google, resulted in $110 million of lost operating income. A year-on-year decline in political advertising on Disney’s TV channels in the United States, and the 2024 spinoff of television assets in India also resulted in lower operating income at Disney’s television unit.
The results came as a succession drama at Disney nears an end. The company’s board will meet in the coming days in Los Angeles and is expected to decide who will run the company when Robert A. Iger retires (for the second time) as chief executive later this year.
Brooks Barnes is the chief Hollywood correspondent for The Times. He has reported on the entertainment industry for 25 years.
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