In spite of the Feared Loss of Streaming Subscribers, Disney Beats Expectations

LOS ANGELES - Disney's first-quarter earnings report included lower subscriber losses and a better bottom and top line.

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There was significant growth at the theme parks during the period, but linear TV and direct-to-consumer units struggled.

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There was a 5% gain in shares after the bell for the company.

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Compared to Refinitiv and StreetAccount estimates, these results are as follows:

• Based on a Refinitiv survey of analysts, earnings per share were 99 cents, compared with the 78 cents expected.
• Refinitiv forecasts $23.37 billion in revenue, whereas Refinitiv expects $23.51 billion
• According to Trade Algo, Disney+ subscribers total 161.8 million, compared to the 161.1 million expected

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In the wake of Iger's return as CEO, Disney is transforming its business through cost-cutting and putting content creators back in charge.

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Streaming growth and profitability will be sustained with the work we are doing to reshape the company around creativity while lowering expenses, Iger said in a statement before the company's earnings call. The move will position us better to weather disruptions and global economic challenges in the future and will provide value to shareholders.

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Iger announced reorganization, job cuts, and cost cuts totaling $5.5 billion during the conference call. In the future, there will be three divisions within the company:

• In addition to its streaming and media operations, Disney Entertainment also produces films and television shows
• The television network and ESPN+ are both part of ESPN's TV division
• There is a park, experience, and product division 

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With ad dollars drying up and consumers making the switch to streaming, Iger's return comes as legacy media companies face a rapidly shifting landscape. With expenses soaring and consumers becoming more cost-conscious about media spending, even the streaming space has been challenging in recent quarters.

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During the quarter, around 2.4 million Disney+ subscribers were likely lost due to a recent price increase for Disney's streaming services. Based on StreetAccount estimates, the company would lose at least three million.

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On Wednesday, Iger said the company is attempting to "move beyond the emphasis on short-term quarterly metrics" by no longer providing long-term subscriber guidance. An in-depth analysis of Netflix's decision was published late last year.

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In addition, Disney's direct-to-consumer business has yet again reported an operating loss as forecast in previous quarters. According to Wall Street, the operating loss for the most recent quarter was $1.05 billion, narrower than Wall Street's estimate of $1.2 billion.

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In comparison to the same period last year, the company's net income came to $1.28 billion, or 70 cents a share. An increase of 8% was reported in revenue to $23.51 billion from $21.82 billion last year.

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During the most recent quarter, Disney's parks, experiences, and products division generated $8.7 billion in revenue, a 21% increase over the previous quarter.

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Its theme park locations contributed more than $6 billion to its revenue. Genie+ and Lightning Lane were among the additive digital products guests purchased during the quarter while visiting Disney parks, hotels, and cruises.

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By the end of the calendar year, Iger also plans to ask the board to reinstate the dividend. Due to the pandemic, Disney suspended dividends at the beginning of 2020.

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“Iger said that we hope to grow this dividend over time through our cost-cutting initiatives,” he said.