Disney Shares Surge on Streaming Growth and Earnings Beat, Plans to Ramp Up Cost Savings

In a significant market development, shares of The Walt Disney Company DIS saw a 3.3% rise in extended trading on Wednesday. The reputable media conglomerate disclosed its earnings results, outperforming analysts' expectations, coupled with an impressive surge in streaming subscribers, further solidifying their commitment to escalating annual cost-saving measures to $7.5 billion, marking an increase from the previous target of $5.5 billion.

Financial Highlights and Strategic Movements

Disney's fiscal fourth-quarter report showcased a net income of $264 million, demonstrating earnings of 14 cents per share. After adjustments for various restructuring expenses and related factors, the earnings stood at 82 cents per share. Revenue, meanwhile, rose 5% to $21.24 billion from $20.15 billion a year earlier, which closely approached, but was slightly under, the anticipated $21.37 billion forecasted by FactSet analysts who had predicted adjusted earnings to hit 71 cents per share.

As per Disney's CEO Robert Iger's statements to CNBC, the aim is to substantially amplify free cash flow by fiscal 2024, aspiring to reach pre-pandemic levels. The restructured business segmentation reveals that their entertainment division accrued $9.52 billion in revenue, a modest increment from the previous year. Notably, the Experiences sector amassed revenues totaling $8.2 billion, presenting an 11% surge, while the Sports domain, including ESPN, accumulated $3.9 billion.

Growth in Streaming and Business Outlook

Disney+ displayed remarkable growth with nearly 7 million new subscribers globally, drastically reducing its quarterly loss to $387 million compared to a considerable loss of $1.47 billion in the comparative quarter of the previous year. High-performing content such as "Elemental," "Little Mermaid," "Guardians of the Galaxy Vol. 3," alongside original series like "Ahsoka" and the Korean original "Moving," have been instrumental in this success.

In December, Disney plans beta launch for a combined Disney+/Hulu streaming application, with a full rollout scheduled for late March 2024. Competition in the streaming arena is fierce as Disney contends with other media giants such as Apple Inc. AAPL, Netflix Inc. NFLX, and several others for market dominance.

Amid its centennial celebrations, Disney navigates through various challenges including an ongoing actors' strike, fluctuating attendance at their Florida-based Disney World Resort, legal disputes, and uncertainties surrounding future leadership.

However, despite these challenges and a downward trend in Disney's share price over the past year, the company's leadership remains optimistic, with strategies aimed at improving the robustness of their parks internationally, as well as their cruise business.

Market Impact and Comparison

Disney shares, having seen a dip to near-decade lows, have declined 8% since Iger's reinstatement as CEO and 2.7% this year. This contrasts with a 14% rise in the S&P 500 over the same period. Disney now girds itself to bolster its streaming services and achieve profitability, aiming to rival giants such as Comcast Holdings Corp CCZ, amidst a dynamic and competitive market landscape.

Disney, Streaming, Earnings