Disney topped Wall Street forecasts for its fiscal second quarter and inched closer to the long-awaited milestone of streaming profitability.Revenue for the quarter ended March 30 increased to $22.1 billion from $21.8 billion in the year-earlier period, the company reported Tuesday. Excluding items, diluted earnings per share for the quarter increased to $1.21 from 93 cents. Analysts had been expecting revenue of $20.53 billion and earnings per share of $1.02.The entertainment direct-to-consumer operation, consisting of Disney+ and Hulu, finished the quarter in the black ahead of schedule with operating income of $47 million. The two had a loss of $587 million in the same period of 2023.ESPN+ reported a loss of $18 million, which was considerably narrower than the year-ago loss of $659 million.The company said it still expects its combined streaming businesses to be profitable by the fiscal fourth quarter, in line with guidance first established at the start of the streaming wars in 2019. While the company has had to adjust some of its subscriber projections during its streaming journey, profitability by the end of fiscal 2024 has remained a key target.The number of Disney+ “core” subscribers (meaning the tally without Disney+ Hotstar) increased by 6.3 million to 117.6 million, with the gain better than analysts’ projections. Hulu, which recently became fully owned by Disney after a buyout of longtime joint venture partner Comcast, broke the 50 million subscriber barrier, finishing the quarter with 50.2 million.Disney+ Core average revenue per user increased by 44 cents over the previous quarter. A deal with Charter Communications to integrate Disney streaming platforms with Spectrum pay-TV and broadband plans, took effect during the quarter and paced the subscriber gains.The Sports unit, which was recently established as a way to set ESPN apart, saw revenue inch up 2% to $4.3 billion, while operating profit fell 9% to $799 million. The company blamed the softness on ongoing subscriber losses in the U.S. as well as one fewer College Football Playoff game than in the year-ago quarter.Experiences, the division that encompasses theme parks and consumer products, reported a 10% rise to $8.4 billion, while operating profit climbed 12% to almost $2.3 billion.“It’s clear that the turnaround and growth initiatives we set in motion last year have continued to yield positive results,” CEO Bob Iger said in the earnings release.Disney’s shift to today’s morning, pre-market period for quarterly results and its conference call with analysts marks a change from the company’s longtime pattern of releasing in the afternoon, after the close of the trading day. Shares pulled back a fraction in pre-market trading on the quarterly financials.Iger and the company recently survived a bruising proxy battle, which was settled at last month’s annual shareholder meeting, where activist investor Nelson Peltz and his backers failed to secure the two seats they had sought on the company’s board. Peltz had accused Iger, who returned for a second CEO run in November 2022 after hand-picked successor Bob Chapek was dismissed, of mismanagement and presiding over a decline in Disney’s stock price. Shares have started 2024 on a hot streak, gaining more than 30% this year to date.
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