Disney stock (DIS) rose Thursday after the company reported fiscal fourth-quarter earnings per share and revenue that beat Wall Street expectations and its direct-to-consumer business built on recent momentum to return to profitability. It skyrocketed.
A strong outlook for the next two years also fueled investor optimism, with shares rising more than 10% in early trading following the results. The stock price closed at about 6%, excluding gains.
The media and experience giant reported fourth-quarter adjusted earnings per share of $1.14, which beat analysts’ estimates of $1.10 compiled by Bloomberg and what Disney reported in the year-ago period. It exceeded $0.82.
Revenue of $22.57 billion exceeded the consensus estimate of $22.47 billion and the year-ago quarter’s sales of $21.24 billion.
Disney’s direct-to-consumer (DTC) streaming business (which includes Disney+, Hulu and ESPN+) posted an operating profit of $321 million for the three months ended September 28. In the same period last year, the company had a loss of $387 million. .
Analysts surveyed by Bloomberg expected DTC’s operating profit to be about $203 million after the company achieved first-quarter streaming profitability in its third-quarter results.
Achieving stable profits from streaming is critical for Disney and other media giants as consumers increasingly migrate away from traditional pay-TV packages and toward direct-to-consumer services.
In mid-October, the company increased prices on various subscription plans, highlighting a trend that has gained momentum over the past year. Such moves are helping media companies seek to boost profit margins from direct-to-consumer (DTC) services at a time when terrestrial TV is declining.
Disney announced Thursday that it expects DTC operating income for fiscal 2025 to be approximately $875 million.
Disney Chief Financial Officer Hugh Johnston said in an earnings call that streaming profits act as a “natural hedge” against linear network struggles, with the segment’s operating profit up from a year ago. The company said sales declined by 6%.
Management warned that linear networks are expected to continue to decline as more consumers abandon their cable packages.
The entertainment giant’s results come as it searches for a successor to current CEO Bob Iger to navigate a changing industry. The executive is expected to leave Disney for the second time by the end of 2026, and the list of candidates is expanding, according to a recent report in the Wall Street Journal.
Disney announced last month that it plans to announce its next CEO in early 2026, with current Disney board member and former Morgan Stanley (MS) CEO James Gorman taking the helm. He will become the company’s new Chairman of the Board on January 2, 2025.
story continues
