(Aug 5): Walt Disney Co’s profit beat Wall Street estimates in the company’s fiscal third quarter (3Q), driven by soaring income from its entertainment division and the resilience of its theme parks in California and Florida.
Disney’s earnings-per-share, excluding some items, rose to US$2.06 (RM8.43) in the period, the company reported on Wednesday. That comfortably beat the average analyst estimate of US$1.86 compiled by Bloomberg. Operating income was US$5.56 billion, beating forecasts of US$5.24 billion. It’s the second straight quarter of better-than-expected profitability for chief executive officer Josh D’Amaro, who succeeded Bob Iger in the role in March.
In the entertainment division led by Alan Bergman that houses Disney’s film studio and flagship Disney+ streaming service, profit rose 64%, driven by subscriptions and a double-digit margin in the online video business.
That helped offset a mixed quarter at the box office, with The Devil Wears Prada 2 and Toy Story 5 being blowout successes while Star Wars: The Mandalorian and Grogu underperformed. The current quarter will also be impacted by the performance of the live-action Moana remake coming in below expectations, Disney warned, as well as a softer-than-expected advertising environment for US streaming platforms.
At Disney’s experiences arm led by Thomas Mazloum that includes parks and cruises, profit rose by 20% to US$3.02 billion, driven by healthy attendance and spending at its parks in the US. In Orlando, the Walt Disney World resort had a “stand-out quarter”, Disney said in its earnings statement, and the company expects another quarter of guest growth in the current period as bookings remain robust.
The performance contrasts with that of rival Comcast Corp’s Universal resorts in Orlando, where demand slowed in June, management said last month, due in part to higher gas prices.
Disney’s sports unit including ESPN, led by Jimmy Pitaro, delivered profit that came in below Wall Street estimates due to the timing of payments for the rights to air games.
Disney also confirmed it was selling its 50% stake in A+E Global Media to joint-venture partner Hearst Communications Inc for US$1.2 billion and said it would redeploy the funds to purchasing additional shares, bringing its total buyback in fiscal 2026 to US$9 billion.
The company said it expects total segment operating income of US$4.9 billion in the fiscal fourth quarter, roughly in line with analyst expectations before Wednesday’s report. Disney also said it was highly focused on reducing costs, through cutting jobs and other administrative expenses, and is “mid-stream” in that process.
Beginning in the first fiscal quarter of 2027, Disney will move its consumer products business, led by Lisa Baldzicki, from the experiences division to the entertainment division so that it can work more closely with the company’s studios.
Disney said it recorded a tariff refund of approximately US$100 million, reversing payments from earlier in the fiscal year.
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