Disney+ added 7.9 million subscribers last quarter
Disney+ added 7.9 million subscribers in the latest quarter for a total of 138 million worldwide, the company announced Wednesday, helping it avoid the streaming slump that has recently dragged down Netflix’s share price.
Like most media companies, Disney’s stock has been decimated in the wake of Netflix’s announcement last month that it had lost 200,000 subscribers in the first three months of the year and expected to lose another two million this quarter. After years of applauding media companies for losing billions on streaming, investors are now pressing for a path to profitability.
The release of movies like Pixar’s “Turning Red” helped Disney+ attract subscribers in the first quarter, which ended April 2. Shares in Disney fell around 3 percent in after-market trading following the results announcement.
Disney’s results are somewhat good news for CEO Bob Chapek, who has faced a public relations crisis stemming from the company’s response to Florida school laws that, among other things, restrict classroom discussions about sexual orientation and gender identity. (Disney is the state’s largest private employer.)
The company initially refrained from speaking out against the bill publicly, but reversed course after an internal uproar. Mr. Chapek subsequently denounced the legislation, which drew the ire of conservatives, including Florida Governor Ron DeSantis. Last month, Republican lawmakers in Florida repealed a 1967 law that allowed Walt Disney World to function as its own quasi-government. In the wake of the uproar, Geoff Morrell, who joined Disney in January as its top government relations and communications chief, resigned last month.
The Race to Rule Streaming TV
Revenue at Disney increased by 23 percent compared to last year, to $19.2 billion, but missed analysts’ expectations. Disney said it took a hit from a decision to pull back some of its content from other distributors in favor of its own channels, which meant a $1 billion reduction in licensing revenue as part of a trade-off to boost its direct- to- consumer business.
Disney reported earnings per share of $1.08, missing analysts’ expectations of $1.17.
Disney’s theme park unit roared back from a year ago, when the Covid-19 pandemic hampered attendance. Revenue in the division doubled compared to the same period last year, with a new line hopping system leading to increases.
As streaming services look for more subscribers, India looks set to become an important market. Deep-pocketed media companies are preparing to bid for rights to show cricket matches from the popular Indian Premier League. Disney currently holds the rights to stream the matches on the Hotstar service, which they acquired in the 2019 mega-deal with 21st Century Fox. Losing these rights can be a blow. However, Mr. Chapek has said that Disney can meet its subscriber goals even if it does not retain those rights.
On a call after the earnings announcement, Mr. Chapek said Disney would eventually become more aggressive in moving major live sports to its ESPN+ streaming service. The money generated by the lucrative portfolio of ESPN cable channels currently makes it unsustainable, so the company is taking a targeted approach to sports streaming, Mr. Chapek said.
“What we’re doing is putting one foot on the dock, if you will, and one foot on the boat,” Mr. Chapek said.
Mr. Chapek also answered an analyst question about the lack of new Disney films opening in the Chinese theatrical market, where the company has had an uneven record in recent years. Mr. Chapek said Disney films performed well without the help of moviegoers in China, pointing to the success of “Doctor Strange in the Multiverse of Madness.”
“We’re pretty confident that even without China — should it be that we continue to have difficulty getting titles there — that it doesn’t really rule out our success,” Mr. Chapek said.