By Dawn Chmielewski
Walt Disney CEO Bob Iger acknowledged that the entertainment company faces a “challenging environment” in the near term on Wednesday, but he emphasized progress in cutting costs and focusing on creativity, even as quarterly results showed Disney’s soft spots.
Disney’s stock rose nearly 3% in after-hours trading, as Iger touted $1 billion in operating-income improvement at the company’s streaming business over the last three quarters, which is aiming for profitability in 2024.
But he also acknowledged the need to improve the quality of Disney’s films, to position the company’s flagship sports brand, ESPN, for streaming directly to consumers, and to resolve the writers’ and actors’ strikes in Hollywood that have halted much film and television production.
“I returned to Disney in November, and I’ve agreed to stay on longer, because there was more to accomplish before our transformation is complete,” Iger said, describing a “challenging environment in the near term.”
The company beat Wall Street’s profit expectations for its fiscal third quarter and said it was on track to cut costs by more than the $5.5 billion it promised investors in February.
Disney also posted quarterly revenue below expectations and fell slightly behind analyst projections for U.S. subscribers of Disney+.
The media conglomerate said it will raise by 27% the price of the ad-free tier of the Disney+ service to $13.99 and hike by 20% the no-ad version of Hulu.
Looking for ways to attract and retain subscribers in a competitive streaming market, Disney also announced it would launch ad-supported streaming in Europe and Canada and provide US subscribers with a new, ad-free package in coming months.
Iger said he would address the issue of password sharing next year, echoing Netflix.
He said Disney will reduce the number of titles it releases and also the cost per title.
Revenue just misses
Disney said it cut losses at its streaming video services to $512 million in its fiscal third quarter from about $1.1 billion a year ago.
It added 800,000 Disney+ subscribers, 100,000 subscribers shy of analyst estimates, and shed 12.5 million subscribers to the Disney Hotstar service in India, or nearly a quarter of its subscribers, as it gave up rights to Indian Premiere League cricket matches.
“Disney will have to cut prices from current levels in an effort to stimulate demand and defend its market share in an increasingly competitive industry,” said Jesse Cohen, senior analyst at Investing.com.
