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Seeking Alpha: Disney streaming success
Disney rises 1.9% on surprise profit with better-than-expected revenue drop, subscriber beat
Shares of Disney (DIS) rose 1.6% AH on Thursday after its fiscal first-quarter earnings easily topped profit expectations, on revenues that didn't decline as much as feared. The results are the first since a divisional reorganization, which makes clear that softer declines in media and entertainment helped mitigate a huge drop in its parks and products business. Disney's streaming service, Disney+, also continues to be a big hit. It now has 94.9M paid subscribers, topping an expected 90.7M, with 8M new viewers added in December alone. ESPN Plus subs rose 83% to 12.1M, and Hulu jumped 30% to 39.4M. That means total direct-to-consumer subs were 146.1M vs. an expected 143.1.
Putting it in perspective: The figure means Disney has already crossed its original 90M subscriber goal for the platform, which is a number it originally expected to take four years to reach. The Mouse House has since revised that four-year plan with a new target of reaching between 230M-260M subscribers by 2024.
The news was still not enough to offset the hardship the company is experiencing due to the pandemic, with COVID-related costs shaving $2.6B from parks' operating income in the latest quarter. Walt Disney World in Florida and Shanghai Disney Resort were open for the entire period, though operations at Disneyland were suspended despite declining coronavirus cases in California. Disney traditionally makes a lot of money from its theme parks and movies, and that, in effect, is subsidizing its big bet on streaming.
Thought bubble: While analysts have said Disney trades at a massive 74x earnings - a valuation similar to cloud computing giants and EV makers - investors have bought into Disney's streaming push. Including ESPN+ and Hulu, the Mouse House has nearly 150M subscribers, and it's only been a little over a year since Disney+ launched in November 2019. That level of unprecedented growth has excited shareholders, even though the business is loss-making now and will likely be for years to come.
Seeking Alpha: Disney streaming success Feb 12, 10:21
got woke, didn't go broke {nm} Feb 12, 10:48
