Disney stock retreated Wednesday after missing Q3 revenue views. The Dow Jones entertainment behemoth expects streaming subscriber growth and announced a deal to acquire key assets from the National Football League.
Disney reported a 16% increase in earnings to $1.61 per share adjusted. Revenue increased 2% to $23.65 billion. FactSet expected earnings of $1.45 per share adjusted on $23.69 billion in revenue.
Overall entertainment revenue rose 1% to $10.7 billion, compared to analysts estimates for $10.8 billion. Experiences revenue increased 8% to $9.09 billion, beating views for $8.89 billion in sales.
Disney's streaming business, its direct-to-consumer entertainment segment, saw revenue climb 6% to $6.1 billion. The streaming segment's operating income improved to $346 million from a loss of $19 million last year.
The number of total Disney+ subscribers rose 1% to 127.8 million from the end of March. Meanwhile, average monthly revenue per domestic subscriber increased to $8.09 from $8.06. The average monthly revenue per international subscriber grew to $7.67 from $7.52 due to increases in pricing.
Hulu subscribers inched up to 55.5 million from 54.7 million.
Sports revenues declined 5% to $4.3 billion. Operating income for the sports segment jumped 29% to $1.04 billion.
For Q4, Disney expects total Disney+ and Hulu subscriptions to increase by more than 10 million compared to Q3. The Dow Jones entertainment giant sees a majority of the growth coming from Hulu as a result of its expanded Charter deal.
Disney expects 2025 earnings to increase 18% to $5.85 per share adjusted. FactSet expects full-year earnings of $5.80 per share.
Operating income for its streaming business is expected to reach $1.3 billion for the year. Disney forecasts double-digit operating income growth for its entertainment business, with an 8% increase for its experiences segment.
RedZone Deal, New ESPN
Elsewhere, Disney reached a deal with the National Football League under which Disney will take ownerships of NFL RedZone, as well as other media assets, in exchange for a 10% equity stake in ESPN, the company said on Tuesday. The agreement also gives ESPN seven more regular season NFL games, NFL Network and the NFL fantasy football business. The release did not include a transaction cost.
The deal comes as ESPN plans to roll out a new direct-to-consumer streaming service, which will combine all ESPN properties into a singularly branded service. The new ESPN DTC service, which launches early this fall, comes in two subscription plans. The premium service, the ESPN unlimited plan, costs $29.99 per month and provides full access to ESPN's linear networks, as well as more than 47,000 live events each year, and original programming. The select plan costs $11.99 per month and provides subscribers access to all content available on ESPN+, and 32,000 live sporting events annually.
Both subscriptions come with bundle offers for Disney+ and Hulu. Existing ESPN+ and bundle subscribers will roll over to the new service based on their current subscription level.
Disney noted that ads will be served in the live and linear content.
Disney Stock Falls Early
DIS shares pared their Wednesday decline to 2.7%.
Tracing a modest pullback since early July, the stock is now caught up below resistance at its 50-day moving average.
Disney is up only 3.4% so far this year.
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