Walt Disney’s shares fell 8.5% in morning trading despite a surprise profit in its streaming entertainment division, as a drop in traditional TV business and weaker box office performance overshadowed the positive news. Disney, like other media companies, has been navigating the shift from cable television to streaming entertainment, with hopes of making its streaming operation profitable by September.
Brian Mulberry, client portfolio manager at Zacks Investment Management, noted that the market reaction suggests lingering questions about earnings in the coming quarters. Disney revealed plans for a 10-year, $60 billion investment in theme parks and announced a standalone ESPN streaming app, aiming to generate better results from the entertainment division.
While Disney+ added over 6 million customers during the quarter and saw an increase in average revenue per user, the streaming entertainment division is expected to report a loss for the current quarter due to costs related to streaming cricket. However, Chief Financial Officer Hugh Johnston anticipates a return to profitability in the following period. Disney forecasts the combined streaming unit to become a significant growth driver with improved profitability by fiscal 2025.
Source: Reuters