Disney profits jump 50 percent, boosted by theme parks

LOS ANGELES — Countering a streaming slowdown that has hit Hollywood recently, Disney+ added 14.4 million subscribers in the most recent quarter, about 45 percent more than Wall Street expected and lifting Disney’s portfolio of streaming services. 221 million subscribers worldwide, on par with Netflix

Disney released the figures Wednesday as part of a blockbuster quarterly earnings report. The company also announced price increases for Disney+, Hulu and ESPN+, as well as details of a new version of Disney+ that will include advertising.

But it was strong demand for theme park vacations, despite economists’ concerns about an inflation-driven drop in consumer spending, that fueled a surge in Disney’s profitability. Revenue totaled $21.5 billion, an increase of 26 percent from the prior year. Operating profit rose 50 percent to $3.6 billion. Analysts had expected revenue of around $21 billion and profit of around $3.2 billion, according to FactSet.

Economists have long viewed Disney’s theme parks as informal barometers of consumer confidence. Historically, when budgets are tight, families cut back on trips to Disney World in Florida and Disneyland in California. That doesn’t seem to be happening: Disney Parks, Experiences and Products reported quarterly revenue of $7.4 billion, up from $4.3 billion a year earlier, and an operating profit of $2.2 billion, up from the $356 million.

A year ago, due to the coronavirus pandemic, most Disney theme parks were operating at reduced capacity and Disney Cruise Line was not operating at all. Since April, Disney’s national parks and cruise ships have generally been operating without coronavirus-related capacity restrictions, the company said. Disney parks have also started charging for queue-shortening privileges, opening up a colossal new revenue stream. New attractions have also debuted.

Disney’s traditional financial engine, cable television, has come under increasing pressure as consumers are canceling cable connections at a rapid rate. In the United States, about 7.5 percent of cable customers cut the cord in the most recent quarter, down from 4 percent a year earlier, according to estimates from research firm LightShed Partners. Cable channels have largely divested themselves of the best programming beyond live sports. That content is now funneled to streaming services.

However, a change in the schedule for this year’s National Basketball Association finals, football scheduling and the Academy Awards provided Disney’s traditional television business with an upbeat quarter. Revenue for the division, which includes ABC, ESPN, FX, Disney Channel and National Geographic, totaled $7 billion, up 3 percent from a year earlier, and a profit of $2.5 billion, an increase of 13 percent.

Streaming, on the other hand, continues to lose money as Disney aggressively spends on content, marketing and technology infrastructure. Losses from Disney’s streaming division topped $1 billion, compared to a loss of $300 million the year before. Streaming revenue rose 19 percent to $5.1 billion.

Starting December 8, the current ad-free version of Disney+ will cost $11 per month, up from $8. The ad-supported option will cost $8.

Prices for a bundle of all three Disney streaming services will range from $13 per month (with ads) to $20 per month (no ads on Disney+ or Hulu but with ads on ESPN+).

“We will offer greater consumer choice at a variety of price points to meet the diverse needs of our viewers and appeal to an even broader audience,” Kareem Daniel, president of Disney Media & Entertainment Distribution, said in a statement.

Disney said Hulu had about 46.2 million subscribers, an 8 percent increase from a year earlier. About 23 million people paid for access to ESPN+, up 53 percent. Disney+ had 152.1 million subscribers, an increase of 31 percent.

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