Disney said it would continue to dramatically cut costs as it looks to rebuild its business in a rapidly changing media environment.
The company announced it would slash expenses by another $2 billion, adding to the $5.5 billion reduction it had previously announced, which included thousands of job cuts.
The company said there were no further plans for layoffs. CEO Bob Iger suggested on a call with investors that the cuts would come primarily from its struggling linear TV business.
Meanwhile, the company continues to lose money in its Disney+ streaming business, but it managed to significantly reduce its losses in that division. It has never turned a profit on Disney+. After raising prices, Disney’s streaming revenue jumped 12% last quarter, and its loss narrowed to $420 million, down from $1.4 billion in the same quarter a year earlier.
“Our results this quarter reflect the significant progress we’ve made over the past year,” CEO Bob Iger said in a statement. “While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our business again.”
Disney’s stock was more than 3% higher in after-hours trading, bouncing off a nearly 10-year low.
The company reported revenue of $21.2 billion, coming in slightly below expectations of $21.3 billion, according to estimates from analysts surveyed by Refinitiv.
Disney’s report comes during a rocky period for the company as it grapples with a streaming business burning through cash, cord cutting, a recent string of box office flops, an ongoing actors strike and legal battles with Republican presidential candidate Florida Gov. Ron DeSantis.
The company said it was “aggressively managing its cost base,” planning to slash $2 billion more in costs than previously reported. The ongoing actors’ strike also helped the company reduce some short-term production costs, Disney’s interim chief financial officer, Kevin Lansberry, said.
Disney previously announced 7,000 job cuts in February as part of a $5.5 billion cost saving plan. On Wednesday, the company said its efficiency target had grown to $7.5 billion.
Disney’s theme park and cruise division was a bright spot for the company, increasing by over 30% compared to last year. The company pointed to strength in its international theme parks and Disney cruises. However, the company said revenues for Walt Disney World in Central Florida were weaker.
The company’s fiscal fourth quarter began in July and ended October 1, and included the summer slump seen at Walt Disney World Resort in Central Florida. In July, Disney World parkgoers experienced shorter-than-expected ride wait times and fewer crowds than expected.
Lansberry, said consumer strength fueled the gains in Disney’s parks division.
“Domestically we feel good and internationally we feel pretty good,” he said. “We’re not really seeing anything in terms of an economic hangover.”
Disney+, Disney’s flagship streaming service, increased its subscriber base in the US and Canada by 1% in the quarter, and added 11% more subscribers internationally.
Ad-supported Disney+ added more than 2 million subscriptions in the fourth quarter, Iger said.
In total, Disney has lost more than $10 billion on its streaming service venture since it was introduced in 2019.
On Disney’s earnings call, Iger reiterated that the company is “confident” that its streaming services will achieve profitability by the end of 2024.
“We are bullish about the future of our streaming business,” Iger said.
In October, Disney hiked the price of ad-free Disney+ subscription to $13.99 per month but kept the price of its advertising tier steady at $7.99 per month.
But Disney+ isn’t the company’s only streaming bet.
Earlier this month, Disney announced it would acquire Comcast’s one-third stake in Hulu for $8.61 billion, meaning that Disney will now own 100% of the streaming service.
Iger said a beta version of a combined Hulu-Disney+ app will launch in December, with a formal rollout planned for early Spring 2024.
Disney’s linear TV business continues to slip, with revenues declining 9% in the fourth quarter compared to last year – an even larger decline than in its recent third quarter, when revenue fell 7%.
Earlier this year, comments made by Iger fueled speculation that some of Disney’s linear TV assets, which include ABC, Disney Channel, FX and National Geographic, may be put up for sale.
Iger said the company continues to “evaluate options for each of our linear networks with a goal of identifying the best strategic path for the company and maximizing shareholder value.”
However, Iger also said a review of the company’s linear TV assets “has uncovered significant long term cost opportunities, which we’re implementing while continuing to deliver high quality content.”
The company said it saw a decrease in advertising revenue, primarily at its ABC Network, due to lower average viewership and lower political advertising revenue.
ESPN was an outlier in Disney’s media portfolio, continuing to attract sports fans to cable TV. The network saw its best overall viewership in four years, according to Iger.
Questions surround the company’s upcoming content slate due to the Hollywood strikes that halted major studio productions this year, including the writers’ strike that ended in September, and an ongoing actors’ strike.
In a Wednesday interview with CNBC, Iger said that the impact of the strikes on Disney’s business, so far, has been “negligible,” though if the strikes go on longer, “it could become significant.”
“Obviously, we’d like to try to preserve a summer of films, the entire industry is focused on that. We don’t have much time to do that,” he said.
Last month, Disney announced it would delay the release of its live-action “Snow White” movie by a year, from March 2024 to March 2025, due to the actors’ strike.
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