Disney Swings to Streaming Profit of $321 Million in Q4, $134 Million for 2024

Shares of Disney jumped over 9% in pre-market trading on Thursday after its streaming business, considered the key to its future success, ended 2024 strong, with a combined profit of $321 million for its fiscal fourth quarter and $134 million for the full year. That compared to losses of $387 million in the year-ago period and a whopping $2.6 billion loss in fiscal 2023.

Total revenue for the company grew 13% to $6.3 billion for the quarter and 14% to $24.94 billion for the year.

Disney also touted one of the best quarters in history for its film studio, driven by “Inside Out 2” and “Deadpool & Wolverine.” But the overall results were weighed down by steep declines in profits at its entertainment linear networks as well as lower income in its sports and Experience segments — in particular internationally.

The entertainment giant’s streaming business finished the year with 236.2 million subscribers across Disney+, Hulu and ESPN+, up nearly 3% from 229.8 million in the third quarter of 2024.

Here are the top-line results:

Net income: $460 million, a 77% jump from $260 million in the prior-year period. For the full year, net income was $4.97 billion, more than double the $2.35 billion in 2023. 

Diluted Earnings Per Share: 25 cents, up 79% from 14 cents. Excluding certain items, EPS grew 39% to $1.14, higher than the $1.09 per share expected by analysts surveyed by Zacks Investment Research. For the full year, diluted EPS more than doubled to $2.72 and grew 32% to $4.97 when excluding certain items.

Revenue: $22.6 billion, up 6% and in line with estimates from Zacks. For the full year, revenue grew 3% to $91.4 billion.

Operating income: $3.66 billion, up 23% from $2.98 billion. For the full year, it grew 21% to $15.6 billion.

Disney+ subscribers: Disney added 4.8 million Disney+ subscribers during the quarter, or 1%, for a total of 158.6 million

“As I reflect on the two years since my return to the company, I’m incredibly proud of how much progress we’ve made. We’ve emerged from a period of considerable challenges and disruption and we’re well positioned for growth. We put in place specific strategies to generate growth across our businesses, and our solid results this quarter are a clear indication they’ve been successful,” Disney CEO Bob Iger told analysts during the company’s fourth quarter earnings call. “Given the momentum we see, we believe we can continue to drive healthy growth beyond this year, including our expectation of high single digit adjusted EPS growth in fiscal 2025 accelerating to double digit adjusted EPS growth in fiscal 2026 and 27.”

Total cash provided by operations grew 15% to $5.5 billion during the quarter and 42% to $13.97 billion for the year, while free cash flow grew 18% to $4.03 billion and 75% to $8.6 billion. During the quarter, Disney recorded $1.54 billion in restructuring and impairment charges, including a $584 million write-down on its entertainment linear networks, $328 million on retail assets, $210 million on Star India, $187 million on content, $165 million in equity investments and $69 million in severance.

Disney Entertainment

Disney’s Entertainment segment, which includes Disney+, Hulu and the company’s entertainment linear networks, saw revenue grow 14% to $10.83 billion and an operating profit of $1.1 billion, more than quadruple its profit of $236 million a year ago. The increase in operating income was driven by improved DTC and content sales, licensing and other results, which was partially offset by a decline in its linear networks. 

Linear networks saw revenue fall 6% year over year to $2.46 billion and operating profit slid 38% to $489 million. 

Domestic linear revenues fell 5% year over year to $2 billion and operating income fell 34% to $347 million. Operating income fell due to higher marketing costs, primarily from more season premieres in the quarter, reflecting the impact of the Hollywood strikes in the prior year period, as well as lower affiliate revenue from fewer subscribers, including the impact of the non-renewal of carriage of certain networks by an affiliate. It was also impacted by a decline in ad revenue from lower impressions and average viewership.

Disney’s international linear networks struggled. Overseas revenue fell 12% to $464 million and operating income plummeted 54% to $52 million. The company said operating income was impacted by lower affiliate revenue primarily due to a decline in effective rates and fewer subscribers and higher marketing costs.

Entertainment DTC revenue grew 15% to $5.78 billion. The segment delivered 14% ad revenue growth in the quarter, contributing $253 million in operating income, up from a loss of $420 million in year-ago period. Subscription revenue growth from price increases and subscriber additions led to the improvement in operating income. 

Disney+ reported a total of 158.6 million subscribers, compared to a total of 153.8 million in the previous quarter. Disney+ Core subscribers grew 4% to 122.7 million, including 56 million domestically and 66.7 million internationally. Disney+ Hotstar grew 1% to 35.5 million subscribers. More than half of new Disney+ subscribers in the U.S. are choosing the ad tier.

Disney+ domestic average revenue per user fell 1% to $7.70 due to a higher mix of ad-supported and wholesale subscribers, partially offset by higher advertising revenue. International average revenue per user (ARPU), excluding Hotstar, grew 3% to $6.95, due to higher pricing offset by a higher mix of ad-supported and wholesale subscribers and unfavorable foreign exchange impact. Hotstar ARPU fell 26% to 78 cents, due to lower advertising revenue. 

Hulu’s total subscriber base grew 2% to 52 million, including 47.4 million SVOD-only subscribers and 4.6 million Hulu + Live TV subscribers. Hulu SVOD only ARPU fell 1% to $12.54, primarily due to a higher mix of subscribers to multi-product offerings and lower advertising revenue, while Hulu + Live TV ARPU was flat at $95.82.

The strong performance of “Inside Out 2” and “Deadpool & Wolverine” drove Disney to have one of its best quarters in history for content sales and licensing. Revenue grew 39% to $2.59 billion, and the division swung to a profit of $316 million from a loss of $149 million a year ago. The films also drove $316 million in operating income for the segment.

Upcoming titles for the rest of the year include “Moana 2” releasing later this month and “Mufasa: The Lion King” in December. The 2025 film slate includes “Captain America: Brave New World,” the live-action “Lilo & Stitch,” “The Fantastic Four: First Steps,” “Zootopia 2” and “Avatar: Fire and Ash.”

Disney Sports

Disney’s Sports segment, which includes ESPN, ESPN+ and Star India, saw flat revenue growth of $3.9 billion, while operating income fell 5% year over year to $921 million during the quarter. 

Linear ESPN saw revenue grow 1% to $3.86 billion, including $3.49 billion domestically and $364 million internationally, and a 6% decline in operating income to $869 million, including a $936 million profit domestically and $40 million loss internationally. 

The decrease in operating results was driven by growth in subscription revenue from price increases, higher programming and production costs due to an increase in college football rights and higher production costs. 

ESPN+ subscribers grew 3% from the previous quarter to 25.6 million, with the service’s ARPU falling 5% to $5.94 due to lower advertising revenue and a higher mix of subscribers to wholesale and multi-product offerings. The service posted a profit of $68 million, compared to a profit of $33 million a year ago.

Disney+ will launch an ESPN tile within the service on Dec. 4. Additionally, ESPN’s upcoming direct-to-consumer service, internally codenamed Flagship, will be available in Disney+ and within the ESPN app in early fall 2025. The in-app experience for Flagship will package the network’s sports programming with fantasy sports integrations, enhanced statistics, betting features and e-commerce.

Disney Experiences

Disney’s Experiences segment, which includes its theme parks, hotels, Disney Cruise Line and consumer products, saw operating income fall 6% year over year to $1.66 billion and revenue grow 1% to $8.2 billion. 

Domestic parks and experiences revenue grew 3% to $5.52 billion, while international revenue fell 5% to $1.58 billion.

Domestic operating income grew 5% to $847 million, due to increases in per capita guest spending at its theme parks and cruise line, lower sales of Disney Vacation Club units, and higher costs primarily due to inflation, new guest offerings, increased technology spending and higher operations support costs. That was partially offset by the comparison to depreciation in the prior-year quarter related to the closure of Star Wars: Galactic Starcruiser. 

International operating income fell 32% to $299 million, due to lower attendance and higher costs from new guest offerings and higher depreciation, and lower theme park per capita guest spending. That was partially offset by an increase in per-room spending at Disney resorts. 

Consumer products revenue grew 2% to $1.14 billion, while operating income grew 1% to $513 million.

The Disney Cruise Line fleet will grow to six ships following the unveiling of the Disney Treasure next week and another seven cruise ships are in development.

Additionally, Disney previously announced several projects coming to its parks, including Cars and Villians-themed lands at Magic Kingdom, a Monsters Inc. Land coming to Hollywood Studios, at new area with “Encanto” and Indiana Jones-themed attractions at Disney’s Animal Kingdom, two new attractions coming to Avengers Campus and the first-ever ride-through attraction themed to “Coco” in California Adventure, an Avatar-themed area coming to California Adventure and the first-ever ride-through attraction themed to “The Lion King” at Disneyland Paris.

Financial outlook

Looking ahead, Disney expects adjusted EPS growth in the high single-digits for fiscal 2025 compared to fiscal 2024, approximately $15 billion in cash and $8 billion in capital expenditures and $3 billion in stock repurchases. 

The entertainment segment will post double-digit percentage growth for operating income, weighted to the first half of the year driven by the timing of theatrical releases. Entertainment DTC will report about $875 million more compared to the previous year, which includes an adverse impact from the India business of about $200 million. The content sales, licensing and other segment’s operating income for the first quarter of 2025 is expected to be relatively in-line with the fourth quarter.

Sports will grow operating income 13% for fiscal 2025, which includes an adverse impact of $636 million related to Star India. When excluding the India business impact, Disney expects a decrease of 10% due to key sports rights investments, including a new deal with the SEC and the shift of an additional NFL game into the year offset by advertising revenue growth.

For Experiences, Disney forecast growth of 6% to 8% in operating income, weighted to the second half of the year. The first quarter will include an adverse impact to segment operating income of $130 million due to hurricanes Helene and Milton and $90 million due to Disney Cruise Line pre-launch costs. 

In fiscal 2026, Disney expects double-digit growth in EPS, cash and Entertainment segment operating income and a 10% operating margin for its Entertainment DTC businesses, excluding Hulu + Live TV. The Sports segment will see a low single-digit increase in operating income, while Experiences will see a high single-digit increase. 

In fiscal 2027, Disney forecasts double-digit adjusted EBITDA growth.

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