Gabrielle Russon
Disney’s streaming services were profitable for the first time, helping lift up the company’s earnings despite the theme parks attendance falling flat, according to the new third-quarter earnings report.
The Walt Disney Co. beat Wall Street estimates despite the post-pandemic travel surge at Disney World and Disneyland slowing down for the quarter that ended June 29.
Disney’s companywide revenues rose to $23.2 billion, up 4% from last year’s same time period. Meanwhile, the domestic parks’ operating income dipped 6%, to $1.3 billion. Disney said the decrease was from higher costs due to inflation, more technology expenses and the depreciation from last year when Disney closed the Star Wars hotel at Disney World.
But Wednesday’s earnings report also showed good news for Disney’s entertainment side.
Disney’s streaming business, which includes Disney+, hit $5.8 billion in revenue, a profit for the first time.
“Obviously, I think we’ve made a ton of progress,” Chief Financial Officer Hugh Johnston said Wednesday. “We were losing a billion dollars a quarter not all that long ago, and now we’re making money. And our expectation is we’re going to continue on that journey.”
Attendance fell flat at the theme parks for the quarter, Johnston said during Wednesday’s earnings call. He warned that the upcoming fourth-quarter revenue for the parks during the normally busy Summer would likely be flat too.
“I would just call this a bit of a slowdown that’s being more than offset by the entertainment business,” Johnston said without an alarmist tone. “The IP is so strong in our parts. It really does attract a strong audience, and people are reluctant to cancel vacations.”
After big gains as people were anxious to travel again post-pandemic, the theme park industry is down.
“The lower income consumer is feeling a little bit of stress. The high income consumer is traveling internationally a bit more,” Johnston said.
That means fewer people are heading out to ride roller coasters.
Revenue fell 11% at Universal theme parks in the second quarter compared to the same period last year, Comcast said last month during an earnings call. Comcast officials blamed the lack of new rides and more options, like cruises, for fewer guests coming to the parks. The next major expansion — Epic Universe, a new park built from the ground up — doesn’t open in Orlando until next year, giving guests a reason to delay their trips until then.
