Disney shares tumble as TV revenue shrinks
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The news: The Walt Disney Company reported a decline in its traditional TV business and a weaker box office, eclipsing a surprise profit in its streaming entertainment division and dragging its stock to the deepest one-day drop in 17 months.
The numbers: Quarterly revenue rose to USD22.1 billion ($33.5 billion), in line with expectations, while diluted earnings per share of USD1.21 was above consensus estimates of USD1.10.
However, revenue from the traditional television business declined 8% to USD2.77 billion and operating profit fell 22% from a year ago. The news sent Disney shares 10% lower.
The context: The company said the TV decline reflected lower ad revenue and the impact of Disney's new TV distribution deal with Charter Communications as the second-largest cable TV and broadband company in the US dropped eight of Disney's cable networks.
The direct-to-consumer entertainment division, which includes the Disney+ and Hulu streaming services, reported operating income of USD47 million for the January-March period, compared with a loss of USD587 million a year earlier. But the combined streaming business with ESPN+ lost USD18 million.
Like other media companies, Disney has been trying to adapt to consumer migration from cable television to streaming entertainment, and had promised Wall Street that its streaming operation would become profitable by September.
Chief executive Bob Iger, who came out of retirement to revamp Disney in November 2022 and defeated board challenges from activist investors last month, instituted cost cuts that are expected to reach at least USD7.5 billion by the end of September. He also unveiled a 10-year, USD60 billion investment in theme parks and announced plans for a standalone ESPN streaming app.
