If you want to read The Walt Disney Company’s Fiscal Full Year and Q4 earnings report
The Walt Disney Company reported its earnings for the fourth quarter. Earnings per share were $1.14 per share compared to the $1.10 that was expected. Disney’s revenue came in at $22.57 billion compared to the $22.45 billion that was expected. Disney’s fiscal full-year revenue increased to $91.4 billion from $88.9 billion.
Disney+ now has 157 million subscribers. However, this quarter Disney broke out the number as having 174 million Disney+ Core and Hulu subscribers. I’d expect this will be the key number going forward, that combined total. Disney expects to see a modest decline in Disney+ Core subs in Q1 2025.
Disney+ grew this quarter. Disney+ Core subs were up by 4.4 million. Disney has been incentivizing discounts but they have also been cracking down on password sharing. 1.3 million of the new Disney+ Core subs come from the domestic, and 3.2 million from international. I wish Disney would’ve divulged how many subscribers have come from the password-sharing crackdown. Is any subscriber doing paid sharing? Those could be fascinating numbers.
Disney is keeping its foot on the gas when it comes to streaming growth. The long-awaited ESPN tile will debut in Disney+ on December 4. ESPN’s flagship DTC service will be debuting in 2025, when that debuts that content will also be featured in the Disney+ app (for subscribers who are paying for both).
Disney CEO Bob Iger was sure to point out the comeback year of Walt Disney Studios. The top two movies of the year, Deadpool and Wolverine and Inside Out 2 were major success stories for the year. Disney is the first studio to cross $4 billion globally in 2024. Iger also seems quite bullish that Disney will end the year strong with Moana 2 and Mufasa: The Lion King. Both films will have huge marketing campaigns and Moana 2 is tracking to do some big numbers. Mufasa tracking/marketing is still early but Disney may need to put some more magic behind that campaign.
Iger also highlighted some key titles in Disney’s 2025 slate which include Captain America: Brave New World, Lilo & Stitch, The Fantastic Four: First Steps, Zootopia 2, and Avatar: Fire and Ash. People always read too much on the titles that Iger doesn’t mention. Although I think it’s quite fascinating that Lilo & Stitch which was supposed to be a Disney+ Original Film is now being spoken about in the same tier as the heavy hitters instead of saying Snow White, Tron: Ares, Freakier Friday, etc. But once again we can’t read too much into this.
The key quote from this section was this.
“With the combination of our intellectual property, creative talent, and an increased number of consumer touchpoints extending the reach of our stories, a successful Disney movie today drives more value than ever before.”
The Disney flywheel is back and stronger than ever before.
A hit at the film studio like Inside Out 2 and Deadpool & Wolverine lifts the sails at consumer products, the Disney Parks, and Disney+. I think most of the Wall Street analysts have ignored this but now Iger/Hugh Johnston (not Jackman) are creating a compelling case that Disney hits just mean more.
That was pretty much it for the opening remarks. Disney changed its format so much and it feels like they are doing these calls early and making them so brief so they can avoid certain headlines.
Disney Experiences
Disney Experiences’ revenue increased 1% to $8.24 billion, and operating income of $1.7 billion was a decline of $0.1 billion, or 6% compared to the prior-year quarter.
Domestic Parks & Experiences operating income increased in Q4, on comparable attendance to the prior-year quarter, driven by higher guest spending, partially offset by higher expenses and costs related to new guest offerings driven by Disney Cruise Line. International Parks & Experiences operating income declined in Q4.
Disney Experiences also noted that they are estimated to lose $130 million due to Hurricanes Helene and Milton. They also noted that $90 million will be spent due to Disney Cruise Line pre-launch costs.
Disney Streaming
Domestic Disney+ ARPU decreased from $7.74 to $7.70 due to a higher mix of subscribers to ad-supported and wholesale offerings, partially offset by higher advertising revenue. International Disney+ (excluding Disney+ Hotstar) ARPU increased from $6.78 to $6.95 due to higher retail pricing, partially offset by a higher mix of subscribers to ad-supported and wholesale offerings and an unfavorable foreign exchange impact.
Hulu SVOD Only average ARPU decreased from $12.73 to $12.54 primarily due to a higher mix of subscribers to multi-product offerings and lower advertising revenue.
Final Thoughts
Disney CEO Bob Iger received a question on ads and he said linear is really strong right now but that advertising is working for Disney both in linear and streaming. Disney has made significant investments in its ad tech.
Speaking of tech, someone asked Iger about Disney Entertainment & ESPN’s new CTO Adam Smith. For what it’s worth I think Disney should’ve still named one overarching CTO that included Experiences as well. Iger gave us an update and said Smith is hard at work improving tech across streaming, working on personalization & customization, and improving engagement. Iger also mentioned Smith is working at unifying the Disney+ and Hulu tech stacks and he’s spearheading Disney’s password-sharing initiative.
Iger then mentioned how new titles increase the engagement of old titles. Iger expects this to happen a lot in 2025 and specifically in 2026 when Disney has a new Star Wars film, Avengers film, and live-action Moana.
Iger was also asked about M&A on this call and he brushed it off. Disney has already consolidated and they don’t need any more assets. People love to speculate on what Disney may buy next but their days as the buyer may be over. Now is the time to see if their previous investments like 21st Century Fox and Epic Games pay off.
For the theme park nerds, it was exciting to hear Disney CFO Hugh Johnston answer the never-ending question about Universal’s Epic Universe. How will Universal’s game-changing new theme park affect Walt Disney World attendance? Well, according to Hugh not by much so far. “We did model Epic (Universe) into our Experiences outlook,” said Johnston. “The early bookings we have next summer are positive. We also looked at the history of other parks opening up in Florida and it’s been beneficial for us.” This will be a big wait-and-see moment. Universal is currently doing a ticketing strategy that forces a majority of non-annual passholder guests to do their other parks as well. Universal wants to avoid Epic Universe cannibalizing its other two parks. Disney however may have to pull a few different levers to keep bookings and attendance high throughout 2025.
Disney CEO Bob Iger said on the call that 37% of subscribers of Disney in U.S. are on the Disney+ ad tier. 30% on the ad tier globally. Iger then after the fact during a hot mic moment stated, “I don’t know if I was supposed to disclose those AVOD numbers.”
For what it’s worth, the hot mic moment could’ve been way worse. This is minor as only nerds like us care about how many subscribers are opting in for the ad tier. However, I have to wonder what the big deal is in disclosing these numbers. We all know Disney wants more subscribers on the ad tier so they can advertise even more.
Disney CFO Hugh Johnston then discussed the Disney-Reliance deal in India. Johnston said they are happy with the deal. Disney will have 36% of the joint venture. Reliance will be the ones in charge. Johnston then got another question about the parks and he said he sees growth in the domestic parks and that there will be gradual strengthening of the consumer. Both Iger and Johnston in their previously released remarks noted how diversified the Disney Experiences business is from theme parks, cruise line, and now Epic Games initiatives.
Iger also stated that Disney Experiences has “an investment strategy that is highly targeted in terms of projects, locations, and IP.” We know the IP part and we know the locations for the most part but wouldn’t it be nice to know more of the timetable? Also, will we be getting more project announcements? It would be nice if a Wall Street analyst pressed Disney on the $60 billion investment strategy and what Phase 2 may look like.
The only clear spot for Disney Experiences is Disney Cruise Line. Disney views Disney Cruise Line as an ambassador for the Disney brand, bringing their most beloved IP into markets where they don’t have theme parks. Disney Cruise Line will have a six-ship fleet by December and another seven ships are in development.
The overall outlook for The Walt Disney Company seems pretty positive. The Q4 call seems like a celebration of Deadpool & Wolverine, Inside Out 2, Disney+ working, and the Parks staying solid. Obviously the parks may see some dips next year but then again that’s a prime reason why Disney is investing in that division. Disney CFO Hugh Johnston is also forecasting EPS (earnings per share) growth for fiscal 2025, 2026, and 2027. I’m assuming that’s a move that may make some on Wall Street happy.
Lightning Round
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Zach Perilstein is the Editor-in-Chief of the Boardwalk Times
