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Disney's adjusted earnings per share for the March quarter beat Wall Street expectations, but the company's stock price slumped amid concerns from the Mouse House.
Disney stock fell 9.5% to $105.41 per share as of 11:30 a.m. ET. The pullback comes even as the stock had risen 29% since the beginning of the year as of Monday.
Disney's theme park business led sales and bottom line growth in the first three months of 2024, with sales increasing 10% and segment operating income increasing 12%. The company said it expects segment operating profit for the June quarter to be approximately positive. Can be compared with the previous year.
At an earnings call, Chief Financial Officer Hugh Johnston told analysts that Disney was seeing “evidence of post-COVID-19 peak travel being curtailed globally” at its theme parks. He said rising costs and inflation were likely to weigh on the sector's profits.
Meanwhile, revenue for Disney's linear television business (excluding ESPN) fell 8% to $2.77 billion, and operating profit fell 22% to $752 million, below analyst expectations. In the U.S., Disney attributed the decline in operating income to “the impact of non-renewal of certain network carriers by affiliates” (a reference to Charter's elimination of eight cable networks last fall) and average viewership. This was thought to be due to a decline in advertising revenue reflecting the decline in the number of consumers.
Disney's second-quarter financial results showed that its streaming business is finally making progress toward profitability, with its Disney+ and Hulu divisions reporting operating profits for the first time in history, while the company's services, Disney+ Hotstar, The decline is expected to result in losses in the entertainment and streaming division. Available in India and other Southeast Asian countries.
Chief Executive Officer Bob Iger said in an earnings call that Disney said the company's “path to profitability” in its streaming business is not “linear.”
Additionally, Disney posted a one-time $2.05 billion goodwill impairment charge related to Star India and an unspecified Entertainment Linear Network, resulting in a net loss for the quarter. Star India's impairment was a result of the company's agreement with Reliance Industries to combine Star India's operations and Reliance's Viacom18 in a new joint venture.