Disney+ actually turned a profit — but Disney stock still drops 8%

The Walt Disney Co.’s streaming business may not yet be profitable, but the entertainment giant is inching toward its goal.

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The Burbank, California-based company reported an $18 million operating loss in its fiscal second quarter for its direct-to-consumer division, which includes Disney+, Hulu, and ESPN+. That’s down from a $216 million loss in Disney’s last quarter and a $659 million loss year-over-year.

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The entertainment side of the streaming business – Disney+ and Hulu — notched an operating income of $47 million for the quarter, marking its first time in the black. During the same time in 2023, those two streaming services had a loss of $587 million. ESPN+ reported an $18 million loss, a considerably smaller hit than the $659 million loss recorded last year.

Disney said Tuesday it still expects its combined direct-to-consumer division to reach profitability by the last fiscal quarter of 2024. But it expects the entertainment side of the streaming business to be softer next quarter, driven by Disney+ Hotstar, its Indian streaming service.

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Disney stock dropped 8.2% in Tuesday morning trading.

The number of Disney+ “core” subscribers, which excludes Disney+ Hotstar subscribers, increased by 6.3 million to 117.6 million last quarter. Hulu smashed past the 50 million subscriber milestone as Disney gets serious about acquiring the rest of the streaming service from Comcast.

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“Our results were driven in large part by our Experiences segment as well as our streaming business,” CEO Bob Iger said in a statement. “Importantly, entertainment streaming was profitable for the quarter, and we remain on track to achieve profitability in our combined streaming businesses in Q4.”

Disney’s parks and experiences division recorded a 10% increase in revenue to $8.4 billion, driven by international growth. Disney’s international parks and experiences revenue grew 29% to $1.5 billion, while the domestic side notched a 7% increase to $5.9 billion.

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Operating income for the business grew by 12%, led by Walt Disney World Resort and the Disney Cruise Line. The Disneyland Resort in Anaheim, California, recorded “lower results,” according to the company.

Overall, Disney reported a net loss of $20 million, or 1 cent per share, for the quarter, compared to a $1.3 billion, or 70 cents per share, gain a year earlier.

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