Disney Q2 earnings: is CEO Iger warming up to own 100% of Hulu?


Walt Disney Co (NYSE: DIS) is trading down in extended hours after reporting a decline in the number of subscribers on its flagship streaming platform in Q2.

Disney stock down despite lower DTC loss

Disney+ lost 4.0 million subscribers to end the second financial quarter with 157.8 million subscribers – well below 163.5 million that experts had forecast.

On the plus side, though, the said decline was related only to Disney+Hotstar while its core streaming service continued to add subscribers in the recently concluded quarter.  

Also a positive was the operating loss from its direct-to-consumer business that contracted about 26% to $659 million. On Yahoo Finance Live, Third Bridge analyst Jamie Lumley said:

Disney is in a period of transition. Cutting costs down is a top priority. That’s moving in the right direction.

Remember that CEO Bob Iger is aiming to lower costs by a whopping $5.5 billion. To that end, he recently said the company will cut about 7,000 jobs before summer – and further layoffs in the future may not entirely be off the table, as per Lumley.  

Hulu content to be added to Disney+

Also on Wednesday, the entertainment and mass media company said it will soon integrate the Hulu content into its Disney+ streaming app. Third Bridge’s Lumley noted:

It’s been challenging having Disney+ and Hulu be separate. From a branding and marketing perspective, there are challenges to having multiple platforms with different focal points and audiences.

However, it still remains unclear if Disney will choose to own 100% of Hulu moving forward, he added. CEO Bob Iger also revealed plans of lifting the price of ad-free subscription later this year today.

Disney shares are up more than 8.0% for the year at writing.

Notable figures in Disney Q2 earnings report

Earned $1.49 billion versus the year-ago $597 million

Per-share earnings also climbed from 26 cents to 69 cents

Adjusted EPS printed at 93 cents as per the press release

Revenue jumped nearly 8.0% year-on-year to $21.82 billion

Consensus was 93 cents a share on $21.8 billion in revenue

Disney brought in $14.04 billion from media and entertainment distribution (its largest business) versus $14.15 billion expected.

DTC sales printed at $5.51 billion in Q2 – up from $4.9 billion last year but missing consensus estimates by some $50 million. $7.78 billion from theme parks and product sales came in better than expected.

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