Walt Disney continues to see customer growth for its Disney+ service, but its big bet on streaming continues to be a drag on the media giant’s bottom line.
The company, which posted its fiscal fourth-quarter results on Wednesday, reported adding nearly 7 million core subscribers to its Disney+ service, driven primarily by growth overseas. It has a total base of 112.6 million customers. Hulu, meanwhile, added just 200,000 subscribers to bring its base to 48.5 million.
Disney is in the midst of a dealing with challenges on a number of fronts, including from an activist investor. Like the other studios, it’s facing a work stoppage with the ongoing actors’ strikes, but it’s facing critical and commercial disappointments in its key Marvel and Star Wars franchises. It’s potentially looking to spin off, sell or partner with its ESPN business, which continues to be a major money maker despite cable subscribers cutting the cord at a faster rate. While CEO Bob Iger was brought back to shore up the company’s problems, the struggles remain.
One of the question for Iger on the upcoming earnings conference call is what progress has been made to get its streaming initiative back to profitability. The company posted an operating loss of $420 million for its direct-to-consumer services, which include Disney+ and Hulu. That compares favorably with a year-ago loss of $1.41 billion. In the prior fiscal third quarter, its direct-to-consumer streaming services posted an operating loss of $512 million.
Disney said last week that it would acquire Comcast’s 33% stake in Hulu, taking full control of the streaming service.
By contrast, its ESPN business continues to be an engine of profit, posting operating income of $981 million, up 14% from a year ago. Its ESPN+ streaming business increased by 800,000 to a total of 26 million subscribers.
In total, the company posted fiscal fourth-quarter income of $264 million, or 14 cents a share, compared with a year-earlier profit $162 million , or 9 cents a share. Revenue rose slightly to $21.2 billion from $20.2 billion a year ago.
In comparison, Wall Street expected the media giant to post earnings of 68 cents a share on revenue of $20.1 billion, according to a survey taken by Yahoo Finance.