Walt Disney’s streaming services continued to lose money, and its efforts to tighten its belt are having an effect on its customer base.
In an effort to get Disney+ and Hulu into the black, the company took steps like removing content from Disney+ and Hulu, raising prices, and moving forward with a password sharing crackdown. As a result, Disney saw its subscriber base for Disney+ tick down in the fiscal first quarter. The company ended the year with 111.3 million global Disney+ customers, a down 1.3 million from the prior quarter, while its U.S. base fell by 400,000 to 46.1 million.
Disney’s streaming business posted an operating loss of $138 million, which looks bad until you stack it up against the $984 million it lost a year ago. The company expects to turn a profit on streaming by fiscal fourth quarter.
The slow road to progress is one of several reasons Disney is facing a potential shareholder revolt, with two separate activist investor parties trying to gain board seats and influence on the company’s future, with one seeking to potentially break up the company. Trian Fund Management, one fo the two firms calling for change, sent a terse response after the earnings call.
“It’s déjà vu all over again. We saw this movie last year and we didn’t like the ending,” said a spokesman for the investment fund.
While Disney didn’t mention the announced streaming sports joint venture with FOX and Warner Bros. Discovery in its press release, CEO Bob Iger kicked off the earnings call with the news, saying it represents a next step to bringing ESPN to more people. The so-called skinny bundle — in streaming form — would cobble together 14 networks, from ESPN to FOX Sports and local ABC and FOX affiliates.
The company is no stranger to joint ventures. It had long shared control of Hulu with FOX (which it acquired) and Comcast, whose stake it purchased at the end of last year.
Overall, Disney reported a fiscal first-quarter profit of $1.91 billion, or $1.04 a share, up from $1.28 billion, or 70 cents a share, a year ago. Revenue inched up slightly to $23.55 billion.
Analysts, on average, forecast earnings of 92 cents a share on revenue of $22.01 billion, according to Yahoo Finance.