The Walt Disney Company yesterday reported earnings for its fourth quarter and fiscal year which ended October 1, 2022, during an investors call.
“2022 was a strong year for Disney, with some of our best storytelling yet, record results at our Parks, Experiences and Products segment, and outstanding subscriber growth at our direct-to-consumer services, which added nearly 57 million subscriptions this year for a total of more than 235 million,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company, summing up the call.
Disney Parks, Experiences and Products
According to Disney, its Parks, Experiences and Products division generated $7.4 billion in the last quarter, depite Hurricane Ian’s path near Disney World in late September costing the company $65 million from the closures.
The parks also took in a record fiscal year total of $28.7 billion.
Even with the record numbers, Chief Financial Officer Christine McCarthy said during the call that Disney is “actively evaluating [its] cost base” across the company and “looking for meaningful efficiencies.”
Unfortunately she says that as Disney is negotiating with employee unions for new contracts. Frontline Disney employees are arguing increasing company profits should lead to employee raises, especially since the cost of living in theme park areas has risen so much since the pandemic.
Speaking of cast members, Disney CEO Bob Chapek did make mention of Walt Disney World’s for working through the hurricane.
“They went above and beyond to help keep our guests safe and entertained during the storm,” Chapek said. “From protecting the many animals in the Animal Kingdom, to packing thousands of meal kits, to donating and delivering emergency supplies to the community, I am so proud that our team came together to support our guests, our neighbors and each other.”
Disney Media and Entertainment Distribution
Disney Media and Entertainment Distribution includes both network TV and streaming, along with movies, TV, and other visual and audio entertainment.
Domestic Channels revenues for the quarter decreased 2% to $5.3 billion, and operating income increased 6% to $1.5 billion. The increase in operating income reflected higher results at Cable and a modest increase at Broadcasting.
Overall, Disney’s spectrum of direct-to-consumer services, which includes Disney+, Disney+ Hotstar, Hulu and ESPN+, has surpassed 235 million global subscribers, up from 221.1 million total subscribers worldwide at the end of the previous quarter.
The results come after Disney saw an operating loss in its streaming operations of $1.5 billion. The company said the loss was due to a higher loss at Disney+ and a decrease in results at Hulu.
On the call, Chapek cited a “strategic decision to invest heavily in creating incredible content and rolling out the service internationally” for a good portion of those losses.
He also suggested that price increases for Disney+ would be implemented in due course, and that a new ad-supported tier for the service would help generate revenue.
“Our fourth quarter saw strong subscription growth with the addition of 14.6 million total subscriptions, including 12.1 million Disney+ subscribers. The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate,” said Chapek.
“By realigning our costs and realizing the benefits of price increases and our Disney+ ad-supported tier coming December 8, we believe we will be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future.”
The Bottom Line
It appears that not all divisions are doing well for The Walt Disney Company, but the projections are for an even stronger 2023.
Summing it all up, Chapek said, “As we embark on Disney’s second century in 2023, I am filled with optimism that this iconic company’s best days still lie ahead.”
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