# Disney streaming beats Wall Street targets, earnings miss
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-08
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Disney+ Exceeds Subscriber Expectations, Earnings Fall Short
Meta Description: Find out how Disney+ surpassed subscriber estimates but fell short on earnings due to investment costs, impacting shares in after-market trading.
URL: https://financedigest.com/disney-streaming-beats-wall-street-targets-earnings-misshtml

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By Dawn Chmielewski and Lisa Richwine

(Reuters) – Walt Disney Co said on Tuesday its marquee streaming service, Disney+, gained more subscribers than Wall Street had expected, but investment costs dragged quarterly earnings below analysts’ targets.

Shares in Disney fell 5% in after-market trading.

The entertainment company is [spending billions](https://www.financedigest.com/chipmaker-infineon-ready-to-spend-billions-on-acquisitions-ceo.html "Chipmaker Infineon ready to spend billions on acquisitions – CEO") to compete with Netflix Inc and others for streaming television customers as traditional TV declines in popularity. Disney+ reported 164.2 million subscribers in the fiscal [fourth quarter](https://www.financedigest.com/german-gdp-contracted-by-0-4-in-the-fourth-quarter.html "German GDP contracted by 0.4% in the fourth quarter"), surpassing Factset estimates of 161 million.

The [cost to build Disney’s streaming business](https://www.financedigest.com/cutting-business-costs-pros-of-using-commercial-heat-pumps-in-2016.html "Cutting business costs: Pros of using commercial heat pumps in 2016") led to a $1.5 billion loss in the direct-to-consumer unit, which hurt quarterly earnings.

Net income from [continuing operations](https://www.financedigest.com/taylor-wimpey-espana-celebrates-double-operating-profit-for-2016-as-spanish-market-continues-to-soar.html "Taylor Wimpey España celebrates double operating profit for 2016 as Spanish market continues to soar") rose 1% to $162 million. Excluding some items, Disney earned 30 cents per share, missing [Wall Street’s](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May") target.

Revenue of $20.15 billion for the July-to-September quarter also fell short of the consensus [estimate](https://www.financedigest.com/electric-kick-scooter-market-is-projected-to-reach-6-5-billion-by-2031-and-estimated-to-grow-at-11-5-cagr-between-2021-and-2031.html "Electric Kick Scooter Market is Projected to Reach .5 billion by 2031, And estimated to grow at 11.5% CAGR between 2021 and 2031") of $21.25 billion.

Disney has amassed a total of 235 [million subscriptions across Disney+, Hulu and ESPN+ streaming services, a gain of 14.6 million from the previous quarter](https://www.financedigest.com/warner-bros-discovery-adds-2-million-subscribers-in-first-quarter.html "Warner Bros Discovery adds 2 million subscribers in first quarter"). Hulu reported 47.2 million subscribers, up 8% from a year ago, and ESPN+ logged 24.3 million, a [gain of 42% from a year](https://www.financedigest.com/hong-kong-home-prices-drop-15-6-in-2022-snap-13-years-of-gain.html "Hong Kong home prices drop 15.6% in 2022, snap 13 years of gain") earlier, and Disney+ is up 39% from a year ago.

The company repeated comments in August that losses from its direct-to-consumer business would peak in [fiscal 2022 which ended](https://www.financedigest.com/hp-to-cut-about-12-jobs-by-end-of-fiscal-2025.html "HP to cut about 12% jobs by end of fiscal 2025") Oct. 1.

We expect our DTC operating losses to narrow going forward and Disney+ will still achieve [profitability in fiscal 2024,” said Chief](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks") Executive Robert Chapek. “Assuming we do not see a meaningful shift in the economic climate.”

The ad-supported version of the Disney+ [service will launch in the United States on Dec](https://www.financedigest.com/russian-services-activity-shrinks-for-third-month-running-in-dec-pmi.html "Russian services activity shrinks for third month running in Dec -PMI"). 8, bringing a new [source of revenue to underwrite](https://www.financedigest.com/monte-dei-paschi-to-have-underwriting-consortium-for-share-sale-by-tuesday-source.html "Monte dei Paschi to have underwriting consortium for share sale by Tuesday – source") the billions the company spends creating original movies and series for the services. Macquarie Research analyst Tim Nollen estimated the ad tier could bring an additional $800 million in ad [sales next year](https://www.financedigest.com/spains-november-retail-sales-fall-0-6-on-year.html "Spain’s November retail sales fall 0.6% on year").

Disney theme parks posted robust growth despite [COVID-19 related travel restrictions](https://www.financedigest.com/pandemic-restrictions-that-hampered-the-circulation-of-viruses-other-than-covid-19.html "Pandemic restrictions that hampered the circulation of viruses other than COVID-19") in China and Hurricane Ian forcing the temporary closure of Walt Disney World in Florida in September.

Disney’s parks, experiences and products group reported revenue of $7.4 billion in the quarter, [beating analysts’ forecasts](https://www.financedigest.com/truck-maker-volvo-posts-record-q1-as-sales-margins-beat-forecasts.html "Truck maker Volvo posts record Q1 as sales, margins beat forecasts"). Operating income [reached $1.5 billion](https://www.financedigest.com/td-other-banks-reach-1-35-billion-settlements-to-end-stanford-litigation.html "TD, other banks reach .35 billion settlements to end Stanford litigation"), more than double a year ago.

Nollen wrote that [higher prices](https://www.financedigest.com/vhs-tapes-selling-for-46000-higher-than-original-price.html "VHS tapes selling for 46,000% higher than original price"), and the technology Disney uses to distribute demand, have resulted in a 40% increase in spending per person since 2019.

For the fiscal year, Disney reported per-share earnings of $3.53, [excluding certain items](https://www.financedigest.com/myhermes-boosts-smes-by-revising-cover-model-and-excluded-items-list.html "MyHermes Boosts SMEs By Revising Cover Model And Excluded Items List"), on revenues of $82.7 billion.

In the fiscal second quarter, Disney said it recognized $1 billion in lost revenue in the second [quarter from terminating a film and television contract early](https://www.financedigest.com/first-quarter-dash-for-cash-largest-since-early-2020-bofa.html "First quarter ‘dash for cash’ largest since early 2020 -BofA") so it could use content on its own streaming services.

(This story has been corrected to fix hurricane name in paragraph 11 and timing of $1 billion charge in paragraph 15)

(Reporting by Dawn Chmielewski and Lisa Richwine in [Los Angeles; Editing by Richard Chang)](https://www.financedigest.com/patsnap-circumnavigates-northern-hemisphere-with-launch-of-los-angeles-office.html "PatSnap circumnavigates northern hemisphere with launch of Los Angeles office")


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