In a recent earnings report, The Walt Disney Co. outperformed Wall Street expectations, marking a significant achievement as CEO Bob Iger approaches a likely transition from his role in the coming months. Iger, whose contract extends until 2026, may be succeeded by Josh D’Amaro, currently Disney’s experiences chairman.
The uncertainty surrounding Iger’s future with Disney post-CEO role remains, particularly whether he will assume a different position within the company, such as a board member. During his statement linked to the earnings release, Iger expressed pride in the progress the company has made, citing strong box office performance from major franchises like “Zootopia 2” and “Avatar: Fire and Ash.”
Iger emphasized that his return as CEO three years ago was marked by significant challenges, but he saw it as an opportunity to prepare the company for future growth. “When I came back, I had a tremendous amount that needed fixing,” he stated, adding that fixing issues is equally as important as focusing on growth opportunities. He noted the company is now better positioned than it was three years ago, with significant investments made across various segments, including the expansion of parks and cruise line operations.
He reiterated the importance of adaptability in an ever-evolving landscape, stating, “In a world that changes as much as it does…my successor will not try and preserve the status quo.” Iger expressed confidence that his successor will inherit a robust company with ample growth opportunities.
Disney reported $26 billion in revenue for its fiscal Q1, with segment operating income of $4.6 billion and adjusted earnings per share of $1.63, surpassing analyst expectations of $25.6 billion in revenue and adjusted EPS of $1.58. The strong earnings were driven by a solid film slate and a growing streaming business. The company’s entertainment division reported $11.6 billion in revenue, while the experiences division achieved record revenues of $10 billion, supported by increased guest spending and higher cruise ship occupancy.
Streaming revenue reached $5.3 billion, with operating income of $450 million, showing substantial growth compared to the previous year. Notably, this quarter marked the first time Disney ceased disclosing streaming subscriber numbers, though the last quarter ended with 132 million Disney+ subscribers and a combined total of 196 million subscribers across Disney+ and Hulu.
Iger also addressed Disney’s recent agreement with OpenAI, detailing plans to incorporate Sora-generated videos on Disney+. The initiative aims to enhance engagement on Disney+ by introducing short-form video content, inspired by successful models on platforms like YouTube.
Despite the positive earnings, challenges were evident. The extended blackout of Disney channels on YouTube TV adversely impacted operating income by $110 million, significantly affecting the sports division, which saw a 23 percent decline in year-over-year operating income. Additionally, while the company reaffirmed its guidance, it cautioned of rising costs related to new attractions, cruise ships, and international visitation challenges at domestic parks.
Looking forward, Disney anticipates segment operating income for fiscal Q2 to remain comparable to the previous year, with streaming income projected to rise to $500 million. Overall, the company forecasts double-digit operating income growth for the year, particularly in the second half, as well as modest growth within the experiences division.
Iger concluded with an optimistic outlook for Disney’s future, drawing on the long-term potential of its intellectual property portfolio and ongoing projects across its global footprint. He expressed confidence in Disney’s ability to thrive and expand, particularly highlighting the potential for growth in regions like Abu Dhabi, emphasizing the strategic significance of reaching previously untapped markets.
