(Bloomberg) — Walt Disney Co. posted fiscal fourth-quarter sales and profit that beat Wall Street estimates and forecast earnings growth for the next three years, a rare event for a company that historically hasn’t made long-range profit projections.
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Earnings-per-share, excluding some items, rose to $1.14, beating the $1.10 average of analysts’ estimates compiled by Bloomberg. The company forecast high-single-digit growth in adjusted earnings in fiscal 2025, compared with current analysts’ estimates for growth of 4%. It projects double-digit profit increases for 2026 and 2027, according to a statement released Thursday. The shares gained as much as 12% in New York, the most since February.
The improved profitability in the quarter underscores the turnaround put in place by Chief Executive Officer Bob Iger. Earnings in the period were driven in part by the better performance of Disney’s film studio, which has been on a tear this year thanks to blockbusters including Inside Out 2 and Deadpool & Wolverine, and the second straight quarterly profit at its streaming business, which includes the flagship Disney+ streaming service.
The direct-to-consumer segment, which also includes the Hulu and ESPN+ streaming services, posted a profit of $321 million in the period, well above Wall Street estimates of $202.9 million.
Subscribers to the Disney+ platform, including the Hotstar service in India, grew to 158.6 million, beating analysts’ estimates by a small margin. The company is expecting a modest decline in core Disney+ subscribers in the first quarter of fiscal 2025 due to the impact of recent price increases and the expiration of some promotions, Chief Financial Officer Hugh Johnston said in an interview. He expects growth to resume in subsequent quarters.
Growth in the streaming business offset the continued decline in traditional TV networks, which include ABC and cable channels such as FX and the Disney Channel. Operating income in the unit tumbled 38% to $498 million. Like other major media companies, Disney is focusing on a future in streaming as consumers continue to cut the cord on cable. Last month, Comcast Corp. said it’s considering spinning off its cable networks into a new company. Johnston, however, suggested that Disney wouldn’t consider a similar path, as he sees an important integration between linear TV and streaming.
“I can’t speak to other companies and what opportunities they have with the assets they have, but I absolutely did not see that for Disney,” Johnston said on a call with analysts.
Iger also said advertising is still “very strong” on traditional TV, in part because of live events like sports and because it provides a “differentiated audience than streaming.”
Disney aims to strengthen its streaming offering even more by introducing an ESPN tile to Disney+ on Dec. 4. The move will give subscribers access to ESPN while inside Disney+, similar to an offer for bundle subscribers with Hulu on Disney+.
Looking ahead, Disney expects growth in streaming to come from a balance of price increases and adding new subscribers, but “a little bit more tilted towards pricing,” Johnston said on the call. Iger added that now in the US, about 60% of all new subscribers are choosing ad-supported streaming options. In total, about 37% of US subscribers are ad-supported and 30% globally Iger said.
Disney has a “terrific future” in streaming, Johnston said in an interview with Bloomberg TV, adding that profitability is being driven through price increases and cost cuts
Iger said Disney is also cracking down on password sharing and has anti-password sharing initiatives in more than about 130 countries.
Disney’s content sales and licensing unit, which includes movies, rebounded to a $316 million profit from a $149 million loss the prior year.
The success of those two pillars helped give management the confidence to offer earnings guidance going out for three years, Johnston said.
“The fourth quarter capped a very successful year for Disney,” he said. “We had back-to-back billion-dollar movies, and we’re very excited about Moana 2 and Mufasa: The Lion King. Creativity is very much performing well at Disney.”
Operating income at the company’s theme-park division declined 5.7% to $1.66 billion, in line with analysts’ projections. Profit in the international parks fell as Disneyland Paris suffered competition from the Olympics. Attendance at the company’s domestic resorts was flat.
Still, Disney projects 6% to 8% operating income growth in the theme parks unit next year, driven in part by two new cruise ships, Johnston said.
The company plans to buy back $3 billion worth of shares in fiscal 2025, in line with the past year, and will seek to grow dividends in line with earnings.
Iger returned to lead the Burbank, California-based entertainment giant in November 2022 after nearly two tumultuous years that culminated in the ouster of his handpicked successor, Bob Chapek. Iger has cut costs and raised prices at the company’s theme parks and streaming services, moves that have helped boost revenue and profit.
Iger’s other chief priority is finding a successor, which Disney has pledged to announce early in 2026. That effort is being led by board member and former Morgan Stanley CEO James Gorman, who will become Disney’s chairman in January.
(Updates shares in second paragraph and adds executive comments from call.)
