Disney smashes streaming subscriber expectations, boosting segments hurt by Covid

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Bob Chapek
Jeff Gritchen | MediaNews Group | Orange County Register via Getty Images

Disney reported strong growth in paid streaming subscribers and its first quarterly profit since early last year in its earnings report for its fiscal first quarter of 2021 after the bell Thursday.

The stock was up around 1.7% after hours.

Here are the key numbers:

  • Earnings per share: 32 cents adjusted vs. loss of 41 cents expected, according to Refinitiv
  • Revenue: $16.25 billion vs. $15.9 billion expected, according to Refinitiv

Here’s how the rest of the report went for Disney.

Streaming

Disney said it now has almost 95 million paid subscribers to its Disney+ streaming service as of the quarter ended Jan. 2. This comes during the first quarter after Disney’s free-trial period ended for some subscribers who are also Verizon customers.

Disney CFO Christine McCarthy told analysts on the company’s earnings call that executives are “really happy with the conversion numbers that we’ve seen there going from the promotion to become paid subscribers.”

Average monthly revenue per paid Disney+ subscriber, however, dipped 28% compared with the same quarter last year, from $5.56 to $4.03. That’s because this number now includes subscribers to Disney+ Hotstar, which launched in India and Indonesia last year. The service has lower average monthly revenue per paid subscriber than traditional Disney+ in other markets, pulling down the overall average for the quarter.

On Disney’s earnings call, McCarthy said that excluding Hotstar, average revenue per paid Disney+ subscriber would have been $5.37 in the quarter.

Average monthly revenue per paid subscriber grew slightly for Disney’s other direct-to-consumer platforms, ESPN+ and Hulu, with the latter seeing 26% growth for those using its live TV service.

The company said it now has more than 146 million total paid subscribers across its streaming services as of the end of the first quarter.

McCarthy said Disney will not regularly report streaming subscriber numbers in future quarters as it’s now more than a year out from the launch of Disney+. But, she said, they may disclose some milestones.

Revenue for Disney’s direct-to-consumer business grew 73% compared with the same quarter the previous year, to $3.5 billion. That growth helped to offset losses in other segments affected by the pandemic.

Parks

Revenue at Disney’s parks, experiences and products segment fell 53% to $3.58 billion, as many of its theme parks were either closed or operating at reduced capacity and its cruise ships and guided tours were suspended.

CEO Bob Chapek told analysts on the company earnings call that outlook for parks revenue and reopening is “really going to be determined by the rate of vaccination of the public.” Disneyland is hosting a vaccination site for Californians, and Chapek said the site has so far delivered more than 100,000 doses.

Chapek said he expects any reopening or increase in visitor capacity will include masking and social distance measures through the end of the year. But he said Dr. Anthony Fauci’s prediction earlier Thursday that the vaccine would begin to be available to anyone who wants one in April would be a “game changer.”

The company said the Covid-19 outbreak cost this division around $2.6 billion in lost operating income during the fiscal first quarter.

Content sales and licensing revenues decreased 56% to $1.7 billion during the quarter, as Disney had no new theatrical releases during October, November and December and limited home entertainment releases.

Notably, last year, the studio released “Frozen II” in theaters and had “Toy Story 4,” “The Lion King” and “Aladdin” hit the home video market.

Disney expects capital expenditures for fiscal year 2021 to be similar to those for 2020, with the business investing more in the media and entertainment segment and less in the parks segment.

Disclosure: NBCUniversal is the parent company of Universal Studios and CNBC.

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