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Disney reported strong earnings and revenue in the second quarter, driven by the good performance of its theme parks in the United States and the addition of more than a million new subscribers to its streaming service.
During the three months ended March 30, Disney earned profits of $3.28 billion, or $1.81 per share. A year earlier, it had recorded a loss of $20 million, or one cent per share.
Excluding special charges or benefits, earnings were $1.45 per share, comfortably exceeding the $1.18 expected by Wall Street, according to a Zacks Investment Research survey.
Revenue increased by 7%, reaching $23.62 billion, also exceeding projections.
Revenue for the Disney Entertainment segment —which includes the film studios and streaming— grew 9%, while that of the Experiences area increased 6%.
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Among the recent box office hits, "Moana 2" and "Mufasa: The Lion King" stand out. Their most recent film, "Thunderbolts (asterisk)," currently leads the box office. CEO Bob Iger and CFO Hugh Johnston expressed in prepared statements their confidence in this year's film schedule, which includes titles such as "Lilo & Stitch", "The Fantastic Four: First Steps" and "Avatar: Fire and Ash".
However, Disney could face repercussions from the trade war initiated by former President Donald Trump. Other U.S. companies have noted negative reactions from consumers in international markets. And on Monday, Trump opened a new front in his tariff war, this time aimed at films produced outside the U.S.
In a Sunday night post on his Truth Social network, Trump said he authorized the Department of Commerce and the U.S. Trade Representative's Office to impose a 100% tariff “on any film that comes into our country and was produced on foreign soil.”
Disney has also been the subject of scrutiny by the Trump administration for other issues. In March, the chairman of the Federal Communications Commission (FCC) announced an investigation into Disney and its ABC network to determine if they are “promoting wickedly discriminatory forms of DEI (Diversity, Equity, and Inclusion)”.
Commissioner Brendan Carr announced the investigation in a letter addressed to Iger. At that time, the company said it was reviewing the letter and would gladly answer the commission's questions.
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For now, Disney's streaming business continues to grow. Its direct-to-consumer division —which includes Disney+ and Hulu— reported quarterly operating income of $336 million, compared to $47 million in the same period last year. Revenue increased by 8%.
Disney+ had a 2% increase in paid subscribers in the U.S. and Canada, and 1% internationally (excluding Disney+ HotStar).
Disney+ paid subscribers rose 1% in the quarter, reaching 126 million, from 124.6 million in the first quarter. The company had anticipated a slight decrease in Disney+ subscribers during this period.
The sum of subscriptions to Disney+ and Hulu reached $180.7 million, an increase of $2.5 million compared to the previous quarter.
Iger and Johnston noted that Disney has benefited from box office success, as those films then go on to feed its growing streaming platform. “Moana 2” has accumulated more than 139 million hours of viewing since its premiere on Disney+ on March 12, becoming the biggest premiere for Walt Disney Animation Studios on the platform since “Encanto.” The first “Moana” film remains the most-watched on Disney+, with more than 1.4 billion hours streamed.
The Moana franchise also drives attendance at Disney theme parks, with character meet-and-greets in the parks and cruises, in addition to the Journey of Water attraction at Epcot, in Walt Disney World, Orlando.
The Experiences division —which includes Disney's six global theme parks, its cruise line, merchandise licensing, and video games— reported a 9% increase in operating income, reaching $2.5 billion. In the U.S. parks, operating profits grew by 13%, while in international parks and experiences they fell by 23%, due to lower activity in Shanghai and Hong Kong.
Disney also announced that it will build its seventh theme park in Abu Dhabi. The waterfront complex will be located on Yas Island.
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The park will be built and operated by the developer Miral, while Disney will license its intellectual property for the project and provide development and management services, according to a regulatory filing. Disney will not invest capital in the project but will receive royalties based on revenue and will also charge fees for its services.
Although Disney continues to activate different fronts to successfully manage the components of its business, it is also moving forward in the search for Iger's successor, who has been the face of the company for almost two decades.
Disney created a succession committee in 2023, but the search intensified last year by incorporating James Gorman, executive chairman of Morgan Stanley, to lead the process.
The company still has time, as Iger agreed to extend his contract until the end of 2026.
Disney is considering internal and external candidates. The internal names that sound the most are Jimmy Pitaro (president of ESPN), Josh D’Amaro (president of Parks and Resorts), Alan Bergman and Dana Walden (co-chairmen of Disney Entertainment).
Disney projects adjusted full-year earnings of $5.75 per share, above the $5.43 estimated by analysts surveyed by FactSet. Its previous guidance pointed to high single-digit growth in adjusted earnings per share for fiscal year 2025.
