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Thursday, February 11, 2021

Disney Streaming Gains Highlight Company Earnings Call

 by Ray Keating



February 11, 2021


The Walt Disney Company’s earnings announcement today included a big gain in Disney+ subscriptions during the first quarter 2021, which ended on January 2, 2021.

Specifically, Disney+ subscriptions hit 94.9 million at the end of the first quarter, which was up by 21.2 million versus the previous quarter. A year earlier, Disney+ subscriptions were at 26.5 million.


For good measure, Hulu subscriptions were up 2.8 million subscribers versus the previous quarter, hitting 39.4 million, and ESPN+ increased by 1.8 million in the quarter, reaching 12.1 million. At the same point last year, Hulu subscriptions were at 30.4 million and ESPN+ at 6.6 million.


So, tallying up these three streaming services, subscriptions came in at 146.4 million at the close of the first quarter, versus 120.6 million in the previous quarter and 63.5 million last year.


Disney CEO Bob Chapek reiterated the commitment to its direct-to-consumer business, declaring that Disney was operating a “DTC first business model.” Given that reality, the earnings statement offered the following on DTC:


Direct-to-Consumer revenues for the quarter increased 73% to $3.5 billion and operating loss decreased from $1.1 billion to $466 million. The decrease in operating loss was due to improved results at Hulu, and to a lesser extent, at Disney+ and ESPN+. 


The increase at Hulu was due to subscriber growth and increased advertising revenues driven by higher impressions, partially offset by an increase in programming and production costs due to higher subscriber-based fees for programming the live television service. 


The improvement at Disney+ was driven by an increase in subscribers, partially offset by higher programming and production cost amortization and increased marketing and technology costs. The increases in subscribers and costs reflected the ongoing expansion of Disney+ including launching in additional markets. The current quarter included three months of Disney+ operations whereas the prior- year quarter included two months. 


Higher results at ESPN+ were driven by subscriber growth, partially offset by higher sports programming costs. 


On the parks front, it was noted during the call that the open Disney theme parks are operating at 35 percent capacity.


As for overall earnings, Disney beat expectations for the first quarter. While analysts largely expected an earnings-per-share (EPS) loss for a third quarter in a row, Disney actually managed a positive EPS of $0.32. Again, while that was down markedly from the same time last year, which was pre-pandemic, it was an unexpected profit.




Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the  Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.


The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?


Keating’s new book Vatican Shadows: A Pastor Stephen Grant Novel is the 13th thriller/mystery in the Pastor Stephen Grant series. Get the paperback or Kindle edition at Amazon, or signed books at www.raykeatingonline.com


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