by Ray Keating
News/Analysis
DisneyBizJournal.com
May 11, 2022
The Walt Disney Company reported earnings and Disney+ subscriptions for the second quarter after the market closed on May 11, 2022. The news was positive on both streaming and domestic parks.
On the streaming front, net subscriber additions on Disney+ beat market expectations. While the market generally expected five million new net subscribers, the company added 7.9 million Disney+ subscribers. That brought the total to 137.7 million. Disney’s goal is to hit 230 million to 260 million subscribers in 2024.
ESPN+ subscribers came in at 22.3 million, which was up by 1 million compared to last year, and Hulu added 300,000 to come in at 45.6 million subscribers.
That put total streaming subscribers for the company at 205.6 million.
Meanwhile, revenue came in at $19.2 billion in the second quarter, which was up by 23 percent over the previous year. Income registered $3.7 billion, up by 50 percent versus last year. And earnings per share (EPS) at $1.08 rose by 37 percent. EPS did come in below what the market expected, but that was due, at least in part, to changes in tax regulations.
On the call, the company noted that it was dealing with ongoing supply chain issues and labor market tightness, as is the case across other industries.
As for theme parks, the Disney Parks, Experiences and Products segment saw revenue growth of 110 percent, and operating income coming at $1.76 billion versus a loss of $406 million last year.
Disney explained: “Operating income growth at our domestic parks and experiences was due to higher volumes and increased guest spending, partially offset by higher costs. Higher volumes were due to increases in attendance, occupied room nights and cruise ship sailings. Cruise ships operated at reduced capacities in the current quarter while sailings were suspended in the prior-year quarter. Guest spending growth was due to an increase in average per capita ticket revenue, higher average daily hotel room rates and an increase in food, beverage and merchandise spending. The increase in average per capita ticket revenue was due to a favorable attendance mix and the introduction of Genie+ and Lightning Lane in the first quarter of the current fiscal year. Higher costs were primarily due to volume growth, cost inflation and higher marketing spending. Our domestic parks and resorts were open for the entire current quarter, whereas Disneyland Resort was closed for all of the prior-year quarter, and Walt Disney World Resort operated at reduced capacity in the prior-year quarter due to COVID-19 restrictions.”
The company said that it was still controlling domestic parks attendance in order to improve guest experience.
The stellar box office performance of Dr. Strange in the Multiverse of Madness was highlighted as well, which has now passed $500 million globally.
Disney CEO Bob Chapek also emphasized the importance and profitability of live sports going forward, and vaguely pointed to a major ramping up or shifting of ESPN content to streaming.
After the market closed, at the time of this writing, Disney shares were off by better than two percent. Shares recently were trading at or near 52-week lows.
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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.
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