Disney Beats Earnings Estimates as New CEO Outlines Growth Priorities

Disney reported stronger-than-expected quarterly results on Wednesday, with revenue increasing 7 percent and adjusted earnings per share rising 8 percent. Streaming services and theme park operations drove the gains in the Entertainment division. Shares rose more than 7 percent in early trading after the release.

The company generated more revenue from Disney Entertainment and streaming than from linear networks in the most recent quarter, with streaming revenue more than double that of linear. Linear earnings have become a smaller portion of overall results each quarter.

The Entertainment segment as a whole continued to grow despite declines in traditional television revenue. Rivals such as Comcast and Warner Bros. Discovery have recently separated or announced plans to separate their linear assets. Disney executives stated that separating monetization platforms would be complex and unlikely to increase shareholder value given current market valuations for linear networks.

A Disney executive told analysts on the earnings call that the company has no plans to spin off or sell its linear television networks. The executive explained that networks function as brands with associated studios that produce content for multiple platforms.

“We do understand there’s a lot of focus on linear entertainment assets, and ESPN. Networks are better thought of as brands with studios that produce content, like The Bear or Shōgun, and we monetize that content across multiple distribution platforms." — Hugh Johnston, Disney earnings call The executive added that Disney is already far along in managing the transition of these brands to streaming and other platforms. Sports rights remain a separate discussion, with ESPN still early in its direct-to-consumer shift after launching an expanded app offering last year.”

Josh D’Amaro, who became chief executive in mid-March after succeeding Bob Iger, sent a memo to employees on Wednesday morning. He listed four top priorities: investing in creative storytelling, strengthening streaming through product and technology innovation, capturing the power of live sports for ESPN’s direct-to-consumer business, and delivering growth at Disney Experiences.

The memo noted recent milestones including the launch of a new Disney Cruise Line ship in Asia and the opening of World of Frozen at Disneyland Paris. D’Amaro stated that the earnings results reflected employee contributions and expressed optimism about the company’s next phase of growth.

The earnings report followed a round of layoffs in mid-April and adjustments to stock-based compensation for some technology employees. The company has also faced regulatory review of ABC broadcast licenses and other operational matters in recent weeks.