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Shares of Walt Disney Co. rose 7% in after-hours trading Wednesday on stronger-than-expected quarterly earnings, deeper cuts and a massive reduction in its losses in the streaming business.
The company’s embattled board of directors approved a $3 billion share buyback, the first since 2018, and declared a cash dividend of 45 cents per share payable on July 25. The dividend program had been suspended during COVID. It also led to a 20% increase in EPS for fiscal 2024, to $4.60.
The entertainment giant also announced that it will invest $1.5 billion in an equity stake in Epic Games Inc., the publisher of the popular video game “Fortnite.”
disney
DIS,
which is preparing for a showdown between activists and investors at its annual shareholder meeting on April 3, reported fiscal first-quarter net income of $1.91 billion, or $1.04 per share. After adjusting for restructuring costs and other effects, Disney reported earnings of 1.22 cents per share.
Revenue was flat at $23.55 billion.
Analysts surveyed by FactSet, on average, expected adjusted earnings of 99 cents per share on revenue of $23.7 billion.
“Just a year ago, we outlined an ambitious plan to return Walt Disney Co. to a period of sustained growth and value creation for shareholders,” CEO Bob Iger said in a statement announcing the results. “Our strong performance in the last quarter demonstrates that we have turned a corner and entered a new era for our company, focused on strengthening ESPN for the future, turning streaming into a profitable growth business, revitalizing our movie studios and driving the growth of our parks and experiences. .”
In a wide-ranging interview with CNBC shortly after the results were revealed, Iger said he is confident the company will find a successor for him when his contract expires at the end of 2026. He added that Disney is on track to meet or exceed its $7 ,5. billion annualized savings target by the end of fiscal year 2024.
See also: Opinion: Disney is making progress on a key goal and ready to pull another lever
Disney’s largest business segment, entertainment, generated $9.9 billion in revenue, down 7% from the same quarter a year earlier.
The experiences raised $9.13 billion, a 7% increase from last year’s $8.55 billion. Sports, which includes ESPN, generated $4.84 billion.
Disney+ reached 111.3 million subscribers, while substantially reducing the division’s quarterly loss of $138 million, compared to a loss of nearly $1 billion in the same quarter last year. Disney is locked in a streaming race with Netflix Inc.
NFLX,
Apple Inc.
AAPL,
Amazon.com Inc.
AMZN,
Warner Bros. Discovery Inc.
DMB,
Comcast Corp.
CMCSA,
and others. Disney CFO Hugh Johnston said there will be a crackdown on password sharing. is underwayfollowing in the footsteps of Netflix.
It was also announced that the record-breaking concert film “Taylor Swift: The Eras Tour” will debut on Disney+ on March 15, with four additional songs not available in the theatrical or DVD release, and a sequel to the hit animated film 2016 “Moana” will hit theaters on November 27.
Read more: Disney relies on ‘Moana’, Taylor Swift and ‘Fortnite’ for future growth
As the company celebrates its centennial, it faces a maze of problems. As Iger tries to turn a profit in the streaming business, he faces a showdown with activist investors.
In the latest twist Tuesday, investment firm Blackwells Capital implored shareholders to elect its three board candidates and split Disney into three parts: sports, entertainment and resorts. Another activist investor, Trian Partners, has proposed two members for Disney’s board of directors.
See: Disney activist Blackwells proposes breaking up company in proxy fight
Iger said he has not spoken to the activists and dismissed their actions as a “distraction.”
A spokesperson for Trian Partners summed up Disney’s results as: “It’s déjà vu all over again. “We saw this movie last year and we didn’t like the ending.”
Disney’s results come on the heels of a successful partnership revealed Tuesday. ESPN, Fox Corp.
FOX,
and Warner Bros. Discovery Inc.
DMB,
They said they will create a joint sports streaming service, available this fall, that will offer a sort of Hulu model for sports programming.
The joint venture marks a major milestone moving ESPN into the direct-to-consumer business, Iger told CNBC, and Disney continues to seek commercial partners for the service. He said the unnamed company’s price will be less than what it costs to buy each sports package separately.
Read more: Disney, Fox and Warner Bros. Team Up to Launch New Sports Streaming Service
ESPN will be available as a standalone streaming service in August 2025, according to Iger. It is likely to integrate betting, statistics and personalized data, he said during a conference call with analysts.
Disney shares have fallen 11% over the past year. The S&P 500
SPX
has risen 21%.
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