Disney’s theme parks business continued to rebound in the second quarter as the company also added more subscribers to its Disney+ streaming service as the embattled Mouse House reported earnings after the market closed Wednesday.
The Burbank, Calif.-based media giant has been under a microscope over its streaming growth amid a political feud with Florida Gov. Ron DeSantis over the state’s “Don’t Say Gay” law. Recently, streaming leader Netflix logged its first subscriber decline since October 2011 with some 200,000 customers pulling the plug.
The news sent Netflix’s stock into freefall and caused Wall Street analysts to question whether the streamer had hit a ceiling with 221.6 million customers.
But Disney CEO Bob Chapek told investors on Wednesday that Disney+ gained 7.9 million customers in the first three months of 2022 to 137.7 million. Analysts expected 135 million subscribers. The exec reiterated the company’s guidance of 230 million to 260 million subscribers by fiscal 2024.
Disney shares closed at $105.21 before the announcement and got a 5 percent bump in after-market trading when the results were released. It quickly leveled off when the company warned of headwinds from inflationary pressures.
Chapek called Disney+ — home to hits like “The Mandalorian” franchise and “Encanto” — “one of a kind” and said he expects the service to continue to grow as it adds general entertainment content and a lower cost ad-supported tier.
“Almost half of Disney+’s subscribers are adults without kids,” he said.
During the period ended April 2, Disney reported net income of $3.7 billion, or EPS of $1.08 a share. The company reeled in revenue of $19.2 billion, compared with $15.61 billion a year earlier. Analysts were expecting the company to report EPS of $1.07 on revenue of $18.91 billion.
Overall revenue was propped up by sales at its theme parks and consumer products division, which includes Walt Disney World and Disneyland resorts. It reeled in $6.65 billion, above analysts expectations of $6.29 billion.
Disney World has been in the news lately as Florida legislature’s recently repealed its special tax privileges district that houses the Orlando-based theme park.
The district owes $1 billion in municipal debt, which is now ensnared in a legal mess over how bondholders will be paid back under the new arrangement.
The bill repealing the tax treatment came amid controversy over Disney’s response to Florida’s “Don’t Say Gay” bill, which was signed into law last month. It bans the discussion of gender identity and sexual orientation for kids in kindergarten through third grade.
Chapek initially chose to stay mum on the bill, but after pressure from Disney employees and critics, the CEO flip-flopped and came out against the legislation. He vowed to fight against it and withdrew Disney’s political donations in Florida, but his mishandling of the issue has caused some critics to question his future at the company.
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