Disney on Wednesday reported better-than-expected quarterly earnings — helped by surging theme park attendance, an aggressive cost-cutting plan and narrowed losses in its streaming business — as CEO Bob Iger looks to fend off challenges to his leadership from activist investors.
Iger declared that the Mouse House is entering a new rebuilding phase after a massive restructuring, putting the company on track to achieve roughly $7.5 billion in cost cuts — a $2 billion increase from the previously announced $5.5 billion at the beginning of the year.
“While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again,” Iger said on a conference call after the company reported the fourth-quarter results.
“We have a solid foundation of creative excellence and innovation built over the past century, which has only been reinforced by the important restructuring and cost-efficiency work we’ve done this year.”
Shares of the Mouse House, which have languished near nine-year lows, edged up nearly 4% in after-hours trading Wednesday.
The 100-year-old entertainment giant is once again under pressure from activist shareholder Nelson Peltz, whose Trian Fund Management is expected to seek board seats. Billionaire and former Marvel executive Isaac “Ike” Perlmutter has said he has entrusted his stake in Disney to Trian for that effort, giving the fund control over a stake worth upward of $2.5 billion, The Wall Street Journal reported.
Trian had pushed for one board seat in January, but ended its proxy fight a month later, after Iger laid out restructuring plans aimed at saving $5.5 billion.
For the quarter ended Sept 30., Disney’s net income rose 63% to $264 million, or 14 cents, compared with year-ago income of $162 million or 9 cents a share. Adjusted EPS totaled 82 cents, better than Wasll Street’s EPS estimate of 70 cents.
Revenue increased 5% to $21.24 billion, falling short of expectations of $21.33 billion.
Slumping ad revenue at the company’s TV stations like ABC, resulted in Disney reporting its second-straight revenue miss.
Over the summer, Iger said he was entertaining selling the company’s TV properties like National Geographic, FX, ABC and others. Iger is also looking to sell a minority stake in sports network ESPN.
Disney’s entertainment division, which includes TV networks and film studios, brought in $9.5 billion in revenue, with direct-to-consumer making up more than $5 billion of that number. Income totaled $236 million, with all the profits from linear networks offsetting the losses in streaming services such as Disney+.
Disney said that its streaming business, which has been losing money since the launch of Disney+ in late 2019, is making progress in narrowing its losses. The business, which also includes Hulu and ESPN+, lost $387 million in the quarter, down from $1.47 billion a year earlier.
In its sports unit, ESPN saw its revenue rise slightly to $3.8 billion, with operating income rising 16% to $987 million.
Lastly, in theme parks and experiences, revenue rose 13% to $8.2 billion, with operating income rising by 31% to $1.8 billion. Higher attendance at Shanghai Disney, Hong Kong Disneyland and Disneyland resorts, and growth of the cruise businesses, helped offset lower results at Walt Disney World in Florida.
While Wednesday’s earnings lifted Disney’s stock price, it has been a tough year for the Mouse House, whose share price has fallen below $90 for most of the year. That’s less than half of its share price just two years earlier.
This story originally appeared on NYPost
