Dive Brief:
- The Walt Disney Company delivered mixed news to investors on Wednesday, reporting signs of trouble within its theme park business while announcing a first-ever profit for its streaming unit.
- Disney’s Experiences segment, which includes parks, generated revenues of $8.39 billion for the third quarter, a 2% increase over the prior year. But the segment saw its operating income decline, with more challenges ahead amid softening demand, according to the company.
- “We expect to see a flattish revenue number in Q4 coming out of the parks,” Disney CFO Hugh Johnston said during a Wednesday earnings call. “I don't think I'd refer to it as protracted, but just a couple of quarters of likely similar results.”
Dive Insight:
The media and entertainment giant’s overall revenues jumped 4% to $23.2 billion during the third quarter, up from $22.3 billion in the year-earlier period.
The company’s combined direct-to-consumer streaming business also generated an operating profit for the first time: $47 million compared with a loss of $512 million a year ago. Disney also highlighted the fact that its recent “Inside Out 2” movie became the highest-grossing animated film of all time.
But these successes were overshadowed by struggles in the company’s Experience business, which posted $2.3 billion in operating income for the quarter, a 3% decline year over year. And the segment’s operating income is expected to decline by “mid single digits” in the fourth quarter over the prior year, Disney said in its earnings report.
Johnston said this reflects a “slowdown that's being more than offset by” the company’s entertainment business.
Lower income consumers are currently “feeling a little bit of stress,” while high income consumers are “traveling internationally a bit more,” the finance chief explained.
“I think you're just going to see more of a continuation of those trends in terms of the top line,” he added.
