Disney Earnings: Pay TV Weakness Overshadows Strength In Parks & Streaming

Disney shares are trading lower in premarket following Q3 results that were broadly in line but revealed underlying softness. The company raised full-year adjusted EPS guidance to $5.85 (from $5.75), ahead of the Bloomberg Consensus $5.77 estimate. While adjusted EPS of $1.61 beat consensus ($1.46), investor sentiment was dampened by continued deterioration in the conventional entertainment TV segment, which posted a sharp year-over-year decline. The theme here is that this segment-level weakness overshadowed strength in parks and streaming. 

Data compiled by Bloomberg shows Disney’s revenue rose 2.1% year-over-year to $23.68 billion in the quarter ended June 28, in line with consensus estimates. Adjusted earnings came in at $1.61 per share, topping the Bloomberg Consensus estimate of $1.46.

Overshadowing Disney’s strong performance in its theme parks and streaming businesses was a sharp decline in conventional entertainment TV, where income plunged 28%, and a loss from the Disney film studio. Income at the theme parks division grew 13% in the quarter to $2.52 billion, while revenue rose 8%. The streaming segment delivered a quarterly profit of $346 million.

Here’s a breakdown of Disney’s Q3 financials and subscriber metrics, comparing actual results to both year-over-year (y/y) performance and Bloomberg Consensus estimates:

Headline Results

• Adjusted EPS: $1.61 Up from $1.39 y/y, Beats estimate of $1.46

• Revenue: $23.65B +2.1% y/y, Marginal miss vs. estimate of $23.68B

Revenue by Segment

• Entertainment: $10.70B, +1.2% y/y, Below estimate of $10.82B

• Sports (mainly ESPN): $4.31B, -5.5% y/y, Missed estimate of $4.44B

• Experiences (Theme Parks, Cruises, etc.): $9.09B, +8.3% y/y, Beat estimate of $8.87B

• Eliminations (internal sales): -$448M, Down 21% y/y (non-core line item)

Operating Income by Segment

• Total Operating Income: $4.58B, +8.3% y/y, Beat estimate of $4.47B

• Entertainment: $1.02B, -15% y/y, Below estimate of $1.11B → weak performance in TV/film

• Sports: $1.04B, +29% y/y, Beat estimate of $961.7M → strong profitability at ESPN

• Experiences: $2.52B, +13% y/y, Beat estimate of $2.44B → theme parks continue to outperform

Streaming Metrics

Disney+ Total Subscribers:

• 127.8M +1.4% QoQ

• Slight miss vs. estimate of 127.97M

• Domestic (US/Canada): 57.8M (flat QoQ) — missed 58.73M

• International: 69.9M (+2.5% QoQ) — beat 69.2M

Hulu Total Subscribers:

• 55.5M +1.5% QoQ, beat 55.18M

• Hulu SVOD only: 51.2M (+1.8%), beat

• Hulu Live TV + SVOD: 4.3M (-2.3%), missed

Average Revenue Per User (ARPU)

• Disney+ ARPU: $7.86 (+1.2% QoQ), beat $7.43

• Hulu SVOD ARPU: $12.40 (+0.3% QoQ), missed $12.83

• Hulu Live TV + SVOD ARPU: $100.27 (+0.3% QoQ), missed $100.69

Disney’s Q4 and full-year forecasts both suggest solid profitability momentum: 

Disney Q4 Forecast Summary:

• Disney+ Subscribers: Expected to see a modest quarter-over-quarter increase, roughly in line with the +1.6% estimate.

• Total Streaming (Disney+ + Hulu): Forecasts net subscriber growth of over 10 million, driven primarily by Hulu, benefiting from the recently expanded Charter distribution deal.

Disney 2025 Full-Year Outlook Summary:

• Sees adjusted EPS $5.85, saw $5.75, estimate $5.77 (Bloomberg Consensus)

• Sees entertainment direct-to-consumer operating income $1.3 billion, estimate $1.22 billion

• Still sees entertainment operating income growth double-digit percentage, estimate +24.2%

• Sees experiences operating income +8%, saw +6% to +8%, estimate +7.5%

• Still sees sports operating income +18%, estimate +17.4%

• Sees cruise line pre-opening expense of about $185 million, with about $50 million 4Q

• Sees equity loss from India JV about $200 million from purchase accounting amortization

In markets, Disney shares are slightly lower in premarket trading. On the year, shares are up 6% as of Tuesday’s close. Shares are trading around Covid lows.

In a separate announcement, Disney revealed that the National Football League will acquire a 10% equity stake in ESPN.