The Walt Disney Company released its fourth quarter earnings for the 2024 fiscal year last week, and as usual we want to take some time to delve into the details. While earnings reports may not seem like the most interesting thing to most people, these reports usually provide a lot of great insight into what theme park and movie fans can expect from the company in the future. Announcements on the updated slate of animation films or changes to park offerings are commonly first mentioned in the earnings calls before they hit any press release or reputable blog. Whether the numbers look good or bad, CEO Bob Iger usually likes to sprinkle in some interesting items, and this report was no different.
Disney had a strong quarter with its revenue up 6%, making the overall revenue for the year up 3% to a total of $91.4 billion. Almost all segments of the company saw growth from last year. As a result, shares of Disney popped about 10% last week. During the CEO message from the earnings call, Bob Iger shared “This was a pivotal and successful year for The Walt Disney Company, and thanks to the significant progress we’ve made, we have emerged from a period of considerable challenges and disruption well positioned for growth and optimistic for our future.” Disney ended its call uniquely giving guidance for the next three years (rather than the customary one year guidance), and it was positive. The company expects single digit adjusted EPS growth for FY2025, and double digit growth for FY26 and FY27.
That was the big picture, but there were other items discussed in both the earnings call and within interviews on CNBC that I thought were super interesting. Hugh Johnston, who has been the Walt Disney Company’s CFO for almost a year now, said the strong quarter was a result of “investing in the parks, improving streaming profitability, and putting creativity first.” He noted Disney+ currently had 175 million subscribers, and reminded viewers that the service had turned profitable over the last year. Many will remember a little more than a year ago, many shareholders were concerned about the company’s ability to turn Disney+ profitable. Previous CEO Bob Chapek had invested a large amount of capital into developing new movies and shows for the streaming service, as he so often touted the need to “feed the beast.” But in doing so, many felt the product was too watered down in quality programming, and at the same time was adding a big burden to the company’s bottomline. Since Iger took over, less content with a more focused quality, in combination with growing the pricing on ad-tier membership, has taken the streaming service into profitability.
Also in the media news this week was the interesting announcement that Comcast planned to “spin-off” many of its linear cable television channels. In a lot of ways, Comcast and Disney are very similar companies, so any shift in business from either side is usually relevant to the other. In his interview on Squawk Box on CNBC, Johnston was asked if Disney would ever consider doing the same with some of its television channels. In fact, Bob Iger even referenced this idea in an interview with David Faber last year, and the stock did have a short lived dip at this idea. However, Johnston disagreed with the need stating he “did not see a value gain through divestitures.”
The Studios sector had a great quarter. Bob Iger noted both Inside Out 2 and Deadpool & Wolverine were a boon to overall revenue, and were the top 2 movies of the year thus far for box office sales. My prediction is both these titles will soon be replaced by Moana 2, with its release set for next week. There’s no doubt this sequel will be the company’s biggest opening of the year. It was interesting to hear from Bob Iger that Disney+ sees an increase in viewership regarding any movies related to current theatrical releases, i.e. more people watching Moana on Disney+ now that Moana 2 is being released. Sequels may not always be better than their original for the audience, but it sounds like they are always a welcomed addition for ad revenue on DIsney+. Could that be part of the reason why we have so many sequels in the pipeline for the upcoming slate of theatrical releases? Iger did list a few titles expected for the 2025 slate: Captain America: Brave New World, Live Action Lilo & Stitch, Zootopia 2, and the latest Avatar sequel Fire and Ash. Personally, I wish Disney would stop the live action remakes, but the others sound promising.
Disney’s parks and experiences continue to be a reliable positive for the company’s earnings. Spending at the parks was up, and so overall operating income had increased compared to last year. Interesting to note that attendance was flat, so results were mostly the product of increased guest spending at the domestic parks. Although domestic park income was up, the international parks were down. This is likely due to the decreased economic activity in China for the year affecting both Shanghai Disney and HongKong Disneyland. For the future, 2025 will be an interesting year for Walt Disney World, with the opening of Universal’s new park Epic Universe. While most would expect this to negatively impact Disneyworld, as more visitors choose to spend their days at Universal parks, CFO Johnston says he feels the increased competition to be beneficial to the Disney parks.
Overall Bob Iger was very pleased with the company’s performance and optimistic for future gains. He did take time to mention ad revenue was up across the board, spoke on the new Disney Cruise Line ship with the expectation to grow to a total of 13 ships, reiterated the expectation for ESPN to launch direct to consumer in Fall of 2025, and also touted the release of their password sharing technology for Disney+ to reduce subscription churn. Lastly, the search for the next CEO is still ongoing. There are several internal candidates, but the recent news has mentioned a shift to looking for outside candidates as well. With so many sectors of the business headed in the right direction, here’s hoping the next CEO is able to match the business acumen of outgoing CEO Bob Iger. Who would you like to see as Disney’s next CEO and why? Leave a comment below!
Photos above property of The Walt Disney Company.
