Disney reported a 30% year-over-year growth in adjusted earnings per share, raising its full-year adjusted EPS growth target to 25% in its recent Q2 2024 earnings call. This performance was largely driven by the Entertainment and Experiences segments, with Disney’s streaming business reaching profitability in the Entertainment division. Here’s a closer look at how each business segment performed and the challenges Disney faces moving forward.
Entertainment segment
Disney’s Entertainment segment saw its operating income surge by over 70% year-over-year, primarily due to strong growth in its direct-to-consumer (DTC) business. Revenue in this segment grew sequentially by 2% and annually by 13%, reaching US$47 million in operating income. This success was attributed to significant expense savings and a 6.3 million increase in Disney+ core subscribers. Disney+ core ARPU (average revenue per user) also grew by 6% sequentially, thanks to price increases and improved international ARPU.
Despite these positive trends, Disney is bracing for a loss in the Entertainment DTC business in the third quarter due to the cost of ICC cricket rights for Disney+ Hotstar. Additionally, the company expects no growth in Disney+ core subscribers in the third quarter but anticipates a rebound in the fourth quarter. Nevertheless, Disney remains confident that its streaming businesses will achieve profitability again in Q4 and continue improving into fiscal 2025.
The Linear Networks division faced some headwinds, with operating income declining due to lower domestic affiliate and advertising revenue and reduced international affiliate revenue. However, linear networks continue to play a crucial role in Disney’s DTC strategy by providing high-quality content not captured on streaming alone, that broadens the audience base.
Meanwhile, the Content Sales/Licensing division reported lower results compared to last year due to the absence of significant theatrical releases. Nevertheless, modestly positive operating income is expected in the third quarter.
Sports segment
