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Source: Disney+

Disney is edging closer to streaming profitability as it reported generally positive financials in its Q2 report on Tuesday – although shares plunged nearly 10% due to the ongoing decline in the linear TV business and a flat theme parks forecast for Q3.

Total Disney revenue climbed 1% year-on-year to $22.1bn, slightly below analysts’ expectations. The company said it remained on track to generate approximately $14bn in cash provided by operations and over $8bn of free cash flow this fiscal year.

Diluted earnings per share increased from 93 cents to $1.21 year-on-year and the company revised upwards its earnings per share growth target for the year from 20% to 25%.

Operating income at the media giant’s streaming segment reached $47m, a marked improvement on the $587m loss reported in the year-ago period. Revenue increased 13% to reach $5.6bn and executives confirmed they still expect the steaming business to reach profit in Q4.

Core Disney+ subscribers increased by 6.3m in the second quarter to reach 117.6m, while Hulu added 500,000 members on SVoD and Live TV and SVoD to reach 50.2m. Under a deal that closed with Charter during the quarter, Disney’s streaming platforms have been integrated into Spectrum pay-TV offerings. 

The experiences segment encompassing theme parks has been a hero for the company in recent times and revenue increased 10% overall to $8.4bn, while operating income increased 12% to $2.3bn. However executives forecast a flat Q3 in terms of parks and experiences attendance due to anticipated lower travel patterns and rising costs.

Linear TV continues to struggle as customers cut the cord and revenue excluding ESPN fell 8% to $2.8bn while operating income dropped 2% to $752m. Revenue at ESPN climbed 3% to $4.2bn while operating income fell 9% to $799m.

The studios business falls under a ’Content Sales/Licencing and Other’ sub-category and revenues plunged 40% to $1.4bn, mostly due to a lack of titles in the quarter. Fox’s Kingdom Of The Planet Of The Apes opens this weekend and Pixar’s Inside Out 2 arrives on June 14. 

Sports operating income is forecast to decline due to higher programming costs related to College Football Playoff games at ESPN.

Disney stock settled on $105 at closing, compared to $116m at close on Monday.

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