Disney beats profit estimates on strong theme parks & streaming growth, announces TikTok partnership, shares rise 3.65%
Walt Disney reported better-than-expected quarterly earnings on Wednesday, driven by solid performances from its theme park and streaming businesses despite ongoing concerns over global economic conditions.
The entertainment giant said its domestic parks continued to perform strongly, with Walt Disney World in Florida delivering a standout quarter. While the company acknowledged softer demand at its theme parks in Shanghai and Hong Kong, it said advance bookings for its U.S. parks remain healthy, reflecting resilient consumer interest.
Disney also posted encouraging results from its streaming operations, highlighting lower customer churn as subscriber retention improved. The company added that it is evaluating a complementary advertising-based offering to further strengthen its streaming business.
The stronger-than-expected earnings helped lift investor sentiment, with Disney shares rising over 3%.
At 1:42 p.m. EDT, Disney shares rose 3.65%, or $3.58, at $101.76.
For the third quarter, Disney reported net profit of $2.6 billion, roughly half the level recorded a year earlier, when results were boosted by a significant one-time tax benefit. Revenue increased 6.8% year-on-year to $25.2 billion, although it came in slightly below Wall Street expectations.
Chief Financial Officer Hugh Johnston said the company continues to face headwinds from higher fuel prices, which have affected consumer spending, particularly at its Asian theme parks. However, he reiterated that the ongoing U.S.-Iran conflict has not altered Disney's plans to develop a major new theme park in Abu Dhabi.
"Demand is strong across domestic parks and cruises," said Johnston.
Attendance at Disney's U.S. parks rose 3% during the quarter, though the company noted that international visitor numbers to its American destinations have slowed.
Streaming, Films and Sports
Disney's entertainment division benefited from growth in streaming subscriptions. The company also noted that, similar to industry trends toward advertising-supported streaming services, it is exploring additional opportunities to expand advertising revenue.
At the box office, Disney highlighted the strong performances of Toy Story 5 and The Devil Wears Prada 2, while Star Wars: The Mandalorian and Grogu fell short of expectations. Despite the weaker theatrical performance, Disney said the franchise continued to support higher attendance at its theme parks and stronger sales of related merchandise.
The company's sports division reported a steeper decline in operating profit than previously anticipated, reflecting shorter NBA playoff series due to multiple four-game sweeps, as well as higher sports broadcasting rights costs.
TikTok Partnership
Alongside its earnings announcement, Disney unveiled a new partnership with TikTok that will enable fans and content creators to produce short-form videos using scenes and clips from Disney's vast library. The videos will be available on both TikTok and Disney's streaming platform.
Chief Executive Josh D'Amaro said on an earnings conference call that the company was exploring a free streaming product for consumers, viewing the option as "way to expand our reach to a customer segment that's more price sensitive."
Under the collaboration, Disney will provide memorable content from popular franchises including Marvel and Star Wars, allowing users to create and share original short videos across the two platforms.