Disney (DIS) reported fiscal third quarter earnings on Wednesday that beat expectations, driven by continued strength in its domestic parks business and a year-over-year swing to profitability in its streaming unit.
The direct-to-consumer segment posted a profit of $346 million, compared to a $19 million loss a year ago. The company continues to prioritize consistent profitability in streaming amid the ongoing shift away from traditional pay-TV. Disney is targeting approximately $875 million in streaming profits for fiscal 2025.
The company raised its full-year profit forecast to $5.85 a share, up from its May forecast of $5.75 and ahead of Wall Street expectations of $5.77.
Prior to its earnings update, Disney also confirmed previous reports that ESPN has reached a preliminary deal to acquire key NFL Media assets, including NFL network, NFL RedZone, and NFL Fantasy, in exchange for a 10% equity stake in the network.
Alongside the sale of NFL Network, the league and ESPN have also agreed to a second deal under which the league will license certain NFL content and intellectual property to ESPN for use across NFL Network and related assets. The news comes as ESPN prepares to launch a new standalone service this fall.
Analysts see the debut as a key step toward more bundling opportunities with Disney+ and Hulu, as streamers across the industry work to retain subscribers and reduce churn.
The deal had been previously reported by the Athletic. Ahead of its confirmation, Morgan Stanley analyst Ben Swinburne wrote in a Monday note, “With the NFL as an investor, ESPN’s long-term future is incrementally more secure.”
He added, “While the NFL cannot stop cord-cutting and will surely not give Disney a discount in future rights renewals, by investing in ESPN, the NFL will be even more motivated to help ESPN survive and potentially thrive in the new streaming-first world ahead.”
Disney reported revenue of $23.65 billion for the quarter, roughly in line with analyst expectations of $23.68 billion and up 2% from the same period last year.
Adjusted earnings per share of $1.61 came in ahead of the $1.46 expected by analysts polled by Bloomberg. Earnings increased from $1.39 from a year ago.
On the streaming front, Disney+ added 1.8 million subscribers in the quarter, falling short of the 2.05 million analysts polled by Bloomberg had expected.
Looking ahead, Disney expects total Disney+ and Hulu subscriptions to grow by more than 10 million in the current quarter, with most of that growth coming from Hulu due to an expanded distribution deal with Charter (CHTR). Disney+ is expected to see a more modest sequential increase.
