Disney Beats on Earnings as ESPN Secures Landmark NFL and WWE Deals

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The Walt Disney Company reported fiscal third-quarter earnings that topped analyst expectations on the bottom line but fell just shy on revenue, underscoring both the progress and challenges in its turnaround efforts. Adjusted EPS rose 16% year-over-year to $1.61, beating consensus of $1.47, while revenue came in at $23.65 billion versus the $23.73 billion estimate. Guidance was raised, with full-year adjusted EPS projected at $5.85, up from $5.75 previously. Still, shares slipped about 2.8% following the release, as traders weighed near-term technical concerns against the strength of the results. Key support now sits at $114, while $124 remains a critical resistance level amid a descending triangle pattern on the daily chart.

Financially, Disney turned in a strong quarter, with net income more than doubling to $5.26 billion, or $2.92 per share, helped by tax benefits from its Hulu stake consolidation. Free cash flow was a robust $1.89 billion. However, operating performance varied significantly by segment, with the Parks and Sports divisions delivering double-digit profit growth, while the Entertainment unit lagged due to weakness in linear TV and mixed film results.

Segment Breakdown

Entertainment: Revenue rose 1% to $10.7 billion, but operating income fell 15% to $1 billion. Within the segment, the direct-to-consumer business was a highlight: revenue climbed 6% to $6.18 billion, and operating income swung to a $346 million profit versus a loss last year, powered by 1.8 million new Disney+ subscribers. Total Disney+ and Hulu subscriptions reached 183 million, up 2.6 million from the prior quarter. Yet linear networks continued to drag, with operating income falling 28% to $697 million as ad revenue and viewership slipped. Disney’s content sales and licensing unit also posted a $21 million operating loss, down sharply from last year’s $254 million profit, as “Elio” underperformed compared to 2024’s blockbuster “Inside Out 2.”

Sports (ESPN): The Sports division delivered a 29% jump in operating income to $1 billion, though domestic ESPN operating income dipped 7% due to higher NBA and college sports rights costs. Revenue rose modestly to $4.3 billion, supported by a 3% uptick in advertising. Despite short-term cost pressures, ESPN is at the center of Disney’s media strategy, with new deals that could transform its reach and revenue model.

Experiences (Parks, Resorts, Cruises, Consumer Products): This segment was the standout. Revenue increased 8% to $9.1 billion, and operating income jumped 13% to $2.5 billion, driven by a 22% surge at domestic parks. Higher guest spending and strong cruise demand bolstered results. Disney Cruise Line also benefited from an Easter holiday timing shift and new ship preparations.

Key New Deals: NFL and WWE

Disney took bold steps this week to reshape its sports footprint. ESPN struck a landmark deal with the NFL, under which Disney will acquire the NFL Network, NFL RedZone, and NFL Fantasy in exchange for the league taking a 10% stake in ESPN. Starting in 2026, Disney+ and Hulu will stream the NFL Draft alongside ESPN, ABC, and ESPN Deportes, integrating pro football content into Disney’s growing direct-to-consumer sports push.

In addition, ESPN signed a five-year, $1.6 billion deal with WWE, making it the exclusive U.S. home of all WWE premium live events, including WrestleMania, beginning in 2026. Combined with ESPN’s upcoming standalone streaming service, priced at $30 per month and launching August 21, these moves position Disney to capture a broader sports audience while diversifying away from declining linear networks. CFO Hugh Johnston told CNBC the new streaming service will be “accretive to overall earnings growth.”

Market Reaction and Technical View

Despite the strong results and game-changing sports deals, Disney shares slid 2.8% in early trading. The reversal highlights market skepticism about valuation and technical risks. The stock continues to trade within a descending triangle pattern, with $124 marking stiff resistance. A failure to hold $114 support could signal further downside, even with fundamental momentum in streaming and parks.

Outlook

Disney guided Q4 to add more than 10 million total Disney+ and Hulu subscriptions, largely driven by the expanded Charter deal. Management expects double-digit operating income growth in Entertainment, 18% growth in Sports, and 8% in Experiences for fiscal 2025. Gross margin tailwinds from the profitable direct-to-consumer business are expected to continue, offsetting linear TV erosion. CEO Bob Iger emphasized the company’s evolving streaming portfolio: “We’re not done building, and we are excited for Disney’s future.”

Conclusion

Disney delivered a fundamentally strong quarter, with EPS beating expectations, streaming turning profitable, and parks delivering record income. The NFL and WWE deals reinforce its strategy to make ESPN a cornerstone of direct-to-consumer sports, a move that could drive long-term revenue growth. Yet, the market remains cautious, with shares under pressure despite raised guidance. For investors, Disney’s story is increasingly a balancing act: operational momentum versus technical resistance. Holding above $114 will be crucial as the company looks to build on its latest strategic wins.

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