Disney Shares Slide Over 3% Despite Strategic Streaming Moves and Earnings Beat

Disney's shares have witnessed a decline, overshadowing recent successes in the streaming sector. Despite favorable earnings results, the outlook for Disney's profitability has caused concern among investors. The company's third-quarter fiscal report indicated a rise in profit driven by strength in domestic parks and streaming services. The Walt Disney Co. reported earnings per share of $2.92, up from $1.43 a year earlier, with adjusted earnings of $1.61 per share surpassing analyst expectations of $1.46. However, its revenue of $23.65 billion was slightly below the anticipated $23.68 billion.

A significant strategic move saw Disney subsidiary ESPN securing a partnership deal with WWE, enabling ESPN as the exclusive domestic streaming service for WWE's premium live events from the next fiscal year. Major events such as WrestleMania will be available on ESPN's forthcoming streaming service, set to launch next month. The deal, reported but not confirmed, allegedly holds a value north of $1.6 billion over five years.

In parallel developments, an arrangement with the NFL was announced, permitting ESPN to acquire NFL media properties, including the NFL Network and RedZone, with the league securing a 10% equity stake in ESPN. This move is part of a broader strategy to enhance ESPN's digital sports platform, set to debut a direct-to-consumer offering in August.

Despite the share slide, Disney's direct-to-consumer segment, encompassing Disney+ and Hulu, recorded operating income gains to $346 million from a loss in the prior year, accompanied by a 6% revenue climb. Subscriber figures for Disney+ demonstrated stability in the U.S. and Canada, with a minor international increase. The company projects a subscription surge in the fourth quarter, primarily via Hulu, driven by an expanded Charter deal. This growth outlook aligns with Disney's plan to unify Hulu into Disney+, shaping a singular app experience enriched by its diverse entertainment catalog.

CEO Bob Iger and CFO Hugh Johnston articulated the cessation of subscriber count disclosures for Disney+, Hulu, and ESPN+ in future quarterly reports, commencing with ESPN+ in fiscal 2025's fourth quarter and folding Disney+ and Hulu data by fiscal 2026's start. This marks a strategic pivot in performance assessment metrics for the business.

The Experiences segment accounted for robust domestic parks performance with a notable increase in operating income, although international parks saw a decline. Future endeavors include an Abu Dhabi theme park development. Emphasizing Disney's innovative and expansive vision, Iger stated, "With ambitious plans ahead for all our businesses, we’re not done building, and we are excited for Disney’s future."

Addressing earnings projections, Disney forecasts adjusted earnings of $5.85 per share for fiscal 2025, surpassing prior expectations of $5.75, with analysts targeting $5.80. Disney is currently shaping its succession strategy for Iger, focusing on internal and external executive candidates. Iger's extended contract runs through 2026, providing a timeline for strategic leadership transition.

While Disney navigates multiple facets of its business efficiently, shares witnessed a dip of over 3% in morning trading, signifying market vigilance towards its profit trajectory amid its multifaceted operations.