Shares of Disney (DIS) rose sharply Thursday after the company reported fiscal fourth-quarter earnings per share and revenue that topped Wall Street estimates and its direct-to-consumer business built on recent momentum and moved to a profit .
Strong expectations for the next two years also fueled investor optimism, sending shares up more than 10% in early trading after the results. The stock pared gains slightly to only about 7% in afternoon trading.
The media and experiences giant reported fourth-quarter adjusted earnings of $1.14 per share, above the $1.10 expected by analysts polled by Bloomberg and higher than the $0.82 Disney reported in the same period last year.
Revenue came in at $22.57 billion, surpassing consensus expectations of $22.47 billion and the $21.24 billion reported in the same period last year.
Disney’s direct-to-consumer (DTC) streaming business – which includes Disney+, Hulu and ESPN+ – posted operating income of $321 million for the three months ended September 28. That compares with a loss of $387 million in the year-earlier period. .
Analysts polled by Bloomberg had expected DTC’s operating income to be around $203 million after the company achieved its first quarter of streaming profitability in its third-quarter results.
Achieving consistent profits in streaming is critical for Disney and other media giants amid a growing consumer shift to DTC services from traditional pay-TV packages.
In mid-October, the company raised the price of its various subscription plans, highlighting a trend that has gained momentum over the past year. With such moves, media companies are looking to boost margins on direct-to-consumer (DTC) offerings in light of mounting declines in linear television.
Disney said Thursday it expects DTC operating income of about $875 million in fiscal 2025.
During the earnings call, Disney CFO Hugh Johnston noted that gains in streaming serve as a “natural hedge” against struggling linear networks, where revenue fell 6% while operating income for the segment fell 38% compared to the prior year period .
Management warned that linear networks are expected to continue to decline as more consumers abandon their cable packages.
The entertainment giant’s results come as the company looks for a successor to current CEO Bob Iger to navigate a changing industry. A recent report from the Wall Street Journal says the pool of candidates is expanding as the executive is set to leave Disney for a second time at the end of 2026.
Last month, Disney said it plans to announce its next CEO in early 2026, with current Disney board member and former Morgan Stanley (MS) CEO James Gorman taking the reins. He will serve as the company’s new chairman of the board of directors effective January 2, 2025.
