One Unlikely Hero Just Kept Disney’s Magic Alive

If there was ever a perfect time to talk about Disney, it’s the night after watching Hans Zimmer perform The Lion King live. Nothing quite like that orchestral ba dum tss of “Circle of Life” to remind you that life is a rollercoaster of highs, lows, and a few hyenas trying to eat you alive (and tax you to death). Speaking of rollercoasters… Disney just dropped its latest earnings report, and let’s just say, if it weren’t for one division holding things together, their shareholders might be bawling their eyes out.

Disney reported first-quarter earnings that beat expectations, thanks to one unlikely hero… its streaming business. You know, the same streaming business that was hemorrhaging cash like a government program not too long ago? Well, not anymore. Disney+, Hulu, and ESPN+ managed to turn a profit of $293 million, a massive turnaround from last year’s $138 million loss. That marks the third straight quarter of profitability for the streaming segment, proving that maybe, just maybe, Bob Iger can rely on turning a profit with his beloved streaming service going forward. 

Ironically, they did this similar to how Spotify turned a profit for the first time in history (like we talked about yesterday)… with price hikes. Disney jacked up its subscription costs back in October, causing 700,000 subscribers to peace out. But it turns out, charging people more actually makes more money (especially Disney kids turned adults). The average revenue per subscriber rose 4% to $7.99, and Disney’s still expecting around $875 million in streaming profits for 2025. Not bad for a business that’s constantly pumping out horrible Marvel movies for the fun of it.

While streaming pulled a miraculous comeback, Disney’s theme parks business took a hurricane-sized beating… literally. Hurricanes Helene and Milton slammed Florida, dealing an estimated $130 million hit to Disney’s domestic parks segment. Throw in another $90 million for cruise ship pre-launch costs, and suddenly, Mickey’s vacation destinations aren’t looking so magical. Domestic parks and experiences revenue dropped 5%, but don’t cry for Disney just yet. The company says it expects parks to bounce back with 6-8% growth in 2025. In other words, brace yourself for even more price hikes on those $20 Mickey pretzels at the Magic Kingdom.

(Source: Orlando Sentinel)

While Disney parks were struggling to keep their umbrellas upright, their entertainment division was absolutely killing it. Operating income for Disney’s entertainment business skyrocketed 95%, thanks to box office hits like Moana 2 and Mufasa. Yes, the sequel to The Lion King that absolutely no one asked for but everyone will probably still watch. Moana 2 alone crossed the $1 billion mark over MLK weekend, making it the fourth Walt Disney Animation film to hit that milestone. On the flip side, Disney’s traditional TV business continued its slow and painful decline. Operating income from linear networks fell 11% as people broke up with cable for (you guessed it) streaming. And in case anyone was still wondering why ESPN keeps finding new ways to cut costs, Disney also lost another $50 million exiting its failed Venu Sports streaming joint venture.

Despite all the ups and downs, Disney managed to deliver solid numbers. Revenue came in at $24.70 billion, beating expectations of $24.57 billion. Adjusted earnings per share hit $1.76, crushing the $1.42 analysts expected, while net income jumped 23% to $2.64 billion. But what really matters? The House of Mouse still has some magic left, even if it’s been relying on price hikes and box office nostalgia to get there. Investors initially sent shares up 2% in pre-market trading, but those gains faded as reality set in. The streaming win is great, but we’ve yet to see if it can keep carrying the entire empire while theme parks recover and traditional TV walk the plank.

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Stock.News has positions in Disney.