The Walt Disney Company earned less revenue from its traditional linear broadcast and cable television networks during the first three months of the year.
Disney said its domestic linear television networks brought in 7 percent lower revenue during Disney Q2 (calendar Q1), with ABC, the Disney Channel, ESPN, FX and other Disney-owned networks grabbing $2.269 billion.
International networks generated $496 million during the first three months of the year, an 11 percent declined when compared to the previous year. Overall revenue attributed to domestic and international linear networks was down 8 percent on a year-over basis.
Disney attributed lower revenue to ongoing challenge in the traditional advertising market, coupled with lower per-subscriber revenue from fees charged to cable and satellite TV companies in the U.S. and elsewhere. While Disney followed some of its peers in increasing redistribution fees for its channels, those price adjustments weren’t enough to offset cord-cutting and lower ad revenue, the company reported.
Disney’s entertainment streaming services — Disney Plus and Hulu — generated $47 million in profit during the first three months of the year, a first for the company. Streaming-related revenue helped boost Disney’s overall Disney Q2 revenue to $22.1 billion, in line with expectations from Wall Street analysts and up from the $21.82 billion reported during the same quarter last year.
Disney+ subscribers landed at 117.6 million during Disney Q2, representing a net addition of more than 6 million customers on a sequential basis. The number of Hulu subscribers grew slightly to 45.8 million, reflecting a sequential net addition of 700,000 accounts, while the number of ESPN+ customers shrank to 24.8 million customers.
The fate of ESPN+ hangs in the balance as Disney is working on two new sports-centric streaming services: One that it is developing through a joint venture with Fox and Warner Bros Discovery that will offer live access to ESPN channels by the fall of this year, and a standalone, streaming version of ESPN’s core cable channels that is slated to debut next year.
Disney offered few hints on what it plans to do with ESPN+, but did say that its streaming division could land in the red by Disney Q3 (calendar Q2) due to losses from Disney+ Hotstar, which lost 2.3 million subscribers during Disney Q2.
Still, Disney says its entire streaming division — to include entertainment and sports — should swing to full profitability by Disney Q4.
