Just one quarter after generating serious concern across several parts of its balance sheet, the Walt Disney Co. posted a much more robust report for the fourth quarter of 2021, beating analyst estimates in several key areas including its highly watched direct-to-consumer operations.
The company said that subscribers for ESPN+ grew another 25 per cent to reach 21.3 million. Disney+ subscribers, inclusive of international distribution, reached 129.8 million, up by 10 per cent from the prior quarter and topping analyst projections of 125.75 million. And Hulu subscribers grew 3 per cent to 45.3 million.
Average revenue per user (ARPU) for each of those services showed further increases, generally by double-digit percentages.
And overall, Disney posted $21.82bn (€19.1bn) in revenue for the quarter, the company’s first of its fiscal 2022, up by 34 per cent from the same period a year ago, and beating analyst expectations. Adjusted earnings per share of $1.06 tripled the same quarter a year ago and also strongly beat analyst projections.
Also significantly fueling the strong Disney earnings report was a doubling in revenue from the company’s parks, experiences, and consumer products division to $7.2bn, and that component reversing a prior $100m loss to $2.5bn in operating income as it recovers from the Covid-19 pandemic.
The growth, particularly in the direct-to-consumer operations, represented a sizable turnaround from just three months ago, when Disney warned that more dramatic gains for the streaming services would likely not arrive until later in 2022. The results also notably differed from rival entities such as Netflix, which recently saw a 20 per cent cratering of its stock after reporting a flattening of its subscriber base.
“It’s all about content, content, content, and we are bullish about our future content going forward, not only in terms of quality, but also in terms of quantity. And that’s really what’s driving our bullishness,” said Bob Chapek, Disney chief executive.
With a foundation of these strong operating results, Chapek said he was relishing the chance to transform the entire notion of sports content development.
“While multiplatform television and streaming will continue to be the foundation of sports coverage for the immediate future, we believe the opportunity for the Walt Disney Co. goes well beyond these channels,” Chapek said. “It extends to sports betting, gaming, and the metaverse. In fact, that’s what excites us, the opportunity to build a sports machine akin to our franchise flywheel that enables audiences to experience, connect with, and become actively engage with our favorite sporting events, stories, teams, and players.”
Investors quickly responded to the news, sending Disney shares up by about 8 per cent in February 9 afterhours trading on the New York Stock Exchange to more than $158 per share, representing a sizable turnaround from a 22 per cent drop in the stock price over the past year.
Omaha Productions extension
Disney, meanwhile, also announced a contract extension with Omaha Productions, led by former National Football League star quarterback Peyton Manning, to add a fourth year to the contract for Monday Night Football with Peyton and Eli, starring Manning and his brother, Eli, another former NFL star quarterback.
The deal now solidifies that alternative game presentation through the 2024 season, and also calls for similar productions, with other hosts, for the Ultimate Fighting Championship, college football, and golf, to be produced by Omaha Productions in collaboration with ESPN.
Monday Night Football with Peyton and Eli, first announced last July, has been a breakout hit for the network, averaging 1.6 million viewers per game for the 2021 NFL season.
The success of the program also helped inspire ESPN’s recent decision to reshape its Sunday Night Baseball talent and create Sunday Night Baseball with Kay-Rod featuring Michael Kay and former Major League Baseball star Alex Rodriguez.
“We couldn’t be more proud of Monday Night Football with Peyton and Eli and the partnership we’ve develop with Peyton, Eli, and the team at Omaha Productions,” said ESPN chairman Jimmy Pitaro. “This new agreement allows us to deepen our relationship and explore original concepts to spread that magic to other sports and events. Ultimately, this will help grow our audience by providing fans with even more creative options that they crave.”