Bilgesu Erdem
In a move that signals a renewed focus on financial discipline, Disney has unveiled plans to slash expenses by an additional $2 billion, building on its previous commitment to cut $5.5 billion in costs. This aggressive approach to cost management comes amidst a rapidly evolving media landscape, where streaming services are gaining traction while traditional television businesses face challenges.
Streaming Losses Narrow
Despite still operating at a loss, Disney’s streaming business, which includes Disney+, Hulu, and related services excluding ESPN+, saw a significant reduction in its losses during the recent quarter. Revenue for these services jumped 12%, while losses narrowed to $420 million, down from $1.4 billion in the same quarter a year earlier. This improvement is attributed to price increases and a growing subscriber base.
Theme Parks Drive Growth
Disney’s theme parks division delivered a strong performance, with earnings rising 31% to $1.76 billion in the quarter ended Sept. 30. Revenue in the division, which also includes consumer products, grew 12% to $8.16 billion, led by 55% growth internationally. This increase is attributed to higher attendance, increased ticket prices, and an expansion of international operations.
Traditional TV Business Faces Headwinds
In contrast to the growth in streaming and theme parks, Disney’s traditional television business continues to face challenges. Earnings from the company’s entertainment networks were little changed at $805 million, while revenue slumped 9.1% to $2.63 billion. This decline is attributed to falling ad sales and lower subscriber revenue at traditional TV networks, a trend that is impacting many media companies.
Cost Cuts Target Linear TV
CEO Bob Iger suggested that the additional $2 billion in cost cuts will primarily come from Disney’s struggling linear TV business. This suggests that the company is bracing for further declines in traditional television revenue and is looking to streamline operations in this segment.
As Disney continues to navigate the rapidly changing media landscape, its focus on cost management, combined with investments in streaming and theme parks, signals a strategic shift towards these growth areas while addressing the challenges of traditional television. The company’s ability to balance these priorities will determine its success in the years to come.
