Disney D2C posts $293m profit in Q1 as Disney+ sheds 700k subscribers

Disney continued to make progress in its direct-to-consumer (D2C) business in the first quarter, with operating income climbing to US$293m versus a loss of US$138m the year prior, at the same time as its streamer Disney+ lost around 700,000 subscribers globally.

Bob Iger

In its entertainment segment, which houses its linear networks and streaming assets, revenue was up 9% to US$10.87bn in the first quarter, helped by the strong theatrical performance of Moana 2.

Within that, linear networks revenue fell 7% to US$2.6bn with a profit of US$1.1bn, while D2C revenue grew 9% to US$6.07bn with a profit of US$293m. Content sales, licensing and other revenue grew 34% to US$2.2bn with a profit of US$312m.

While linear networks revenue was down, the entirety of the decline came from Disney’s international linear nets. International linear revenue dropped 31% to US$411m, while domestic linear revenue was flat at just over US$2.2bn.

Disney finished the first quarter with 124.6 million Disney+ subscribers globally, down from 125.3 million the prior quarter. Those losses came outside of North America, with Disney+ losing 1.5 million subscribers outside the US and Canada. In North America, Disney+ gained around 800,000 subs in the quarter.

US-only streamer Hulu gained 1.6 million subs in the quarter for a total of 53.6 million.

During a Wednesday earnings call, Disney CEO Bob Iger said he expected Disney+ to grow its total subscriber count this year.

Iger was asked by analysts whether Disney would be open to the idea of putting some of its linear networks into a cable roll-up that would house networks from various studios under one roof. To that, Iger responded that Disney’s linear networks are “not a burden at all” and are continuing to play a key role in funding other growth areas, namely streaming.

He did, though, note that there was a chance its linear networks could be “configured differently” in the future. “I won’t rule out the possibility of some of the smaller networks, in some form or another, being configured differently in terms of how we how we bring them to market, maybe even ownership,” he said.

“But we’re not right now. We actually feel good about the hand we have and the manner in which we’re managing both the linear and the streaming businesses across the board.”