Disney returns to profit in 4Q, but streaming gains slow

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The Walt Disney Company returned a quarterly profit as it was hit by once-reopening parks, but subscriber gains for its Disney+ streaming service slowed.

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The Walt Disney Company returned to a quarterly profit as it was hit by once-reopening parks, but subscriber gains for its Disney+ streaming service slowed.

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Burbank of California-based Disney reported Wednesday that it had a net income of $159 million in the three months to October 2, compared to a loss of $710 million in the fourth quarter a year earlier. Earnings per share fell to 9 cents, or 37 cents, after one-time items. Revenue climbed 26% to $18.53 billion.

Analysts surveyed by FactSet predicted earnings of 52 cents per share, excluding one-time items, on revenue of $18.8 billion. Disney shares fell 4.9% to $165.98 in aftermarket trading.

The company ended its fiscal year with 118.1 million Disney+ subscribers, a 60% increase over the prior year, but only 2 million more than the previous quarter and lower than analysts’ forecast of 126.2 million. This is the lowest number of quarter-on-quarter customer gains since the service was launched two years ago.

Disney CFO Christine McCarthy said she expects customer gains to be “significantly higher” in the second half of the fiscal year starting in October than in the first six months.

Some analysts have warned that growth is lagging and Disney+ could miss its target of 230 million to 260 million subscribers by 2024. Disney CEO Bob Chapek backed the company’s forecast in a call with investors on Wednesday.

The pandemic caused a change in film operations at Disney and other film studios. Many big releases were moved to streaming services like Disney+, while many movie theaters were closed or with limited capacity due to COVID restrictions.

Disney recently said that it is returning to theatrical release for the rest of the year. Chapek said on Wednesday that the theater industry is seeing some improvement. Disney’s “Shang Chi and the Legend of the Ten Rings” broke Labor Day opening record, grossing $90 million over a four-day weekend.

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