Disney (DIS) Earnings and WWE + NFL Deal
Walt Disney (DIS) is lower premarket after reporting 3Q earnings. It beat on EPS with $1.61 but missed slightly on revenue with $23.65 billion. It raised profit forecasts for its streaming and experience segments, based on expectations of more consumers bundling its streaming services and higher spending on theme parks and cruise ships.
Disney+ added 1.8 million subscribers in the quarter, with 900K for Hulu. However, ESPN subscriptions remained flat at 24.1 million – and Disney’s aiming for a refresh of the latter. ESPN reached agreements with the WWE and the NFL as the streaming market scrambles for sports rights.
In a deal worth $1.6 billion, per WSJ, ESPN will be the U.S. domestic home for all WWE Premium Live events, which includes WrestleMania. ESPN will launch a new streaming service later this month with an “enhanced app” touting personalized features and better function.
The NFL deal is way bigger, though: ESPN will take over the NFL Network and other media assets. NFL will get a 10% stake in ESPN. CEO Bob Iger calls the partnership a “leap forward” for fan-centric innovation as ESPN Fantasy and NFL Fantasy merge to create a “best-in-class” fantasy football experience.
DIS is making a bet on sports as it charges higher subscription rates for the service. The new ESPN service will start at $29.99/month – as compared to the Disney+ average monthly revenue of $7.86 per paid subscriber. Disney has struggled with the box office for the last few years, with fan enthusiasm for Marvel movies dwindling and Pixar’s Elio becoming the studio’s lowest-grossing film (excluding the pandemic).
Disney also seems to think the well may be running dry for new Disney+ subscribers, forecasting a modest increase in 4Q. Its box office difficulties have also hit another revenue source: merchandise. Its Content Sales/Licensing operating income fell, which it ascribed to the performance of this year’s titles vs the smash Inside Out 2 last year. Content is King, after all, and the yearly predictable cycle of sports may look more attractive as it begins to exhaust its behemoth franchises.
DIS stock is up 6% year-to-date and up 32% over the last year, bouncing back to a 52-week high at the end of June after a strong drop-off in March. It may be finding its feet again with Bob Iger back at the helm, but his tenure is reportedly up at the end of 2026, so another successor will take the reins soon. Investors should also consider consumer strength as credit card debt piles up, putting cruises or theme parks out of reach for more families.
Consumers hop from streaming service to streaming service depending on the content they want to watch. Will Disney solidifying its hold on football cement loyalty?
