(News Bulletin 247) – The group published results above expectations and also announced share buybacks and an increase in its dividend. Initiatives to reduce costs are paying off.

The magic of Walt Disney is working again on Wall Street. The action of the famous media and amusement park group jumped 10% this Thursday around 4:50 p.m. after having published its results the previous evening for the first quarter of its 2023-2024 financial year, i.e. for the three months from October at the end of December.

The company led by Bob Iger published stable year-over-year revenues of $23.55 billion while its earnings per share stood at $1.22 per share, up 23%.

This last indicator exceeded expectations. According to an LSEG consensus cited by CNBC, analysts expected earnings per share of 99 cents.

An important point: Disney’s streaming losses are clearly decreasing. The streaming activity of the “direct to consumer” division, which includes Disney+ but also Hulu and ESPN+, saw its revenues increase by 14% to 6.08 billion dollars while the operating loss stood at 216 million dollars compared to 1.05 billion dollars a year earlier.

Disney also indicates that these losses were reduced by more than $300 million compared to the previous quarter.

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Profitability targeted in the coming months

The group also confirmed that it wants to achieve profitability in streaming in the last quarter of its financial year ending in 2024, which Bank of America appreciates. “We believe this business will ultimately be a key driver of earnings growth for the Company,” the company said.

Losses in streaming are closely watched by investors who have focused more on profitability in this sector than on growth in recent months. This while Netflix seems to have taken a long lead over its competitors, managing to quickly gain subscribers while improving its profitability.

Disney also plans to add between 5.5 million and 6 million subscribers to Disney+ in the second quarter of its current fiscal year, while continuing to increase its revenue per subscriber.

The company has also taken care to take measures likely to please its shareholders. The group decided to launch a $3 billion share buyback program and also decided to raise its dividend to 45 cents per share, an increase of 50% compared to its last quarterly dividend.

“The good results obtained during the past quarter show that we have reached a milestone and that we have entered a new era for our company,” said Bob Iger, the group’s CEO, quoted in a press release.

During a conference call with analysts, the manager indicated that he was targeting earnings per share for the entire 2023-2024 financial year of $4.60, up 20% year-on-year and significantly above market expectations. analysts, which stood at $4.27, according to Bloomberg.

Bob Iger’s recipe works

“A little more than a year after his return to the helm of the company, Bob Iger’s actions are already having an impact,” says Bank of America. The emblematic boss of Disney, urgently recalled at the end of 2022 to take over the reins of an anemic group, had notably announced a vast plan to cut jobs in March 2023, with 7,000 fewer jobs, with the aim of generating 7.5 billions of dollars in full-year savings.

“The company has taken bold and decisive steps (…) as evidenced by the recent announcement of a joint venture with Warner Bros. Discovery and Fox regarding a new sports application,” continues Bank of America. The bank also cites “the launch of a streaming offering for ESPN in fall 2025,” the focus on revitalizing the cinema division, accelerating investments in theme parks and expansion in the gaming sector (with a recent investment in Epic games)”.

Disney actually announced Wednesday evening that it had taken a stake in Epic Games, the studio that owns the multiplayer arena fighting game Fortnite, which enjoys huge popular success. The amount of the investment amounts to 1.5 billion dollars for Disney.

As our colleagues at BFM Tech explain, the Fortnite game already integrated Disney licenses via personalized outfits for the characters played by players, such as Dar Vader, Spider Man or Indiana Jones. The partnership established with Epic on Tuesday evening should allow the media group to create its own space within the video game in Fortnite to bring together its licenses.