Disney experiences worst day in 18 months

Disney accomplished the rare feat of turning a profit with its streaming service, Disney+, and Hulu, earning $47 million in profit for the first time ever. However, its other streaming property, ESPN+, continued to lose subscribers and money, resulting in a combined streaming loss of $18 million. This was still a significant improvement over the $659 million loss reported in the same period a year ago. Despite these results, Wall Street was not satisfied and Disney’s stock shares dropped more than 9%, marking the company’s worst trading day in 18 months.

Looking ahead to future growth, investors became concerned about the projected slowdown in entertainment streaming in the next quarter. Disney still expects the combined streaming business to achieve profitability by the end of its fiscal year in September. Analysts highlighted the challenge of not only reaching profitability but also sustaining it in the competitive streaming landscape. Disney is facing an unexpected transition where it is now competing against tech giants like Apple and Amazon in the streaming market, in an effort to catch up with Netflix.

Streaming represents a new and challenging business model for legacy media companies like Disney, which have traditionally relied on cable TV for profit. Cord-cutting trends have led to the decline of cable TV, forcing companies to adapt and attract streaming audiences. Profit margins in streaming are lower compared to cable, making it difficult for companies to adjust to a new reality and shift their focus towards capturing streaming audiences. Disney, in particular, is facing multiple challenges such as box office flops, restructuring efforts, and succession planning as CEO Bob Iger approaches the end of his contract in two years.

Disney’s market reaction on Tuesday signaled that Wall Street has more questions than answers about the company’s earnings in the coming quarters. While the resolution of the boardroom proxy battle was a relief, it has shifted the focus towards financial results. Analysts and investors are closely monitoring Disney’s progress in the streaming market, as well as its overall performance in the face of tough competition and changing consumer preferences. As Disney navigates these challenges, it will need to demonstrate its ability to sustain profitability and growth in the rapidly evolving media landscape.