Disney returned to a profitable third quarter as its combined streaming business began generating positive results for the first time, and a strong theatrical run for Inside Out 2 boosted content sales. The company also posted solid gains in its entertainment segment and reported improved results across several key businesses.
Profitable efforts from Disney
Operating income for Disney’s entertainment segment—which includes the movie studio and portions of its television operations—nearly tripled to $1.2 billion for the quarter. The company’s box office momentum remains robust, with Deadpool & Wolverine joining Inside Out 2 among the year’s top performers.
The Walt Disney Company reported that its direct-to-consumer division, which houses Disney+, Hulu and ESPN+, posted a quarterly operating loss of $19 million, a dramatic improvement from a $505 million loss a year earlier. Revenue for the unit rose 15% to $5.81 billion. These results coincided with Disney’s announcement of price increases for Disney+, Hulu and ESPN+ effective October 17: both Disney+ and Hulu with ads will move to $9.99 per month; the ad-free Disney+ tier will increase to $15.99 per month while Hulu’s ad-free tier will rise to $18.99; ESPN+ will be priced at $11.99 per month. The price adjustments are part of Disney’s broader strategy to strengthen monetization as subscriber growth matures.
Disney earnings highlights
- Quarter results: Disney earned $2.62 billion, or $1.43 per share, for the period ended June 29. A year earlier the company reported a loss of $460 million, or $0.25 per share. Excluding one-time items, adjusted earnings were $1.39 per share, exceeding the $1.20 consensus estimate from analysts surveyed by Zacks Investment Research. Consolidated revenue rose 4% to $23.16 billion, topping Wall Street’s estimate of $22.91 billion.
Investor reaction and executive commentary
Shares initially fell more than 2% in early trading as investors digested mixed signals from Disney’s theme parks business. The company warned that softer demand at U.S. parks could persist for several quarters, which, combined with cyclical softness in China and reduced tourism to Disneyland Paris tied to the Olympics, is expected to suppress fourth-quarter operating income in the Experiences segment by the mid single digits versus the prior year.
Hugh Johnston, Disney’s senior executive vice president and CFO, noted on the earnings call that lower-income consumers are facing increased financial pressure, which has affected attendance trends at domestic parks. At the same time, higher-end consumers appear to be doing more international travel. For the quarter, domestic parks and experiences operating income fell 6%, while international parks and experiences operating income edged up 2%. Revenue rose 3% for domestic parks and 5% for international parks, with margins pressured by higher operating costs tied to inflation, investments in technology and new guest offerings.
Content sales and licensing contributed $254 million in operating income, helped in large part by the extraordinary box office performance of Inside Out 2. The film has become the highest-grossing animated movie in history, generating more than $1.5 billion globally, and its success has driven increased engagement across Disney’s platforms. Disney said the original Inside Out (2015) helped spur more than 1.3 million Disney+ sign-ups and produced over 100 million views worldwide after the Inside Out 2 teaser was released.
For the first time, Disney’s combined streaming operations—Disney+, Hulu and ESPN+—achieved profitability, driven by a strong quarter for ESPN+ and better-than-expected results from the direct-to-consumer unit overall. CEO Bob Iger and CFO Hugh Johnston highlighted ESPN’s particularly strong performance: ESPN had its most-watched third quarter in primetime among adults 18–49 in a decade, fueled by events such as the NBA Finals, WNBA draft coverage, and the NHL playoffs and Stanley Cup finals.
Earlier guidance had anticipated a softening in streaming performance during the quarter due to the company’s platform in India, Disney+ Hotstar. Disney had expected combined streaming businesses to reach profitability in the fourth quarter, so achieving that milestone one quarter earlier was notable.
Looking ahead, Disney now expects full-year adjusted earnings per share to grow approximately 30%, reflecting improving operating trends across businesses and the impact of pricing and content successes.
Beyond quarterly results, Disney has continued to resolve strategic and legal matters. In April, shareholders rejected attempts by activist investor Nelson Peltz to gain board seats, reinforcing support for Iger’s leadership. In June, Disney asked a federal appellate court to dismiss its lawsuit against Florida Governor Ron DeSantis after the governor’s appointees approved a long-term agreement on how Walt Disney World will be developed over the next two decades, resolving the remaining points of contention between the parties.
Under the approved 15-year development deal, Disney committed to invest $17 billion in Walt Disney World over the next two decades, while the district agreed to undertake infrastructure improvements on the resort property—parts of a broader plan intended to support future growth and guest experiences.
Overall, Disney’s third-quarter report showed meaningful progress toward stabilizing and monetizing its streaming operations, continued box office strength that boosts content revenue, and mixed but manageable trends at its park properties. Investors will be watching whether price increases, content momentum and operational improvements sustain the company’s path toward higher profitability in the coming quarters.