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Disney earnings miss across the board with slowing streaming growth

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Disney character Mickey Mouse is seen above the entrance at Disneyland Paris during the 25th anniversary of the park, in Marne-la-Vallee, near Paris, France.

Benoit Tessier | Reuters

Disney reported fiscal fourth-quarter earnings on Wednesday after-the-bell. The company missed Wall Street estimates across the board, sending the stock down more than 3% in after-hours trading.

Earnings per share: 37 cents adj. vs 51 cents expected, according to RefinitivRevenue: $18.53 billion vs $18.79 billion expected, according to Refinitiv

The company added 2.1 million Disney+ subscribers to reach a total of 118.1 million, in line with Disney’s estimates. During the Goldman Sachs Communacopia Conference in September, CEO Bob Chapek said the segment’s growth had “hit some headwinds” and that Disney expected to add “low single-digit millions” of streaming subscribers in the fourth quarter.

However, Wall Street seemed more bullish than Chapek. StreetAccount estimated the company would report 125.4 million total Disney+ subscribers as of the fourth quarter, suggesting 9.4 million new subscribers since the third quarter.

During the company’s earnings call, Chapek reiterated the company’s goal of reaching 230 million to 260 million Disney+ subscribers by 2024.

“We remain focused on managing our DTC business for the long term, not quarter to quarter,” Chapek said.

Average monthly revenue per subscriber for Disney+ came in at $4.12, down 9% year over year. The company attributed the dip to a higher mix of Disney+ Hotstar subscribers compared with the prior-year quarter.

Disney’s average revenue per user has shrunk in recent quarters because of the lower price points for its Disney+ and Hotstar bundle in Indonesia and India. The service has lower average monthly revenue per paid subscriber than traditional Disney+ in other markets, pulling down the overall average for the quarter.

Overall, Disney reported 179 million subscriptions across Disney+, ESPN+ and Hulu at the end of the fourth quarter. Revenue for the direct-to-consumer segments increased 38% to $4.6 billion. Average monthly revenue per paid subscriber rose slightly for ESPN+ and Hulu.

Content sales and licensing revenues increased 9% to $2 billion.

The company released films such as “Black Widow,” “Free Guy” and “Shang-Chi and the Legend of the Ten Rings” during those three months and delivered solid box-office results.

Looking to the last stretch of the year, Disney will release hotly anticipated films “Encanto” and “Spider-Man: No Way Home,” which are expected to be big draws for audiences domestically and abroad.

Parks begin to show rebound from pandemic

With Covid-19 vaccinations on the rise, Disney’s theme parks have seen a pick-up in attendance in the second-half of 2021.

The company’s parks, experiences and products segment finally produced positive operating income for the first time since the pandemic began last quarter and improved on those results during the most recent period.

All of Disney’s global theme parks were open during the fiscal fourth-quarter and several of its cruise ships resumed sailing. The business unit as a whole, which includes theme parks, hotels and merchandise, saw revenue grow 26% to $5.45 billion.

Disney noted that the company as a whole incurred a total cost of $1 billion throughout fiscal 2021 in order to meet government regulations and increase safety measures for its workers and guests.

This is a developing story. Please check back for updates.

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