Walt Disney Co. rose more than 6% in extended trading after the announcement that capital costs and expenses for TV shows and movies are coming in lower than predicted.
After the entertainment titan posted third-quarter results, acting chief financial officer Kevin Lansberry shared content spending is also down $3 billion this year to $27 billion, partially attributed to the Hollywood writer and actor strikes.
Additionally, he shared Disney has ambitions to pay a moderate dividend this year.
“We are still expecting full-year total revenue and segment-operating income to grow at single-digit percentage rates versus the prior year,” he said.
On the subscriber side of the business and after the crackdown on Disney password sharing, however, the Disney+ streaming service plummeted 7.4% to 146.1 million in a quarter with virtually the entire loss attributed to the Disney+ Hotstar business in Asia.
The company failed to renew streaming rights for popular cricket games which attributed to this roughly 25% loss.
After previously retired CEO Bob Iger returned to Disney, he said he expects to exceed the overall cost-cutting target of $5.5 billion and then proceeded to introduce several cost-cutting measures inclusive of axing roughly 7,000 jobs and cancelling certain shows and movies.
To increase profits, however, the entertainment company moved forward with raising streaming subscription rates by an eye-watering 27% in some cases.
It has been no secret that traditional TV for Disney, including channels such as ABC and ESPN, has seen a huge decline in profit surging up to 23%.
“The disruption of the [traditional TV] business has happened to a greater extent than even I was aware of,” Iger said, admitting this is a struggling part of the business.
With Disney working to regain its previous profitability, rumuors have been whispered in Hollywood that the beleaguered entertainment company may sell to a larger tech company, rumours Iger dismissed quickly.
In a call to investors, he said: “Anyone who wanted to speculate about such things would have to immediately consider the global regulatory environment. I’ll say no more than that.”
Iger is, however, attempting to sell part of the ESPN sports business to fast-track the network’s shift to streaming.
Also adding to the ESPN bottom line, a long-term agreement was struck between the casino operator Penn Entertainment Inc. and the sports content heavyweight to license its brand for sports betting, which will result in Penn making large cash payments of around $1.5 billion over the 10-year term and will give Disney a much needed boost in profits overall.
