Disney has posted stronger-than-expected Q3 earnings off the back of a profitable quarter, especially for its streaming division.

The company’s direct-to-consumer (DTC) business — which includes Disney+, Hulu and ESPN+ — posted operating income of US$346 million (A$534 million), reversing a US$512 million (A$790 million) loss from the same period a year earlier.

Over the just-ended quarter, Disney+ and Hulu subscriptions increased by 2.6 million, bringing the total number of subscribers to 183 million. Disney expects that figure to grow by 10 million in the current quarter.

Disney had been hoping for a turn-around in its performance but wasn’t expecting it to arrive for another quarter.

Encouraged by the streaming unit’s profitable turn, Disney raised its full‑year adjusted earnings-per-share guidance to US$5.75 (A$8.85), reflecting a firmed 16% increase over 2024 and above prior expectations.

It wasn’t all good news at the Magic Kingdom, with Disney’s ‘legacy’ entertainment division struggling. Its operating income fell 15% to US$1 billion ($A1.5 billion), a result the company attributed to disappointing results from its traditional television networks and the lack of a blockbuster film equivalent to 2024’s Inside Out 2.

While Disney’s parks divisions did well, seeing a 13% gain in operating income to US$2.5 billion (A$3.9 billion), it was the streaming division’s turnaround, following some major investments in content, that captured the market’s attention.

Disney has recently inked deals with both the National Football League (NFL) and World Wrestling Entertainment (WWE) as it prepares to launch its $29.99 (A$45) a month ESPN streaming service on August 21. Among other things, subscribers will have exclusive rights to major wrestling and sporting events.

It’s likely Disney will pose a much more considerable threat to the likes of Netflix once it can offer its customers a package deal.

Disney CEO Bob Iger said, “We’ll bundle that trio – Disney+, Hulu and ESPN – [to seize] an opportunity to lower churn (and) increase engagement.”