Disney’s streaming leap hooks 26.5 mln subscribers, earnings beat forecasts

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Walt Disney Co’s new streaming service Disney+ reached 26.5 million paying subscribers at the end of last year, the company said on Tuesday as it reported quarterly earnings that beat Wall Street forecasts.

The results showed Disney made a strong entrance into the streaming video wars dominated by Netflix Inc. The owner of sports powerhouse ESPN is trying to transform its business to capture audiences that are moving online.

Analysts at three brokerages had expected more than 20 million subscribers to Disney+, which is available in five countries including the United States. Netflix, which began delivering online video 13 years ago, boasts 67.7 million paid subscribers in the United States and Canada.

Subscribers at Hulu, a streaming service Disney now controls, climbed to 30.4 million, the company said. ESPN+ customers reached 6.6 million.

Speaking on CNBC television, Disney Chief Executive Bob Iger said 50 percent of Disney+ subscribers came from the company’s own website.

He said the service did not experience significant churn after the end of “Star Wars” series “The Mandalorian,” which will return for a second season in October.

Earnings for the quarter grew with help from healthy business at Disney’s theme parks and the strong performance of animated movie “Frozen 2.”

Excluding certain items, Disney earned $1.53 per share, above the average analyst estimate of $1.44, according to IBES data from Refinitiv. Revenue rose to $20.9 billion, up 36 percent from a year earlier.

The parks, experiences and products division posted operating income of $2.3 billion, up 9 percent from the prior year.

The unit will be hit in the current quarter, however, by the closings of Shanghai Disney Resort and Hong Kong Disneyland in late January to help China stop the spread of coronavirus.

The closings came during the busy Chinese New Year holiday.

Disney’s direct-to-consumer and international segment, the division that is spending big to build the streaming business, reported an operating loss of $693 million, below analyst expectations.

Operating income in Disney’s media unit, home to ESPN, the Disney Channels and ABC, rose 23 percent to $1.6 billion.

Profit more than tripled at the movie studio to $948 million.

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