Disney+ Hotstar shattered all records with a peak of 59 million concurrent viewership at the finals of 2023 ICC Men’s Cricket World Cup. But this success did not rub off financially for Walt Disney.
The company clocked operating loss to the tune of $315 million for the quarter ending December 2023. This according to reports is a 144 percent surge compared to the previous year.
The major loss can be attributed mainly to the elevated expenses linked with airing the high stake tournament.
Interestingly Star India, Disney’s sports subsidiary in the country benefitted from the tournament, They witnessed a 71 percent growth in sports revenue attributed to the World Cup.
Additionally, their streaming platform also did well.
Disney’s streaming service Disney+ Hotstar added 0.7 million paid subscribers to take its subscriber base to 38.3 million for the first quarter ended December 30, 2023, benefiting from increased usage during the ICC Cricket World Cup 2023. The increase in the subscriber base comes after the streaming service clocked four straight quarters of subscriber decline, in which it lost about 12.5 million subscribers.
However, overall performance of the company in India has also had its share of roadblocks that has led to a drop in its valuation in their ongoing discussions of a possible sale to Reliance.
The current deal size of about $3.9 billion is significantly below Disney’s initial expectation of $10 billion.
As per a Wall Street Journal Report, under the sale arrangement, Disney will retain ownership of 40 percent of its India operations, while Reliance will own 51percent and Rupert Murdoch and Uday Shankar-backed Bodhi Tree System will own 9 percent. Viacom18 is expected to pay approximately $1.5 billion in cash and offer stock to acquire its share in the combined entity.
“Just one year ago, we outlined an ambitious plan to return to a period of sustained growth and shareholder value creation, and our strong performance this past quarter demonstrates we have turned the corner and entered a new era,” said CEO Bob Iger said during his post-earnings remarks on Wednesday.
For the quarter, Disney’s net income rose to $1.91 billion, up from $1.28 billion, in the prior-year period. Revenue was about flat at $23.55 billion, compared with $23.51 billion in the year-ago quarter.
Disney’s direct-to-consumer unit reported a $138 million operating loss in the quarter. Including the performance at ESPN+, losses for all its streaming businesses narrowed to $216 million, from $1.05 billion in the prior-year period.
Disney+ core subscribers shrank by 1.3 million from the prior quarter due to price increases, but the company saw a rise in average revenue per user because of those subscription cost hikes, CNBC reported.
The company said it’s on track to achieving significant cost reductions across businesses by the realisation of over $500 million in selling, general and administrative and other operating expense savings across the enterprise in the first quarter. Iger said they are on track to meet or exceed the $7.5 billion annualised savings target by the end of fiscal 2024, while continuing to look for further efficiency opportunities.