By Dawn Chmielewski
LOS ANGELES, Feb 2 (Reuters) – Walt Disney’s theme parks and the movie “Zootopia 2” helped the company beat revenue and earnings estimates for the holiday quarter ended in December.
The media and entertainment giant is expected to name a new chief executive to replace Bob Iger early this year. Hollywood executives believe Josh D’Amaro, the chairman of the experiences division, is the front-runner.
The experiences unit, which includes Disney’s parks, cruises and consumer products, carried the December quarter, generating $10 billion in revenue and 72% of the company’s quarterly operating profit of nearly $5 billion.
Walt Disney World, in particular, benefited from favorable comparisons to a year earlier, when Hurricane Milton had forced Orlando-based attractions to close.
The company’s overall revenue rose 5% to $26 billion for its fiscal first quarter ended December 27. That topped the consensus revenue forecast of $25.7 billion, according to analysts surveyed by LSEG. Disney reported income before taxes of $3.7 billion, besting Wall Street’s projection of $3.5 billion.
Adjusted per-share earnings fell to $1.63, down 7% from a year earlier but better than analysts’ estimate of $1.57 per share.
Disney reaffirmed its full-year forecast of double-digit per-share earnings growth, compared with fiscal 2025. It estimates it will bring in $19 billion in cash from operations, and is on track to repurchase $7 billion in stock.
Disney and YouTube TV’s two-week contract dispute, which resulted in millions of subscribers losing access to Disney-owned networks such as ESPN, resulted in a $110 million hit to the company’s sports unit, which reported a 23% drop in operating income for the quarter.
The sports division reported a modest 1% rise in revenue, to $4.9 billion. Operating income fell to $191 million, reflecting the YouTube licensing dispute, an increase in programming costs, and fewer regular-season NBA games.
Disney’s entertainment unit, which includes the company’s film studios, television networks and streaming services, reported revenue of $11.6 billion in the quarter, up 7% from a year ago.
It was propelled by a holiday theatrical slate that included “Zootopia 2,” the Disney animated sequel that has brought in nearly $1.8 billion in worldwide ticket sales, and “Avatar: Fire and Ash,” which has grossed $1.4 billion globally, according to Comscore.
However, the entertainment unit reported a 35% drop in operating profit year-over-year in part because of the costs of marketing “Avatar” – which was released in the last week of the quarter – and eight other films, versus just four movies last holiday season. The group also showed a $140 million decline in political advertising compared with a year ago.
Shares of the company were down about 2% in premarket trading on Monday.
Disney’s streaming services, which include Disney+, Hulu and ESPN, reported a 72% spike in operating income to $450 million. Revenue rose to $4.4 billion, up 13% from a year ago. The company no longer reports the number of streaming subscribers.
(Reporting by Dawn Chmielewski, Additional reporting by Harshita Mary Varghese; Editing by Edmund Klamann)
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