Disney earnings beat expectations as CEO Bob Iger says he will deepen annual cost cuts by $2B in dramatic turnaround plan

Disney beat Wall Street’s profit expectations on Wednesday and said it is on track to make $7.5 billion in annualized savings, $2 billion more in cuts than CEO Bob Iger initially announced in his turnaround plan.

The company’s shares rose 3.6 percent after the closing bell, as higher attendance at its theme parks and narrowing losses on Disney+ offset a decline in advertising revenue at television network ABC.

Disney reported net income of $264 million for the quarter ended September 30, up from $162 million a year ago and better than analyst estimates. Quarterly revenue of $21.2 billion was largely in line with consensus estimates.

The company said it added nearly 7 million Disney+ subscribers in the quarter, with the addition of Guardians of the Galaxy Vol. 3 and the original series ‘Star Wars: Ahsoka.’

Disney+ ended the quarter with 150.2 million subscribers, ahead of Visible Alpha’s estimate of 147.4 million.

Disney shares are down more than 15% in the past year as the company pursues a turnaround

The earnings came at a crucial time for Iger, who was brought out of retirement a year ago to right the ship after his hand-picked successor Bob Chapek lost the confidence of the company’s board.

“Our results this quarter reflect the significant progress we have made over the past year,” Iger said in a statement.

“While we still have work to do, these efforts have enabled us to move past this period of recovery and rebuild our businesses.”

Iger has implemented an aggressive restructuring at Disney as he grapples with continued losses at Disney+, an ongoing actors’ strike, declining attendance at the flagship park in Orlando and legal battles with Florida Governor Ron DeSantis.

The 100-year-old entertainment giant is also under renewed pressure from activist shareholder Nelson Peltz, whose Trian Fund Management is expected to seek board seats.

Trian had pushed for one board seat in January but ended its proxy fight a month later after Iger laid out his restructuring plans, which aimed to save $5.5 billion a year.

Quarterly losses at the company’s streaming services, which also include Hulu and ESPN+, fell to $387 million from $1.47 billion a year earlier, due to price increases and higher advertising revenue.

Disney said its streaming business remains on track to be profitable by September 2024.

Disney World is seen in a file photo. Disney’s new Experiences group, which also includes its theme parks and resorts, cruise lines and consumer products, reported operating income of nearly $1.8 billion this quarter, up 31% from a year ago

Disney’s new Experiences group, which also includes its theme parks and resorts, cruise lines and consumer products, reported operating income of nearly $1.8 billion this quarter, up 31 percent from a year ago.

Higher visitor numbers at Shanghai Disney, Hong Kong Disneyland and Disneyland resorts, as well as growth in cruise operations, helped offset lower results at Walt Disney World in Florida.

Disney’s Entertainment unit, which includes the television networks, movie studio and Disney+ and Hulu services, posted operating income of $236 million in the quarter, compared with a loss of $608 million a year ago.

The ABC network and Disney-owned TV stations reported a decline in advertising revenue due to declining viewership.

The summer movie “The Haunted Mansion” underperformed compared to last year’s “Thor: Love and Thunder.”

The company’s sports businesses, which include Disney’s ESPN-branded television channels, ESPN+ streaming service and Star-branded sports channels in India, reported operating income of $981 million, up 14% from the same period a year ago.

The results reflected lower programming costs as ESPN walked away from renewing its contract with the Big Ten college football conference.

The unit was also helped by an increase in subscription revenue from ESPN+, due to a price increase and an increase in subscribers.