Shares of Walt Disney Co. (NYSE:DIS) are down 5% in pre-market trading after the company missed analyst expectations across the board with is latest quarterly financial results.
Disney reported a smaller-than-expected increase in subscribers to its streaming service, a sign that Disney+ is struggling to broaden its appeal after an explosive start two years ago.
The Disney+ streaming service gained 2.1 million customers in the fiscal fourth quarter, bringing the total to 118.1 million globally. Analysts were forecasting 119.6 million subscribers at the end of the quarter.
The earnings miss was part of a broadly disappointing quarter for the entertainment giant, which also saw profit decline at its film and TV businesses.
Disney has made the family streaming service its major focus for growth in coming years and plans to reach as many as 260 million subscribers by 2024.
The company is celebrating the second anniversary of Disney+ on November 12 by offering new movies and promotions across the platform.
Disney reported fourth-quarter earnings of $0.37 cents U.S. per share, excluding some items, missing analysts’ projections of $0.49 cents. Sales in the period rose to $18.5 billion U.S., trailing estimates of $18.8 billion U.S.
Shares of Disney fell as much as 5.3% to $165.12 U.S. in extended and premarket trading after the earnings announcement. The stock had declined 3.7% this year through yesterday’s (October 10) close in New York trading.
Losses in the direct-to-consumer business, which includes Disney+, widened to $630 million U.S., the result of heavy spending on TV shows and movies. Wall Street projections were for a loss of $438.8 million U.S.
In Disney’s traditional TV business, profit fell 11% to $1.64 billion U.S., due to higher programming and marketing costs for the ABC broadcast network, along with lower affiliate fees from cable networks such as ESPN.
Profit at the company’s theme-park business, the largest in the world, came to $640 million U.S., compared with a year-earlier loss. That was less than the $864.4 million U.S. analysts had forecast and was the result of international losses and a profit of just $244 million U.S. in the domestic parks.
The Disney film studio posted a loss of $65 million U.S. in the period, compared with a profit a year ago, reflecting marketing costs and other expenses for major film releases such as “Black Widow” and “Jungle Cruise” that outstripped revenue.