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Disney (DIS+1.92%), one of the oldest and most beloved entertainment brands in the world, is set to report its fiscal fourth-quarter earnings on Thursday morning. The media conglomerate will give investors an update on its efforts to adapt to the ever changing media landscape where streaming is playing an increasingly central role.
Disney stock is up over 13% since the beginning of the year, outperforming most of its rivals like Warner Bros. Discovery (WBD+5.42%) and Paramount Global (PARA-2.71%), which have fallen about 16% and 22% over the past 10 months, respectively. Netflix (NFLX+1.38%) still dominates the sector with its share price skyrocketing over 77% since the start of the year.
On Thursday, Wall Street analysts will be looking to see how Disney is growing its streaming division – which became profitable last quarter, the state of its other segments like linear TV (broadcast and cable networks) and its theme parks, and any new info on the search for CEO Bob Iger’s successor.
Here is what to look for in Disney’s upcoming earnings report:
The continued growth of Disney+
It took Disney five years, since the launch of Disney+, to finally turn a profit within its streaming business. Last quarter, Disney reported that its streaming division, which includes Disney+, Hulu, and ESPN+ turned a profit for the first time.
“This was a strong quarter for Disney, driven by excellent results in our entertainment segment both at the box office and in [direct-to-consumer], as we achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance,” said Iger in a press release at the time. The company had previously anticipated to turn a profit in this division in its fourth fiscal quarter.
In a call with investors in August, Iger said that the company’s goal now is to grow user engagement on its DTC services.
“We see the biggest opportunity at DT, where recent price increases and content releases should support another year of mid-teens revenue growth and operating profit of more than $1 billion inclusive of incremental investment in content and tech infrastructure,” wrote Guggenheim analyst Michael Morris in a note in October.
Deutsche Bank (DB-2.15%) Research analyst Bryan Kraft wrote in a recent note that Disney’s new bundle with Max should have helped with subscriber growth in the fourth quarter.
He added, that recent price increases and a crackdown on password sharing should “yield benefits in F2025, while profitability continues to improve, albeit at a slower pace than F2024.”
Will Disney split from its traditional TV assets
Comcast (CMCSA-0.25%), the parent company of NBC and the streaming platform Peacock, joined Warner Bros. Discover in mulling over a spinoff of its struggling linear TV assets. Could Disney be next?
Although Disney’s streaming business is growing, the media giant continues to struggle — like other media companies — with its traditional television assets, which include its broadcast network ABC; and its cable channels Disney Channel, National Geographic, and FX.
The company reported in August that its operating income from its linear networks fell 6% to $966 million in its third fiscal quarter, from $1 billion in the same quarter in 2023. Disney’s television division was also hit with layoffs this summer.
Additionally, Disney is expected to report negative impacts from a blackout on DirecTV earlier this year.
“Linear networks and sports were impacted by the DirecTV blackout and continue to face secular headwinds on affiliate volumes and ratings,” Kraft wrote.
Disney parks are expected to take some hits
Disney’s theme parks and other experiences — like its cruise ships — are also expected to report declines in the fourth quarter, as this segment of the company was impacted by several disruptions like hurricanes Helene and Milton and a drop in demand in Europe during the Paris Olympics.
“Experiences is set up to have its lowest operating income quarter since 2022 due to softer domestic Parks performance, weather-related closures worldwide, pre-opening costs for new cruise ships, cyclical softness in Shanghai, and the Olympics’ impact on Paris,” wrote Kraft.
Overall, demand for the company’s parks is slowing from a bump following the pandemic. Raymond James (RJF-1.02%) analyst Ric Prentiss wrote in a note in October that “parks attendance and pricing power is slowing meaningfully.”
Clues on Iger’s successor
Investors will also be on the look out for any new info on the search for Iger’s replacement.
Disney said in October that it would announce Iger’s successor in early 2026, as it looks to replace its CEO — again. The search — which will include could internal and external candidates — will be led by Disney’s new chairman James P. Gorman.
Gorman joined Disney’s board in February. He is stepping down from his role as executive chairman of Morgan Stanley’s (MS+0.39%) board later this year.
In August, Gorman was tasked with the difficult job of leading the search committee for Disney’s next CEO — a job that didn’t go so well the first time, as Iger and his successor Bob Chapek’s relationship soured almost immediately due to differences in leadership style.
Iger, who has been with the media behemoth for four decades, served as its CEO from 2005 to 2020. He later became executive chairman before retiring in 2021. Iger returned to the company just a year later to serve a two-year term as CEO — taking his role back from Chapek — which has since been extended. He is now expected to leave the company in 2026.
The front-runners to replace Iger as CEO include Disney Entertainment co-chairs Dana Walden and Alan Bergman; Disney Experiences chairman Josh D’Amaro, and ESPN chairman Jimmy Pitaro.
