• by Wayne Friedman , August 9, 2023

Walt Disney says there was “lower advertising revenue” during its most recent quarterly period at Disney+ and at Hulu -- the latter results coming from “fewer impressions.”

The company also said during its earnings call with analysts that since December, the start of Disney+ ad-supported streaming option, it has seen solid growth -- now at 3.3 million subscribers, adding that 40% of all new Disney+ subscribers are buying this product.

Overall, Disney continues to look to turn around somewhat weak overall financial results -- including a 7% drop in key Disney+ subscribers.

Disney+ global subscribers landed at 146.1 million in July versus 157.8 million in April. This was five million subscribers lower than expectations. Taking out its troubled Disney+ Hotstar, its India premium streaming operations, ‘Disney+ Core’ subscribers were up 1%.

In an effort to accelerate subscriber and revenue growth at its direct-to-consumer (D2C) businesses, Walt Disney CEO Bob Iger said during the earnings call with analysts, that Disney will be raising prices for its ad-free options -- Disney+ going to $13.99 a month (from $11.99); Hulu to $17.99 (from $14.99).

The company is also introducing a new bundling option -- ad-free Disney+ and ad-free Hulu for $19.99 a month.

Analysts believe these price gains will differentiate Disney’s ad-free products from its ad-supported products. For example, Disney+'s ad-supported option remains at $6.99 a month. In addition, Disney says it is looking to expand its ad-option to other countries.

The previous day, Disney announced that it had closed upfront TV advertising deal-making for the new TV season starting next month at revenue volume levels “in line” with the previous year, which Disney said totaled $9 billion. 

For the quarter ending July 1, D2C results showed improvement on two accounts -- overall revenue rising 9% to $5.5 billion, with net losses trimmed by 52% to $512 million (from $1.01 billion in the year-ago period).

The company also noted domestically Disney+ witnessed the average revenue per user (ARPU) growing at a slow 2% to $7.31 for the period versus the quarter ending April 2023. ESPN+ dropped 3% to $5.45; Hulu (SVOD), was up 6% to $12.39.

Linear TV Disney networks lost ground due continuing weakness in the advertising business -- domestically (down 4%) and internationally  (20% lower). Overall linear TV dropped 7% to $6.7 billion. There was also lower affiliate revenue.

Declining international ad revenue was due to lower rates from the Indian Premier League cricket programming. In the U.S. ESPN saw higher advertising revenue from better viewership -- which included the NBA playoffs.

Disney Parks, Experiences and Products revenues were up 13% to $8.3 billion. 

Analysts were somewhat concerned about weaker business data at Walt Disney World Resort in Florida where there was a decline in room night occupancy and park attendance. Better results came from Disneyland Resort in California -- higher attendance and higher guest spending.

For the most part, Disney’s results were expected. 

Overall company-wide revenues were up 4% to $22.3 billion, with operating income flat at $3.6 billion. After-market Wednesday trading of the Walt Disney stock spiked 6% at one point  Disney stock closed down on Wednesday 0.7% to $87.49.