“Hulu exceeded our expectations and it was profitable this quarter,” said Christine McCarthy, senior executive vice president and chief financial officer of Disney, during the company’s earnings phone call on Thursday.
McCarthy did not provide financial details, but added that Hulu’s advertising gains came “from higher sell-through rates, a lot of addressable advertising and a significant ramp-up in the dynamic ad-insertion technology that we have within Hulu Live [TV+].”
In addition, for the upcoming TV season starting in September, Hulu was a chief beneficiary of the very strong TV upfront advertising market in June and July, where TV and video marketers shifted ad dollars out of linear TV.
”We came out of a very strong upfront... and had about 40% of the total upfront dollars into streaming and digital,” she said.
For the third quarter, Disney’s direct-to-consumer business -- which Hulu and Disney+ are a major part of -- was up 57% to $4.3 billion in revenue. The D2C unit trimmed its losses to $293 million, from $624 million in the year-ago period.
The D2C revenue gain was largely due to higher Hulu subscription revenue, as well as a December 2020 price increase for Hulu Live TV+ service.
Hulu (its subscription video-on-demand option) grew 22% to 39.1 million subscribers year-over-year. Hulu Live TV+ SVOD climbed 9% to 3.7 million versus a year ago. Still, Hulu Live TV+ dipped 100,00 subscriber versus Disney previous fiscal second-quarter period.
Not to be outdone, the company’s highly scrutinized Disney+ premium video service outperformed -- rising to 116 million worldwide subscribers. Analysts were expecting 114.5 million.
After the market closed on Thursday, Disney’s stock rose by more than 5%.
Overall, Disney+, Hulu, and ESPN+ now total 174 million global subscribers. A year ago, the total was 101.5 million.. ESPN+ is now at 14.9 million subscribers (up 75% a year ago).
Additionally, Disney’s linear TV networks revenue also gained 16% to $7.0 billion -- though operating income fell 33% to $2.2 billion. Disney pointed to higher programming/production costs at its cable networks, as well as its broadcasting operations. While it had lower viewing results at ABC, there was higher advertising and affiliate revenue.
Theatrical revenues continue to be question-mark going forward -- especially considering another potential disruption from the Delta Variant of the COVID-19 virus.
In its earnings release, Bob Chapek, chief executive officer of Walt Disney, said: “Although most film and television production resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption of film and television production, as well as live sports events, depending on local circumstances.”
With regard to the ongoing controversial issue of where and how its big films might play in movie theaters or on its streaming platform in the future, Chapek said during the company's earnings call: “We're trying to do the best thing for all our constituents and make sure that everybody who's in the value chain, if you will, feels like they're having their contractual commitments honored both from a distribution and a compensation standpoint.”
Company-wide Disney revenues were up 45% to $17.02 billion revenues in the period.
Disney also reversed losses from a year ago in the second quarter -- posting $995 million in income from continuing operators versus a $4.8 billion loss in the second quarter a year ago.
Disney’s big improvements follow other media companies gains now recovering after pandemic issues of a year ago.