• by Wayne Friedman , November 8, 2022

Walt Disney posted higher streaming costs and lower advertising revenue for its most recent reporting quarter, and missed analysts' projections on revenue and net income, pushing investor sentiment lower.

In after-market trading, Disney stock was down 6.3% to $93.60.

The entertainment and media company was at $20.2 billion in revenue for the third quarter -- missing the $21.2 billion market analyst projections.

Revenue was up 9% from the prior-year period. Net income from continuing operations only inched up 1% to $162 million.

Disney’s direct-to-consumer (D2C) business widened its operating-income losses by almost double to $1.47 billion, up from $630 million, due to higher losses at Disney+ and a decrease in profitability at Hulu. The latter was a result of higher programming, production and marketing costs, the company said.

On the plus side, ESPN+ showed improvement with better subscription revenues and subscriber number growth.

Another highly monitored metric -- streaming subscribers -- increased more than expected. Disney+ rose 39% to 164.2 million over the year before, while ESPN was up 43% to 24.3 million and Hulu (including Hulu + Live Tv) rose 8% to 47.2 million.

Some of Disney's D2C financial trouble comes with Disney+'s lower average monthly revenue per paid subscriber -- down 10% to $6.10. Hulu (subscription video on demand) also slipped -- 4% to $12.23.

Disney linear TV networks fell 5% in revenue to $6.34 billion, although operating income climbed 6% to $1.7 billion. The company saw higher operating income at its cable networks and a “modest increase” at broadcasting.

While there was a decrease in advertising revenue at ESPN/ABC sports programming -- and at ABC Television Network -- advertising at the ABC-owned TV stations grew. TV stations have seen benefits from higher midterm political advertising in recent months.

Disney’s Disney Parks, Experiences and Products continued their recovery from the pandemic-related disruption -- up a strong 36% to $7.4 billion . Operating income more than doubled to $1.5 billion from $600 million in the prior-year quarter. There was higher attendance at its parks as well as increased guest spending.

Growing inflation and higher support operations costs were a deterrent to greater growth.