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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The box office success of Marvel’s Deadpool & Wolverine and a solid profit in Disney’s streaming businesses helped raise the entertainment company’s earnings by 39 per cent from a year earlier, even as income at its theme park business dropped.
The film’s performance, combined with Pixar’s record-setting Inside Out 2, has eased investor concerns that Disney was losing its magic touch at the box office. Bob Iger, Disney chief executive, hailed it as “one of the best quarters in the history of our film studio”.
The films’ strong showing, combined with $253mn operating profit at the Disney+ and Hulu streaming services, offset sharp declines in its traditional TV business. Including the ESPN+ sports service, total streaming operating income was $321mn, reversing a loss of $387mn a year ago.
Disney is also expecting a strong holiday season at the box office with the release of Moana 2 and Mufasa: The Lion King. “Creativity is very much back on track for Disney, which is obviously the biggest value creator for us because of the way it plays through the rest of the company,” said Hugh Johnston, Disney’s chief financial officer.
However, investors have grown concerned about another area of the business that had been Disney’s strongest performer over the past two years: the “experiences” division that includes the company’s theme parks and cruise ships.
Disney’s theme parks roared back from the pandemic but faced an early summer slowdown as American visitors reined in spending.
The US business rebounded in the most recent quarter as guests spent more money in theme parks and on cruise ships, but that was offset by weakness at Disneyland Paris and Shanghai Disney. The division had record revenues and operating income for the full year and Disney expects attendance to rise in 2025.
Disney is investing heavily in its experiences business, with plans to pump $60bn into its theme parks and cruise lines over the next decade. The company expects the division to generate operating income growth of 6 to 8 per cent in the coming year, and “high single-digit growth” in 2026 — thanks to the launch of two new cruise ships that year.
The company earned $1.14 in adjusted earnings per share in the fiscal fourth quarter, beating Wall Street estimates of $1.09. Revenue rose 6 per cent to $22.6bn.
Iger returned to Disney after a brief retirement two years ago and launched a sweeping cost-cutting and restructuring plan. Since then the shares have risen but are underperforming the broader stock market.
The company plans to repurchase $3bn in shares in 2025 and says its dividend will “grow in line with earnings”.
