Disney's Streaming Success Begins to Offset Cable Losses

Walt Disney is showing signs of a turnaround, with its streaming business posting its second consecutive quarterly profit, reports Reuters. This progress suggests that CEO Bob Iger's strategy of focusing on streaming is starting to pay off, potentially offsetting declines in the company's traditional television business.

Disney reported a $253 million operating profit for its streaming business in the fourth quarter, driven by cost-cutting measures and a significant increase in subscribers following a crackdown on password sharing. This profit nearly offset the $307 million decline in operating income from its linear television business.

"The right way to think about Disney is to add together the shrinking linear TV business and the rapidly growing direct-to-consumer business, because Disney is hedged," said Laura Martin, senior research analyst at Needham & Co., to Reuters. Martin added that Disney "has reached the cross over point."

The company's streaming success reflects Iger's efforts to restructure the business since his return in 2022. This included reducing spending on original content following a period of heavy investment under his predecessor, Bob Chapek, which had resulted in significant streaming losses.

Disney has also been strategically raising prices for Disney+, most recently in October, to improve margins. The company continues to produce original programming, but it also leverages new film releases to drive viewership of related content on its streaming platform.

"Theatrical film is the engine behind its powerful flywheel and continued success at the box office will help translate to continued streaming engagement," noted Wade Payson-Denney, media analyst at Parrot Analytics, to Reuters.