UPDATED with earnings data: The Disney+ streaming service launched in November has 28.6 million subscribers, the company said Tuesday as it reported fiscal first-quarter earnings after the bell. The sub number is higher than the 20 million-25 million anticipated.
Disney+ had 26.5 million subscribers at year’s end. The new number is current as of Monday.
In earnings after the bell Tuesday, the giant conglom reported that revenue surged 36% to $20.9 billion. Earnings per share, excluding certain items that impact comparability, dipped 17% to $1.53. Comparisons were complicated by the $71.3 billion acquisition of most of 21st Century Fox last March.
“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations,” chairman and CEO Robert Iger said. “Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment.”
Hulu ended the quarter with 30.4 million subs and had 30.7 million as of Monday.
Breaking down the numbers, Disney’s Studio Entertainment revenues for the quarter increased from $1.8 billion to $3.8 billion, and operating income tripled from $309 million to $948 million on increases in theatrical and TV/SVOD distribution results at legacy operations, partially offset by a loss from the consolidation of the 21st Century Fox businesses.
Theatrical distribution was powered by Frozen 2 and Star Wars: The Rise Of Skywalker in the current quarter — compared with Ralph Breaks the Internet in the prior-year quarter. The prior-year quarter also included Mary Poppins Returns and The Nutcracker and the Four Realms. The current quarter includes Maleficent: Mistress of Evil.
Growth in TV/SVOD distribution results was due to sales of content to Disney+, partially offset by a decrease in pay television sales to third parties.
Operating results at the Fox businesses reflected income from TV/SVOD distribution, which was more than offset by a loss from theatrical distribution and general and administrative costs. TFCF theatrical releases in the current quarter included Spies in Disguise, the Oscar-nominated Ford v. Ferrari and Terminator: Dark Fate.
Cable Networks revenues rose 20% to $4.8 billion and operating income increased 16% to $862 million due to the consolidation of the Fox businesses (primarily the FX and National Geographic networks), partially offset by a decrease at ESPN. The decrease at ESPN was due to an increase in programming and production costs and lower advertising revenue, partially offset by higher affiliate revenue.
Higher programming and production costs were driven by rate increases for NFL, the College Football Playoffs and other college sports programming as well as costs for the ACC Network, which launched in August. Lower advertising revenue was due to lower average viewership.
Affiliate revenue growth was due to an increase in contractual rates, partially offset by a decrease in subscribers.
Broadcasting revenues for the quarter increased 34% to $2.6 billion and operating income increased 41% to $575 million, reflecting the consolidation of TFCF, program sales, and a timing benefit from new accounting guidance, partially offset by lower results at legacy operations.
At the beginning of fiscal 2020, the company adopted new accounting guidance, which removes certain limitations on the capitalization of episodic television production costs. Compared to the previous accounting, programming and production expense will generally be lower in the first half of the fiscal year and higher in the second half of the fiscal year as the capitalized costs are amortized.
The decrease at legacy operations was due to lower advertising revenue, a decrease in ABC Studios program sales and higher network programming and production costs, partially offset by an increase in affiliate revenue due to higher rates.
Lower advertising revenue reflected decreases at the owned television stations and in average network viewership, partially offset by higher network rates. The decrease in ABC Studios program sales was driven by the comparison to the prior-year sale of The Punisher. Higher network programming and production costs were driven by a higher cost mix of programming in the current quarter compared to the prior-year quarter.
Parks, Experiences and Products revenues for the quarter increased 8% to $7.4 billion, and segment operating income increased 9% to $2.3 billion.
Operating income at international parks and resorts was lower due to softer results at Hong Kong Disneyland Resort, partially offset by growth at Shanghai Disney Resort. Lower results at Hong Kong Disneyland were due to decreases in attendance and occupied room nights reflecting the impact of recent events. At Shanghai Disney, higher operating income was driven by an increase in attendance.
That was last quarter. Both parks are temporarily closed now due to the Coronavirus epidemic in China.