Disney tops earnings forecasts as Iger sets 'building' phase

FILE PHOTO: Toy figures of people are seen in front of the displayed Disney + logo, in this illustration · Reuters

By Dawn Chmielewski and Lisa Richwine

LOS ANGELES (Reuters) -Walt Disney exceeded Wall Street's earnings expectations on Wednesday as higher attendance at its Shanghai and Hong Kong theme parks offset a decline in advertising revenue at television network ABC.

Shares of the entertainment company rose 3% in after-hours trading to $87.14, signaling investor confidence in Chief Executive Bob Iger's aggressive cost-cutting, the company's better-than-expected streaming subscriber gains and Iger's declaration that Disney had moved into a "building" phase again.

The company also plans to ask its board to reinstate a dividend payment to shareholders by the end of 2023, interim Chief Financial Officer Kevin Lansberry said.

For the fiscal fourth quarter ended Sept. 30, Disney reported adjusted per-share earnings of 82 cents, topping an average forecast of 70 cents, according to LSEG data. Quarterly revenue of $21.2 billion was largely in line with consensus estimates.

The company said it added nearly 7 million Disney+ streaming subscribers in the quarter, with the inclusion of "Guardians of the Galaxy Vol. 3" and the original series "Star Wars: Ahsoka." Disney+ and Disney+ Hotstar together boast 150.2 million subscribers, ahead of Visible Alpha's estimate of 147.4 million.

"Our results this quarter reflect the significant progress we've made over the past year," Iger said in a statement. "While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again."

Disney now says it is on track to achieve $7.5 billion in annualized savings, as it aggressively manages costs.

The 100-year-old entertainment giant is once again under pressure from activist shareholder Nelson Peltz, whose Trian Fund Management is expected to seek board seats. Trian had pushed for one board seat in January, but ended its proxy fight a month later, after Iger laid out restructuring plans aimed at saving $5.5 billion.

Trian had no immediate comment on Disney's earnings report.

The company's results "clearly underline a razor-sharp focus on efficiencies across the board while focusing on content," said PP Foresight analyst Paolo Pescatore. "This is in stark contrast to other traditional rivals who lack the same scale as Disney in this new streaming driven world."

Earlier on Wednesday, Warner Bros Discovery shares tumbled 19% after the company said the effects of two Hollywood strikes and a weak advertising market could hamper earnings into next year.