Mumbai: The Walt Disney Company on Wednesday revealed that Disney+ Hotstar added 8.3 million members during the quarter ended 2 July to reach 58.4 million paid subscribers. The company announced its financial results for the third quarter fiscal 2022.
Overall Disney+ subscribers have reached 152.1 million as compared to 138 million in the previous quarter, an addition of 14.4 million members. The company’s average revenue per paid subscriber for Disney+ Hotstar increased from $0.78 to $1.20 due to higher per-subscriber advertising revenue.
The company’s performance defied market expectations with revenue for the quarter up by 26 per cent at $21.504 billion. For the nine-month period the growth was 28 per cent to $62.5 billion. Diluted earnings per share (EPS) from continuing operations for the quarter increased to $0.77 from $0.50 in the prior-year quarter. Net income from continuing operations rose by 53 per cent for the quarter and by 63 per cent for the nine-month period.
Disney Media & Entertainment Distribution revenues were up by 11 per cent for the quarter to $ 14.1 billion. For the nine-month period it rose by 12 per cent to $42.3 billion. International Channels which come under this division saw revenues for the quarter increase by 7 per cent to $1.5 billion and operating income was comparable to the prior-year quarter at $0.2 billion reflecting lower operating income from channels that operated for the entire current and prior-year quarters (ongoing channels), offset by a benefit from channel closures.
Lower results from ongoing channels were primarily due to an increase in sports programming costs, partially offset by ad revenue growth reflecting higher average viewership. The increases in sports programming costs and ad revenue were due to the airing of 64 Indian Premier League (IPL) cricket matches in the current quarter compared to 29 matches in the prior-year quarter. IPL cricket matches typically occur in the company's second and third fiscal quarters. The increase in the number of matches in the current quarter was due to a shift in the timing of matches in the prior year from the third quarter to the fourth quarter as a result of COVID-19 and the IPL adding matches to the current season.
In the direct-to-consumer segment programming and production costs and ad revenue growth was also due to the additional IPL matches in the current quarter. As had been reported earlier Disney-Star India retained the broadcast rights for the T20 league for five more years while it let go off digital rights due to cost considerations. Those rights went to Viacom18. Linear Networks revenues for the quarter increased by three per cent to $7.2 billion, and operating income increased by 13 per cent to $2.5 billion. Direct-to-Consumer revenues for the quarter increased 19 per cent to $5.1 billion and operating loss increased $0.8 billion to $1.1 billion. The increase in operating loss was due to a higher loss at Disney+, lower operating income at Hulu and, to a lesser extent, a higher loss at ESPN+.
Disney CEO Bob Chapek said, “We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services. With 14.4 million Disney+ subscribers added in the fiscal third quarter, we now have 221 million total subscriptions across our streaming offerings. We continue to transform entertainment as we near our second century, with compelling new storytelling across our many platforms and unique immersive physical experiences that exceed guest expectations, all of which are reflected in our strong operating results this quarter.”
Content Sales/Licensing and Other revenues for the quarter increased by 26 per cent to $2.1 billion and segment operating results decreased from income of $132 million to a loss of $27 million. The decrease in operating results was due to an unfavourable foreign exchange impact and lower TV/SVOD and home entertainment distribution results. These decreases were partially offset by an increase at the stage play business, as productions were generally shut down in the prior-year quarter due to COVID-19, and higher theatrical distribution results.
The decrease in TV/SVOD distribution results was due to a decrease in sales of theatrical film content primarily due to a shift from licensing content to third parties to distribution on the DTC services. The decrease in home entertainment results was due to lower unit sales of catalogue titles.
The increase in theatrical distribution results was due to the strong performance of Doctor Strange In the Multiverse of Madness in the current quarter compared to Cruella in the prior-year quarter. Current quarter releases also included Lightyear and The Bob’s Burgers Movie.
Disney Parks, Experiences and Products revenues for the quarter increased to $7.4 billion compared to $4.3 billion in the prior-year quarter. Segment operating income increased $1.8 billion to $2.2 billion compared to $0.4 billion in the prior-year quarter. Higher operating results for the quarter reflected increases at the US parks and experiences and, to a lesser extent, at international parks and resorts.
Covid-19 Pandemic: The company said that measures to prevent its spread have impacted its segments in a number of ways, most significantly at the Disney Parks, Experiences and Products segment where its theme parks and resorts were closed and cruise ship sailings and guided tours were suspended. These operations resumed at various points since May 2020, initially at reduced operating capacities as a result
of Covid-19 restrictions. In fiscal 2020 and 2021, it delayed, or in some cases, shortened or canceled, theatrical releases. In addition, it experienced significant disruptions in the production and availability of content, including the delay of key live sports programming during fiscal 2020 and fiscal 2021. In fiscal 2022, its US parks and resorts are operating without significant Covid-19- related capacity restrictions, such as those that were generally in place in the prior year.
In addition, its cruise ships have generally been operating without Covid-19-related capacity restrictions since April 2022. Certain international parks and resorts continue to be impacted by Covid-19-related closures and capacity and travel restrictions. At the Disney Media and Entertainment Distribution segment, film and television productions have generally resumed, although the company has seen disruptions of production activities depending on local circumstances. Thus far, it has generally been able to release its films theatrically in fiscal 2022, although certain markets continue to impose restrictions on theater openings and capacity.
The company added that it has incurred, and will continue to incur, costs to address government regulations and the safety of employees, guests and talent, of which certain costs are capitalised and will be amortised over future periods.