The Walt Disney Company has reported its financial results for the first quarter of fiscal year 2025, marking both growth and challenges as it navigates changing market dynamics.
For the quarter ending December 28, 2024, Disney's revenue rose by 5% to $24.7 billion, up from $23.5 billion during the same period last year. This growth was buoyed by the stellar box office performance of its films, including hits like Inside Out 2, Deadpool, Wolverine, and Moana 2, with the latter crossing $1 billion globally.
CEO Robert A. Iger highlighted the success of the theatrical business, asserting, “Our theatrical business had an outstanding run at the global box office in 2024, led by outstanding titles.” The impressive figures were complemented by the entertainment segment's operating income, which nearly doubled to $1.7 billion, reflecting increased content sales and direct-to-consumer (DTC) streaming performances.
Meanwhile, the company faced headwinds with its streaming service, Disney+, which saw subscriber numbers decline by 0.7 million, bringing the total to 125 million. This dip has raised concerns about Disney's strategy as they adapt to the competitive streaming environment.
Disney's financial report also revealed significant challenges within its Indian joint venture (JV) with Reliance Industries. The company reported a $33 million equity loss from this venture during Q1 FY25 and projected total equity losses to reach approximately $300 million for the full year, primarily due to purchase accounting adjustments stemming from the recent restructuring of its India operations.
Disney’s operations in India contributed just $73 million to the entertainment segment’s income this quarter, down sharply from $254 million last year when Star India was fully consolidated. It is apparent the deconsolidation has had substantial financial repercussions as Disney now only recognizes its 37% stake of the newly formed JV, whereby Reliance retains 56% controlling interest.
Despite the losses from the India JV, Disney's overall performance within the sports segment showed marked improvement. The segment turned around from last year's staggering loss of $636 million to report $9 million in operating income this time around, attributing the improvement to the success of major cricket events like the ICC.
Although the DTC advertising revenue for Disney as a whole fell by 2%, excluding the Disney+ Hotstar service—which continues to face pressures due to the loss of lucrative IPL streaming rights—advertising revenue rose by 16% year-over-year.
Looking forward, Disney is forecasting high-single-digit adjusted earnings per share (EPS) growth for the fiscal year 2025, bolstered by ambitious digital strategies, including the integration of ESPN content onto Disney+. The overall sentiment remains one of cautious optimism as the company plans to address the challenges presented by its Indian operations.
“Our results this quarter demonstrate Disney’s creative and financial strength as we advanced the strategic initiatives set in motion over the past two years,” Iger remarked, assuring stakeholders of Disney's commitment to adapting its strategies for sustainable growth.
While the restructuring of the India JV is expected to play a pivotal role in Disney’s transformation, the full financial impact of these changes remains to be realized. With ambitious plans for digital expansion and new content offerings, including the introduction of live sports programming on Disney+, the entertainment giant is taking significant steps to bolster its position.
Disney's strong box office performance and the modest recovery seen within other segments stand as testaments to the company's resilience. Nonetheless, the future profitability of its India JV remains uncertain, set against the backdrop of global growth and burgeoning digital competition.
Investors and analysts alike are watching closely as Disney navigates these waters, striving to balance the challenges of its Indian venture with its larger strategy for global growth.