ABC O&Os Outpace Network

The Walt Disney Co. beat Wall Street expectations for its fiscal third quarter (ended July 3), as total company revenues rose 45% to $17 billion and it posted net income of $923 million, versus a loss of $4.7 billion a year earlier. The biggest gains came from the Parks, Experiences and Products segment, as theme parks reopened following pandemic-related closures, but the Media and Entertainment Distribution segment also saw revenues gain 18% to $12.7 billion. However, operating income fell 32% to just over $2 billion.

In the company’s Wall Street conference call on Thursday afternoon, Disney CFO Christine McCarthy said: “At linear networks, operating results were lower at both our domestic and international channels. At domestic channels, both cable and broadcasting operating income decreased in the third quarter versus the prior year. The decrease in operating income at cable was due to higher programming and production costs and higher marketing costs, partially offset by higher advertising and affiliate revenue.” That was driven by the return of live sports on ESPN.

“At broadcasting, lower results from the ABC Television Network were only partially offset by growth at our owned television stations. The decrease at ABC was largely due to higher programming and production costs, partially offset by higher advertising and affiliate revenue,” McCarthy said.

Much of the call focused on the company’s streaming platforms, which Disney CEO Bob Chapek declared are performing “incredibly well.” Direct-to-consumer revenues were up 57% to $4.3 billion and total subscribers grew to 174 million. However, streaming still lost $300 million, with a higher loss at Disney+ partially offset by improvement at Hulu.

During the Q&A period with analysts, the CFO noted how advertising demand is shifting to nonlinear platforms.

“We came out of a very strong upfront, but we had about 40% of the total upfront dollars into streaming and digital,” McCarthy said.