📌 WHAT HAPPENED

Walt Disney Co. (NYSE: DIS) reported adjusted earnings per share of $0.82 for fiscal Q4, exceeding the $0.70 consensus estimate. Revenue came in at $21.24 billion, slightly below expectations of $21.33 billion. Disney+ saw a reduction in operating losses to $420 million from $1.47 billion a year ago, underscoring management’s commitment to profitability, backed by recent price hikes and subscriber growth.

The Entertainment segment, including film and TV operations, posted revenue of $9.52 billion—down 9% year-over-year. Linear networks declined 9% as cord-cutting persisted. Studio revenue dropped 20% to $1.86 billion, with The Marvels and recent film releases underperforming at the box office. Free cash flow rose to $851 million, up from $187 million last year, signalling improved capital discipline.

💡 WHY IT MATTERS

The results affirm CEO Bob Iger’s turnaround plan focused on streaming profitability and cost rationalisation. Disney’s ability to narrow losses in its DTC (Direct-to-Consumer) segment is central to its long-term narrative, particularly as cord-cutting and box office volatility pressure core legacy businesses.

Despite the linear and studio softness, the rebound in free cash flow gives Disney added flexibility heading into 2024, particularly with Hulu consolidation and ESPN restructuring on the horizon. Yet, the portfolio remains complex and exposed to cyclical media risks.

📈 INVESTMENT PERSPECTIVE

Disney’s mixed quarter will test investor patience. Streaming’s improving trajectory is encouraging, but the core media franchise is still under strain. The DTC business added 7 million Disney+ core subscribers, and expects profitability by end of fiscal 2024—an important inflection point.

Short-term, the shares may be range-bound until stronger evidence emerges of linear stabilisation and content ROI improvement. Medium term, the pivot towards a more disciplined and digitally aligned model positions Disney for recovery, assuming content investments and sports monetisation (via ESPN) deliver as planned.

🎯 BOTTOM LINE

Disney is making real strides in streaming, but legacy media and box office headwinds remain. While progress is tangible, now is a time for selectivity. Long-term investors should watch closely but may await more clarity on ESPN and studio rebound before increasing exposure.