Disney looks ahead

Walt Disney Co. surprised investors with a rare glimpse into its future, projecting robust earnings growth through 2027. On Thursday, shares surged 6% as the entertainment giant forecast a significant upswing in streaming profitability and overall per-share earnings, buoyed by new cruise ships, theme park expansions, and a recovering film division. This optimistic outlook comes as Disney grapples with a decline in its traditional television business. Operating profits at its entertainment networks (ABC, Disney Channel, National Geographic, etc.) and ESPN fell sharply, highlighting the ongoing challenges in the legacy media landscape.

However, Disney's streaming business showed promising signs of recovery, with Disney+, Hulu, and ESPN+ generating a combined $321 million in profit. This marks a significant turnaround from previous losses ($387 million loss in the same prior-year period) and signals the potential for streaming to become a key profit driver. Achieving consistent profits in streaming is critical for Disney and other media giants amid a growing shift by consumers to direct services from traditional pay-TV packages. In mid-October, the company raised the price of its various subscription plans, highlighting a trend that has gained traction over the past year.

The company's film division rebounded strongly, fueled by box-office hits like "Inside Out 2" and "Deadpool & Wolverine." Upcoming releases, including "Moana 2" and "Mufasa: The Lion King," are expected to further enhance the studio's performance.

While theme park revenue remained muted due to inflationary pressures and a slowdown in overseas tourism, Disney anticipates a recovery in the coming fiscal year. “We’ve got visibility,” said Hugh F. Johnston, Disney’s chief financial officer. He projected total per-share earnings to increase by “double-digit” percentages in 2026 and 2027 compared to previous years, driven in part by new cruise ships and theme park expansions. This guidance offers a much-needed boost to investor confidence, indicating that Disney is effectively navigating the complexities of the evolving media landscape.