Disney’s 3Q profit climbs as it sees strength at domestic parks, adds streaming subscribers

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Disney’s profit and revenue climbed in its fiscal third quarter as the entertainment company continued to add subscribers to its streaming service and see strength at its domestic theme parks.

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It also raised its full-year adjusted earnings forecast on Wednesday and announced a deal with WWE that will see the sports entertainment company’s premium live events, like WrestleMania , streamed by ESPN.

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The Walt Disney Co. earned $5.26 billion, or $2.92 per share, for the three months ended June 28. A year earlier it earned $2.62 billion, or $1.43 per share.

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Excluding certain items, earnings were $1.61 per share. This easily beat the $1.46 per share analysts polled by Zacks Investment Research were looking for.

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Revenue for the Burbank, California, company totaled $23.65 billion, falling slightly short of Wall Street’s estimate of $23.68 billion.

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Disney subsidiary ESPN struck a rights agreement with TKO Group’s WWE to become the exclusive U.S. domestic streamer of the sports entertainment company’s premium live events starting next year. Aside from gaining access to WrestleMania, ESPN will also air marquee events such as the Royal Rumble, SummerSlam and Survivor Series.

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The wrestling events will be available on ESPN’s new streaming service, which is set to launch next month, with select ESPN cable channels also airing them.

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Financial terms of the agreement were not disclosed, but The Wall Street Journal said that it’s a five-year deal worth more than $1.6 billion.

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“Sports is the big headline coming out of Disney’s latest earnings report, and for good reason. Live sports programming (like WWE Premium Live Events) amasses captive audiences that advertisers crave, and Disney is prioritizing programming with the highest ad revenue potential,” Mike Proulx, Forrester vice president, research director, said in an emailed statement.

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Last night the NFL announced that it had entered into a nonbinding agreement with ESPN. Under the terms, ESPN will acquire NFL Network, NFL Fantasy and the rights to distribute the RedZone channel to cable and satellite operators and the league will get a 10% equity stake in ESPN.

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Revenue for Disney Entertainment, which includes the company’s movie studios and streaming service, edged up 1%, while revenue for the Experiences division, its parks, increased 8%.

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Disney’s direct-to-consumer business, which includes Disney+ and Hulu, posted quarterly operating income of $346 million compared with a loss of $19 million a year ago. Revenue climbed 6%.

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The Disney+ streaming service had no change in paid subscribers domestically, which includes the U.S. and Canada. There was a 2% rise internationally, which excludes Disney+ HotStar.

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Total paid subscribers for Disney+ came to 128 million subscribers, up from 126 million in the second quarter.

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Disney+ and Hulu subscriptions totaled 183 million, up 2.6 million from the second quarter.

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In the fourth quarter, Disney anticipates that total Disney+ and Hulu subscriptions will increase more than 10 million compared with the third quarter, with most of the increase coming from Hulu due to the expanded Charter deal, CEO Bob Iger and Chief Financial Officer Hugh Johnston said in prepared remarks.