By Lisa Richwine and Nivedita Balu
(Reuters) – Walt Disney Co on Wednesday missed Wall Street earnings projections as it reported the smallest quarterly gain in Disney+ subscribers since the company dove into the streaming video market two years ago to compete with Netflix Inc.
At Disney’s theme park division, operating income reached $640 million from July through Oct. 2, the first quarter when all of its theme parks were open since the start of the COVID-19 pandemic. The parks’ profit fell short of Wall Street projections of $942 million, according to IBES data from Refinitiv.
Disney+ picked up 2.1 million customers during the quarter. Analysts had projected 10.2 million, according to Factset estimates, even though Chief Executive Bob Chapek warned in September that COVID-related production delays and other issues would limit new sign-ups to the “low single-digit millions.”
Disney shares fell 4.3% in after-hours trading on Wednesday.
The media company posted diluted earnings per share of 37 cents, below analyst projections of 51 cents.
Disney has staked the company’s future on building streaming services to compete in a crowded online video market dominated by Netflix.
As of early October, paying subscribers to Disney+ reached 118.1 million. Including Hulu and ESPN+, the company’s streaming customers totaled 179 million.
Disney’s streaming media division, known as direct to consumer, continued to lose money as the company paid for new programming and other costs. The unit reported an operating loss of $630 million in the quarter.
Chapek has previously said that streaming growth will fluctuate from quarter to quarter and has stuck by the company’s projection of 230 million to 260 million Disney+ subscribers by the end of fiscal 2024.
This week, Disney is offering the first month of Disney+ for $2, down from the usual $8, and other promotions.
On Friday, Disney will debut adventure movie “Jungle Cruise,” Marvel film “Shang-Chi and the Legend of the Ten Rings,” a new “Home Alone” movie and a batch of other programming on streaming.
Disney also missed analysts’ estimates for quarterly revenue.
Revenue rose to $18.53 billion in the fourth quarter from $14.71 billion a year earlier. Analysts had expected $18.79 billion, according to IBES data from Refinitiv.
Net income attributable to the company was $159 million, or 9 cents per share, compared with a loss of $710 million, or 39 cents per share, a year earlier.
(Reporting by Lisa Richwine in Los Angeles and Nivedita Balu in Bengaluru; Editing by Sriraj Kalluvila and Lisa Shumaker)
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