The Walt Disney Company (DIS) Stock: Earnings Beat On Streaming Strength As Shares Slide Over 7% Premarket

TLDR

• Disney beat earnings estimates with adjusted EPS of $1.63
• Streaming operating income surged 72% year over year
• Parks and experiences posted record quarterly revenue
• Sports segment profits dropped on higher rights costs
• DIS shares fell premarket despite strong headline results

The Walt Disney Company (DIS) was trading at $103.81, down 7.97% as of writing, after the media giant reported fiscal first-quarter results that topped Wall Street expectations but still triggered a sharp market reaction. Investors focused on rising costs, weaker year-over-year profits, and pressure in the sports business, despite strong momentum in streaming and record-breaking performance from theme parks and experiences.

The Walt Disney Company, DIS
Disney posted adjusted earnings of $1.63 per share for the quarter ended Dec. 27, beating analyst estimates of $1.57. Revenue rose 5% year over year to about $26 billion, exceeding expectations of roughly $25.7 billion. Net income came in at $2.48 billion, down from $2.64 billion a year earlier, reflecting higher operating and content costs across several segments.

Streaming Business Delivers Profit Surge

Disney’s streaming operations were a clear bright spot in the quarter. Operating income from Disney+ and Hulu jumped 72% from a year earlier to $450 million, well above company guidance and analyst forecasts. Streaming revenue climbed 11% to $5.35 billion, supported by pricing actions and improved cost discipline.

Looking ahead, Disney expects streaming operating income to rise to about $500 million in the fiscal second quarter, roughly $200 million higher than the same period last year. The company recently rolled out ESPN’s direct-to-consumer platform and fully integrated Hulu into Disney+, reshaping its streaming ecosystem.

Disney also stopped reporting streaming subscriber numbers this quarter and no longer breaks out financials for linear TV, streaming, and theatrical units separately, mirroring a similar reporting shift by Netflix.

Parks And Experiences Set New Records

The parks, resorts, and cruise division continued to anchor Disney’s earnings profile. The experiences unit generated more than $10 billion in quarterly revenue for the first time, according to Chief Financial Officer Hugh Johnston. Operating income from the segment rose 6% year over year to $3.31 billion.

Domestic theme parks posted revenue of $6.91 billion, while international parks generated $1.75 billion, both up 7% from last year. Attendance increased at U.S. parks, while international visitation remained softer.

Disney cautioned that operating income growth in experiences is expected to be modest next quarter due to weaker international visitation, pre-launch costs for a new Disney Cruise Line ship, and pre-opening expenses tied to the World of Frozen attraction in Paris.

Sports And Entertainment Margins Under Pressure

Disney’s sports segment, which now reports ESPN separately, remained a drag on profitability. Revenue rose 1% to $4.91 billion, but operating income fell 23% to $191 million. Higher programming and production costs tied to new sports rights deals weighed heavily on margins.

Cord-cutting continued to pressure subscription and affiliate fees, while a temporary blackout of Disney networks on YouTube TV reduced operating income by about $110 million during the quarter.

Within the entertainment unit, which includes film and streaming, revenue rose 7% to $11.6 billion on strong box office results from hits like Zootopia 2 and Avatar: Fire and Ash. Operating income for the segment fell 35% to $1.1 billion due to rising production and marketing costs.

CEO Succession And Capital Return Plans

Beyond earnings, investor attention remains fixed on Disney’s leadership transition. The board is expected to vote on a successor to CEO Bob Iger soon, with parks chief Josh D’Amaro and TV executive Dana Walden seen as leading internal candidates.

Disney reaffirmed its fiscal 2026 outlook, including plans to repurchase $7 billion of stock, target double-digit growth in adjusted earnings per share, and generate $19 billion in operating cash flow. While long-term strategy remains intact, near-term investor sentiment appears cautious as higher costs offset operational gains.

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