Disney defies streaming sceptics, reports surge in new customers in Q3

LOS ANGELES • Walt Disney investors, like its customers, love a good story, and they got one when the entertainment giant reported better-than-expected quarterly results and a surge in streaming customers.

Disney+, the company's flagship online TV business, grew to 116 million subscribers in the third quarter ended July 3, beating the 113.1 million that analysts expected.

With its theme parks back open after a Covid-19 shutdown, Disney said on Thursday that earnings rose to 80 US cents a share, excluding some items, beating the 55 US cents analysts estimated.

The results show that the world's largest entertainment company is rebounding from the pandemic, which shuttered its resorts, idled its cruise ships and crimped attendance at movie theatres.

Chief executive Bob Chapek said theme-park reservations are running ahead of the just-ended period despite the Delta variant of Covid-19. Disney expects its resorts to be fully staffed by the year end, after tens of thousands of layoffs last year.

"The fact that you're seeing bookings as strong as they are is an indication of the core reason you want to own Disney," said Mr Markus Hansen, a portfolio manager at Vontobel Asset Management.

Disney shares rose up to 5.9 per cent to US$189.88 in after-market trading. They lost 1 per cent this year through the close on Thursday in New York, compared with a 19 per cent gain for the S&P 500.

The company's direct-to-consumer unit - the home of its streaming business - narrowed its loss in the quarter due to improved results at the Hulu online service. Meanwhile, movies released online, such as Cruella and Luca, as well as new TV shows from the Marvel superhero factory, drove customers to Disney+.

The company said it is acquiring the National Hockey League's stake in its streaming technology business, BAMTech, for US$350 million (S$475 million).

Disney's theme parks beat expectations with operating income of US$356 million, their first profitable quarter since March last year. All its theme parks are open, with attendance and related spending on the rise. Revenue in that division soared fourfold. The Delta variant may threaten that rebound.

Its movie business continues to suffer, with the studio projected to lose money in the current quarter.

Profit will also fall in its traditional TV business, hurt by higher programming and marketing expenses for new shows at networks such as ABC and FX.

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