Walt Disney Co. (DIS) shares plummeted 6.63% in early trading on Thursday after the entertainment giant reported disappointing fiscal fourth-quarter results. The company's revenue fell short of Wall Street expectations, and its traditional TV business continued to face challenges.
For the quarter ended September 30, Disney reported revenue of $22.46 billion, slightly below the $22.75-22.78 billion analysts had forecast. While adjusted earnings per share of $1.11 beat estimates of $1.04-1.05, investors focused on the company's top-line miss and declining profitability in key segments.
The Entertainment segment, which includes Disney's traditional TV networks and film business, saw operating income plunge 35% year-over-year to $691 million. This sharp decline was primarily driven by lower TV advertising revenue and weaker box office performance. The company's biggest theatrical release of the quarter, Marvel's "The Fantastic Four: First Steps," underperformed compared to the previous year's summer blockbuster.
Despite these challenges, there were some bright spots in Disney's report. The company's streaming services, Disney+ and Hulu, added 12.4 million subscribers in the quarter, beating expectations. The direct-to-consumer segment saw operating income more than triple to $352 million. Additionally, the Experiences segment, which includes theme parks and cruises, posted strong results with operating income rising 13% to $1.88 billion.
In an effort to boost shareholder confidence, Disney announced plans to double its share repurchase program to $7 billion for fiscal 2026 and increase its annual dividend by 50% to $1.50 per share. However, these measures were not enough to offset investor concerns about the core business performance, particularly the ongoing decline in the traditional TV segment.
As Disney continues to navigate the challenging media landscape and invest in its streaming future, investors will be closely watching how the company balances its legacy businesses with its digital transformation efforts in the coming quarters.