The Walt Disney Company ended its fiscal year 2025 with strong video streaming results, posting revenue across Disney+, Hulu and other direct-to-consumer (DTC) channels that was up 8% to $6.2 billion year over year (YOY) for the July-September quarter and operating income that rose 39% to $352 million.
“Not bad, considering DTC was running with a $4 billion annual operating loss just three years ago,” CEO Robert Iger quipped during a call with equity analysts Thursday.
Disney finished fiscal Q4 on Sept. 27 with nearly 196 million Disney+ and Hulu subscribers, up 12.4 million for the quarter despite the tumult of September’s controversial decision to suspend late-night host Jimmy Kimmel. The surprising subscriber growth also came despite the third price hike in three years for Disney Bundle services.
Drilling down a little deeper, Hulu added 8.6 million subscribers in the quarter, a result likely spurred by the app’s addition to Charter Communications’ Spectrum Select pay TV bundle. Spectrum Select subscribers started receiving basic ad-supported Hulu at no additional cost late last summer.
Disney also had good news to report regarding the summer launch of its new DTC ESPN app, suggesting it had sparked growth in aggregate subscribers, engagement and ad sales for ESPN, without releasing specifics. The company did offer one nugget — it said that around 80% of signups are coming via a bundle with Disney+ and Hulu.
Looking ahead, the company plans to spend around $24 billion on licensing and making programming in fiscal 2026, an increase of about $1 billion from fiscal 2025. Much of that jump can be attributed to increases in sports licensing costs, with the NBA’s new $76 billion national TV deal kicking in with the start of the new pro hoops season.
Notably absent from the call was news regarding the elephant in the room — Disney’s program licensing impasse with YouTube TV, which has kept ABC, ESPN and about 20 other Disney channels off the fourth largest U.S. pay TV operator for a full two weeks now.
“We care deeply about the consumer, and our priority has always been to remain on their service,” Iger said. “The deal we’ve proposed is equal to or better than what other larger distributors have already agreed to … We’re not trying to break new ground here.”
Continued linear drag
The YouTube blackout, which started Nov. 1, didn’t impact fiscal 2025, but the negative vibes given off by fast-declining traditional television could still be painfully felt in Disney’s bottom line.
Disney fiscal Q4 revenue of $22.46 billion was flat YOY and missed the expectations of equity analysts. Sales generated by linear networks dropped 16% YoY in the quarter. Overall, entertainment division revenue, which includes sales in streaming and linear, was down 6% in fiscal Q4 to $10.21 billion, largely dragged down by the degradation of cable and broadcast TV usage and ad sales.
Disney shares were trading down more than 9% on Wall Street as of Friday morning.
Linear advertising was also hurt by unfavorable comparisons to amped up figures in fiscal Q4 2024, which included robust political ad spending ahead of the U.S. Presidential election. This resulted in a $40 million adverse impact to the 2025 balance sheet.
Other notable highlights from the report:
- After a successful box-office run, the live-action iteration Lilo & Stich generated 14.3 million views in its first five days on Disney+, the fifth best performance for a live-action title on the platform ever.
- ABC’s Dancing With the Stars grew its audience in each of the next six weeks following its 37th season premiere on Sept. 16, marking the first time Nielsen has ever observed that kind of ratings phenomena.
- Disney surpassed $4 billion in revenue at the global box office for the fourth consecutive year.
Additional green shoots included Disney’s “Experiences” unit, which includes its theme parks and boat cruises. That division saw a 6% Q4 rise in sales to $8.76 billion, with Disney christening two new luxury vessels and making plans to build five more. The company is also building a theme park for Abu Dhabi. Advanced bookings for parks are up 3% so far in Q1, Disney CFO Hugh Johnston said.
One ‘super app’ to rule them all
At some point in the near-term future, consumers will be able to buy cruise and theme-park tickets via the Disney+ app, with the Iger on Thursday outlining plans to continue developing the software as a kind of “super app” for “all things Disney.”
Iger also said that Disney will continue to look for third-party bundling partners, with the arrangements having huge positive impacts on customer churn. Disney already partners with Warner Bros. Discovery to bundle HBO Max with Disney+ and Hulu. And it just started teaming with Fox to package ESPN DTC with the new Fox One.
Disney, meanwhile, continues to align its various DTC brands. As of October, for instance, Hulu exists as a subordinate streaming platform within the Disney+ app, housing all of Disney’s “general adult entertainment programming.”
Finally, despite WBD soliciting mergers & acquisitions interest from Paramount Skydance, Netflix and Comcast, among other media rivals, Johnston said Disney has no interest in pursuing any kind of M&A deal at this time.
“I feel like we already have a great portfolio, and we don’t need to do anything,” he said.