The Walt Disney Co. said it had 174 million subscriptions across Disney Plus, ESPN Plus and Hulu at the end of the third quarter.
Disney Plus had 116 million subscribers, up from 103.6 million in the second quarter and 57.5 million a year ago.
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Disney CEO Bob Chapek said the company will be pulling out the marketing stops for a Disney Plus Day on Nov. 12. The company will be taking advantage of its array of brands and touchpoints to raise consumer awareness.
“The power of the synergy will be on full display on November 12th when we celebrate Disney Plus Day with an unprecedented, company-wide, promotional campaign,” he said.
Disney doesn't break out its U.S. subscribers, but on the earnings call CFO Christine McCarthy noted that the majority of the Disney Plus net subscriber additions in the quarter came from Hotstar in India. But she added that "subscriber growth was solid at the core Disney Plus markets."
ESPN Plus had 14.9 million subscribers, up from 13.8 million in the second quarter and 8.5 million a year ago.
Hulu’s SVOD product had 39.1 million subscribers, up from 37.8 million sequentially and up from 32.1 million subscribers a year ago.
The Hulu Live TV vMVPD product had 3.7 million subscribers, up from 3.4 million a year ago, but down 100,000 from the second quarter.
In total, Hulu had 42.8 million subscribers, up from 41.6 million in the second quarter and 35.5 million a year ago.
"In a summer marred by numerous DTC services posting softer than expected subscriber results, Disney has yet again bucked industry trends and beat expectations for Disney Plus net adds," said analyst Kutgun Maral of RBC Capital Market.
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For the quarter, Disney had net income of $918 million, or 50 cents a share, compared to a loss of $4.7 billion ($2.61) a year ago when COVID-19 ripped into its movie and theme park businesses.
The company’s revenue jumped 45% to $17 billion.
Disney’s Media and Entertainment Distribution division had operating income of $2.025 billion, down 32% from a year ago. Revenue rose 18% to $12.7 billion.
The direct-to consumer business posted an operating loss of $293 million, down from $624 million a year ago. Disney cited improved results at Hulu, which turned profitable in the quarter. Hulu had higher subscription and advertising revenue, offset by a bigger loss at Disney Plus, where programming, production, marketing and technology costs were higher. Some of the cost increase reflected Disney plus expanding into additional markets.
During the earnings call, Chapek said that Disney Plus churn had declined, despite price hikes, and that churn for the Disney bundle was even lower, reflecting the product's price/value relationship.
Revenue rose 57% to $4.3 billion from $2.7 billion.
Operating income at Disney’s linear networks fell 33% to $2.2 billion as revenue rose 16% to $7 billion. Operating income at Disney’s domestic channels dropped 37% to $1.8 billion as revenue rose 13% to $5.6 billion. The company said the decrease was due to higher programming and production costs at its cable and broadcast networks as live sports event returned. That helped to drive ad sales at ESPN up by $400 million.
A year ago costs were eliminated as games were cancelled. ABC had lower results, partially offset by increase at the ABC-owned TV stations. The network also had higher costs because of a shift in timing of the Oscars. The Oscar telecast produced an increase in ad revenue for ABC for the quarter.
Disney’s parks unit had operating income of $356 million compared to a loss of $1.9 billion at the peak of the pandemic. Revenue rose to $4.3 billion from $1.1 billion a year ago.
“We ended the third quarter in a strong position, and are pleased with the company’s trajectory as we grow our businesses amidst the ongoing challenges of the pandemic,” Chapek said. “We continue to introduce exciting new experiences at our parks and resorts worldwide, along with new guest-centric services, and our direct-to-consumer business is performing very well, with a total of nearly 174 million subscriptions across Disney Plus, ESPN Plus and Hulu at the end of the quarter, and a host of new content coming to the platforms.”
