Disney EPS Surges 10% on Streaming Gains and 8% Park Revenue Boost Despite TV Decline

Disney (NYSE: DIS) shook off some lingering headwinds from traditional TV and pushed past Wall Street's earnings expectations for its fiscal third quarter, thanks in large part to strong streaming growth and a surge in park revenues.

The media giant posted adjusted earnings per share of $1.61, exceeding estimates that hovered around $1.47. Revenue came in at $23.65 billion, slightly missing analyst calls for $23.73 billion - a rare miss for Disney since mid-2024.

Net income doubled year-over-year to $5.26 billion, or $2.92 per share, bolstered by one-off tax benefits linked to Disney's acquisition of Comcast's Hulu stake. But beyond the headline numbers, the company's story this quarter was about fast-evolving consumer habits.

Streaming is still the star. Disney's direct-to-consumer segment saw operating income jump to $346 million from a loss last year, fueled by a 6% revenue increase to $6.18 billion. Disney+ alone added 1.8 million fresh subscribers, pushing its tally to nearly 128 million worldwide. Hulu's audience crept up 1% to 55.5 million. Combined Disney+ and Hulu subs could grow by more than 10 million over the next quarter - a sign the company is still racking up new paying customers despite fierce competition.

The good news for Disney's streaming growth might have masked a continuing decline in its traditional TV footprint. Revenue from this segment slipped 15% to $2.27 billion while operating income for the linear channels, including ABC and FX, dropped 28% to $697 million. The usual culprits were lower ad revenue and shrinking viewership, problems plaguing the wider pay-TV business.

On the ESPN front, domestic revenue inched up 1% to $3.93 billion even as operating profits dipped 7%, squeezed again by rising costs - mainly from expensive NBA and college sports rights deals. Separation news came fast as ESPN revealed a forthcoming streaming app launching August 21 and unveiled a new NFL partnership, with the league acquiring a 10% stake in ESPN.

The parks remained a bright spot during the quarter, with Disney's experiences segment - theme parks, resorts, cruises, and consumer products - pulling in $9.09 billion, up 8%. Domestic parks alone jumped 10% to $6.4 billion, helped by bigger guest spending and increased cruise passenger volumes. This layer of stability offloads some pressure from the wobbly entertainment unit.

Despite the revenue miss, Disney boosted its full-year fiscal 2025 adjusted EPS outlook to $5.85, an 18% lift from last year and edging up from the May guidance of $5.75. The odds clearly favor streaming and parks carrying the weight as traditional TV continues to lose ground.

Disney's mix of solid subscriber additions, expanding park receipts, and strategic sports partnerships leaves plenty of angles to watch, especially as the industry grapples with the decline in bundled TV services. Will the streaming momentum and live sports deals be enough to rewrite the rules completely?