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Disney's Q2 earnings: increased profits but a mixed picture

The Walt Disney Company released Q2 earnings results on Wednesday.
Disneyland Resort/Christian Thompson
The Walt Disney Company
The Walt Disney Company released Q2 earnings results on Wednesday.

The Walt Disney Company reported a 13% increase in quarterly earnings on Wednesday — to $21.8 billion.

Disney's vast, global portfolio includes theme parks, resorts, movies, streaming and broadcast channels including Disney+, Hulu, ESPN+, and ABC.

Attendance at themes parks and resorts drove revenue this quarter. Disney's Parks, Experiences and Products division increased its profits by 20% to $2.2 billion.

Disney's in-person offerings performed better than streaming

Profits were not evenly distributed across Disney's various businesses.

Disney+ lost some four million paid subscribers this quarter, dropping to 157.8 million. ESPN+ increased slightly to 25.3 million subscribers and Hulu remained steady at 48.2 million subscribers.

Bob Iger, The Walt Disney Company's CEO, attributed the Disney+ downturn partly to a "maturation process." The streaming service launched in 2019, and in the beginning, Iger said their goal was to, "flood the digital shelves as much as possible." He said that lead to a lot of content that did not increase subscriptions and that the company plans to cut back on production.

Late last year, Disney+ increased the price of its ad-free service from $7.99 to $10.99. Rick Munarriz, an analyst with The Motley Fool, says that's "just three bucks, but it's still a sizable 38% jump." Today, Iger said they're planning another price hike. Munarriz thinks offering less new content while increasing prices could be a "risky" business move for Disney. "It's going to take a lot of pixie dust to make that delicate balance fly," he tells NPR.

Earlier this year, Disney announced plans to layoff some 7,000 employees worldwide in an effort to cut more than $5 billion in costs. The move included consolidating divisions that make and distribute movies and TV shows.

Entertainment industry turmoil

Today's earnings report comes at a time of widespread layoffs in the entertainment industry. Paramount Global cut 25% of its staff. Warner Bros. Discovery is facing billions of dollars in debt.

Despite Disney's own layoffs, Munarriz says, the company is in a better position than most of its competitors: "Disney's ecosystem helps smooth volatility in different segments. It wasn't a perfect report, but it could've been much worse."

Disney's feud with Florida

During the Q&A with analysts at the end of today's call, Iger addressed Disney's ongoing wrestling match with the State of Florida.

Disney recently filed a First Amendment lawsuit against Florida Governor Ron DeSantis, claiming the company is the victim of what it calls a targeted "campaign of government retaliation."

As NPR's Greg Allen reported, the lawsuit is "the latest action in a feud that began more than a year ago when Disney's former CEO said he'd work to overturn a law banning discussion of sexual orientation and gender identity in the schools. The law, the 'Parental Rights in Education Act,' is called 'Don't Say Gay' by critics."

DeSantis went on to pass a bill that stripped Disney of its self-governing authority.

Today Iger sounded both exasperated and determined when talking about Florida. He pointed out that Disney is one of the state's biggest tourist attractions and employs some 75,000 people.

"We certainly never expected to be in the position of having to defend our business interests in federal court, particularly having such a terrific relationship with the state as we've had for more than 50 years," he said.

This story was edited by Ravenna Koenig.

Copyright 2023 NPR. To see more, visit https://www.npr.org.

Elizabeth Blair is a Peabody Award-winning senior producer/reporter on the Arts Desk of NPR News.