Walt Disney Co posted fiscal fourth-quarter (4Q) sales and profit that beat Wall Street estimates and forecast earnings growth for the next three years, a rare event for a company that historically hasn’t made long-range profit projections.

Earnings per share, excluding some items, rose to US$1.14 , beating the US$1.10 average of analysts’ estimates compiled by Bloomberg. The company forecast high-single-digit growth in adjusted earnings in fiscal 2025, compared with current analysts’ estimates for growth of 4%. It projects double-digit profit increases for 2026 and 2027, according to a statement released on Thursday. The shares gained 10% in premarket trading.

The improved profitability in the quarter underscores the turnaround put in place by chief executive officer Bob Iger. Earnings in the period were driven in part by the better performance of Disney’s film studio, which has been on a tear this year thanks to blockbusters including Inside Out 2 and Deadpool & Wolverine, and the second straight quarterly profit at its streaming business, which includes the flagship Disney+ streaming service.

The direct-to-consumer segment, which also includes the Hulu and ESPN+ streaming services, posted a profit of US$321 million in the period, well above Wall Street estimates of US$202.9 million. 

Subscribers to the Disney+ platform, including the Hotstar service in India, grew to 158.6 million, beating analysts’ estimates by a small margin. The company is expecting a modest decline in core Disney+ subscribers in the first quarter of fiscal 2025 due to the impact of recent price increases and the expiration of some promotions, chief financial officer Hugh Johnston said in an interview. He expects growth to resume in subsequent quarters.

Growth in the streaming business offset the continued decline in traditional TV networks, which include ABC and cable channels such as FX and the Disney Channel. Operating income in the unit tumbled 38% to US$498 million. Like other major media companies, Disney is focusing on a future in streaming as consumers continue to cut the cord on cable. Last month, Comcast Corp said it’s considering spinning off its cable networks into a new company. 

Johnston, however, suggested that Disney wouldn’t consider a similar path, as he sees an important integration between linear TV and streaming. 

“I like the portfolio the way it is. I wouldn’t change anything,” Johnston said on CNBC. Spinning off the cable assets would require “too much operational complexity”, and it’s “a natural hedge anyway”. While many younger people are switching to streaming, cable and network TV still draw viewers from a primarily older demographic, he said. “I don’t want to lose that so I’d like to keep it part of the portfolio.”

Disney aims to strengthen its streaming offering even more by introducing an ESPN tile to Disney+ on Dec 4, executives said in prepared remarks ahead of an analyst call. The move will give subscribers access to ESPN while inside Disney+, similar to an offer for bundle subscribers with Hulu on Disney+.

Disney’s content sales and licensing unit, which includes movies, rebounded to a US$316 million profit from a US$149 million loss the prior year.

The success of those two pillars helped give management the confidence to offer earnings guidance going out for three years, Johnston said. 

“The fourth quarter capped a very successful year for Disney,” he said. “We had back-to-back billion-dollar movies and we’re very excited about Moana 2 and Mufasa: The Lion King. Creativity is very much performing well at Disney.” 

Operating income at the company’s theme-park division declined 5.7% to US$1.66 billion, in line with analysts’ projections. Profit in the international parks fell as Disneyland Paris suffered competition from the Olympics. Attendance at the company’s domestic resorts was flat. 

Still, Disney projects 6% to 8% operating income growth in the theme parks unit next year, driven in part by two new cruise ships, Johnston said.

The company plans to buy back US$3 billion worth of shares in fiscal 2025, in line with the past year, and will seek to grow dividends in line with earnings. 

Iger returned to lead the Burbank, California-based entertainment giant in November 2022 after nearly two tumultuous years that culminated in the ouster of his handpicked successor, Bob Chapek. Iger has cut costs and raised prices at the company’s theme parks and streaming services, moves that have helped boost revenue and profit.

Iger’s other chief priority is finding a successor, which Disney has pledged to announce early in 2026. That effort is being led by board member and former Morgan Stanley CEO James Gorman, who will become Disney’s chairman in January. 

  - Bloomberg