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Walt Disney Co has reported financial results below expectations for its second quarter, hurt by the more than $1bn it paid in early termination fees for TV shows and films it wanted to use on its streaming service.
The company said adjusted earnings per share were $1.08 – below analyst forecasts of $1.19, according to IBES data from Refinitiv.
Revenue came in at $19.2bn, below the $20.03bn estimate, with a warning that supply chain disruptions and rising wages could put more pressure on finances in future.
Chief financial officer Christine McCarthy said: “Right now, it’s very difficult to accurately forecast the potential financial impact due to the fluidity of the situation but you can trust that we are fully aware of it and we’re working hard to mitigate any pressure on the margin.”
The world’s largest entertainment company has staked its future on developing a streaming business to rival Netflix.
But, while Netflix said it had lost subscribers in the first three months of the year and forecast more losses through to June, Disney said subscriptions for its platform were up to 137.7 million – an increase of 7.9 million and above analysts’ forecasts of 5.3 million.
Shahid Khan, partner at Arthur D Little, a technology and management consulting firm, said: “In spite of less-than-optimal results overall, because of the positive streaming numbers, Disney will do well.
“As households rationalise their streaming choices, given the inflation, Disney+ will become one of the top choices and will become a real threat to Netflix.”
Disney+ needs to average nearly 9.1 million new customers per quarter to reach the low end of its goal.
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