Disney earnings: CEO succession, ABC turmoil and streaming key for investors

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Attention will be on Disney later Tuesday morning as the entertainment giant releases its highly anticipated second-quarter earnings to investors.

The Bob Iger-led company has said it plans to publish the results before the stock market opens in the morning. That marks a change from the after-the-bell reporting that the entertainment giant has typically done in recent quarters, including the prior one.

Here are some topics that have been front-of-mind for many Disney investors in the lead-up to the company’s earnings.

CEO Succession

Disney brought Iger back as CEO in November 2022 and later inked an extension to make his contract run an extra two years until the end of 2026. Since he took back the reins from Bob Chapek, the question of who will ultimately succeed Iger has come up time and time again.

“While it seems to be narrowed down to 4 division execs, we see this as the obvious short list,” Wells Fargo’s Steven Cahall said in an April 22 research note. “We think it’s key that the board start to signal 1-2 heir apparents.”

Ticker Security Last Change Change %
DIS THE WALT DISNEY CO. 116.47 +2.81 +2.47%

Reports have said Disney Experiences Chair Josh D’Amaro, ESPN Chair James Pitaro and Disney Entertainment co-Chairs Dana Walden and Alan Bergman are among those top insiders that the company is looking at, according to reports.

DISNEY WINS PROXY BATTLE AGAINST ACTIVIST INVESTOR NELSON PELTZ

In January, while still in the midst of its proxy battle with Nelson Peltz and the Trian Group, Disney said it “remains committed to and actively engaged in the high-priority work of succession planning.” The company has a succession planning committee dedicated to that.

ABC Turmoil

The ABC building at Walt Disney Studios

ABC News experienced a leadership shake-up over the weekend with Kim Godwin’s retirement. Debra O’Connell, recently-promoted Disney Entertainment News Group and Networks President, has stepped in to guide the unit.

Fox News Digital reported that Godwin said she was “certain” the decision to retire from journalism was “the right one for me as I look to the future and prioritize what’s most important to me and my family.” There had reportedly been feelings of frustration with her leadership approach held by some at ABC News prior to the latest developments.

ABC NEWS PRESIDENT KIM GODWIN STEPS DOWN AFTER REPORTS OF TURMOIL AT THE NETWORK

ABC News falls under Disney’s linear networks business. The overall unit, which faces ongoing challenges, brought in $2.8 billion in revenue and $1.24 billion in operating income in the first quarter, marking year-over-year decreases of 12% and 7%, respectively.

Streaming Business

Disney+

Disney is aiming to earn a profit from its streaming business, and the most recent progress it has made toward that goal will likely be announced later in the morning.

Its streaming business consists of Disney+, Hulu and ESPN+. Those platforms had 224.5 million collective direct-to-consumer subscribers around the world at the end of the first quarter.

Some of its initiatives to reach profitability include getting stricter about password-sharing overall and rolling out the “Hulu on Disney+” feature on its namesake streaming platform. The latter became available to people in the U.S. with Disney Bundles in late March.

For the password-sharing crackdown, Disney+ users can expect to get “new capabilities to allow their borrowers to start their own subscriptions” this summer, CFO Hugh Johnston said in early February. That will be followed “later this calendar year” by giving account owners the ability to pay an extra charge for people outside their households to stream with their subscriptions.

DISNEY ADDING CHANNELS TO DISNEY+? COMPANY CALLS REPORT ‘SPECULATIVE’

In its research note, Wells Fargo estimated Disney will see its Disney+ Core subscriber count go up by 4 million net additions in both fiscal 2025 and 2026, higher than it previously predicted due to the initiative.

“Additionally, we’ve analyzed churn benefits from the Hulu tile w/in Disney+ and think this could add nearly $400mm in add’l OI,” the note said.

Johnston said in February that Disney has “never been more confident about our path to creating a strong and sustainable streaming business with growing subscribers over the long-term and ultimately, double-digit operating margins.”

Disney’s combined streaming business notched $6.075 billion in revenue in the first quarter. Its operating loss, meanwhile, went down 79%, becoming just $216 million.

Fox News Digital’s Lindsay Kornick and Hanna Panreck contributed to this report.

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