Dow Jones entertainment giant Disney cleared estimates for Q1 2025 results early Wednesday. DIS stock edged higher, near a possible buy point, as streaming profitability improved. Elsewhere, Disney recently announced a sports streaming deal with FuboTV.
Disney reported a 44% increase in earnings to $1.76 per share adjusted, marking its fourth straight quarter of accelerating earnings growth. Revenue rose 5% to $24.69 billion.
FactSet analysts expected earnings of $1.45 per share on $24.67 billion in revenue.
Disney's entertainment revenue grew 9% to $10.87 billion. Sports revenue held steady around $4.85 billion. Revenue for the experience segment rose 3% to $9.42 billion, which included some impacts from hurricanes during the quarter.
Disney's streaming business, its direct-to-consumer entertainment segment, saw revenue increase 9% for the quarter to $6 billion, driven by higher pricing. The company's streaming operating profit improved to $293 million from a loss of $138 million last year
The number of total Disney+ subscribers ticked down 1% to 124.6 million. Hulu subscribers rose 3% to 53.6 million. The number of ESPN+ subscribers declined 3% to 24.9 million. Meanwhile, the average monthly price for a Disney+ membership increased 5% to $7.55, while the average price for a Hulu + Live TV subscription rose 4% to $99.22 per month. The average price for a monthly ESPN+ subscription increased 7% to $6.36.
Cord-cutting continues to weigh on Disney's legacy TV business, as linear networks revenue fell 7% to $2.62 billion.
For the second quarter, Disney expects a modest decline in Disney+ subscribers compared to Q1.
The Dow Jones company guided high single-digit EPS growth for 2025. Disney sees double-digit operating income growth for its entertainment business for the year, with a 13% increase in sports operating income. The company forecast called for 6% to 8% growth in experience operating income.
Fubo Deal, Venu Sports Scrapped
Elsewhere, Disney, Fox and Warner Bros. Discovery in January scrapped plans for their joint streaming venture, Venu Sports. The announcement came after Disney and sports streaming provider FuboTV reached a deal to merge certain operations of Disney into Fubo.
Per the agreement, Disney will combine its Hulu + Live TV business with Fubo and will own 70% of the combined company. However, the business will operate under publicly traded Fubo. The current Fubo management team, including CEO David Gandler, will continue to lead it.
Fubo and Hulu + Live TV have a combined 6.2 million subscribers in North America, according to Disney. Fubo plans to create a new sports and broadcasting service, which will feature Disney's networks including ABC, SECN, ACCN, and its various ESPN properties. The companies did not mention an expected launch date or potential pricing plans.
Meanwhile, Hulu + Live TV and Fubo will remain available to customers as separate offerings. Disney's bundle for Hulu, Disney+ and ESPN+ will also remain available.
As part of the deal, Fubo settled all litigation with Disney and ESPN related to Venu Sports. Disney, Fox and Warner Bros. agreed to make a $220 million cash payment to Fubo, while Disney also committed to providing a $145 million term loan to Fubo in 2026. The Disney and Fubo deal also includes a $130 million breakup fee payable to Fubo under certain circumstances, such as if the transaction doesn't close due to failing to obtain regulatory approvals.
The companies expect the deal to close within 12 to 18 months from the initial announcement, Variety reported.
Motion Picture Association Takes On Piracy
Elsewhere, the Motion Picture Association, which is comprised of industry leaders including Disney, Netflix, Sony Pictures, Comcast's Universal, Amazon MGM Studios and Warner Bros., backed a new bill aimed to crack down on foreign-run piracy sites. Rep. Zoe Lofgren, D-Calif., introduced the Foreign Anti-Digital Piracy Act (FADPA) on Jan. 28, which allows copyright owners to file lawsuits and preliminary orders against foreign sites or services that engage in copyright infringement.
The court would then conduct risk assessments into whether the order would violate constitutional rights or significantly burden U.S. internet service providers. If the court is satisfied with the claims and risk assessment, it will issue a blocking order and force ISPs to deny access to the piracy sites.
Digital piracy is a growing issue in the U.S. By 2022, global visits to movie and TV piracy sites reached 191.8 billion, which cost the U.S. economy $29.2 billion annually and threatens more than 230,000 U.S. jobs in entertainment, technology and small businesses, according to the bill text. One unnamed piracy site in October 2024 hit 364 million visits during the month, which beat out Disney+ viewership. Meanwhile, live sport piracy drains about $28 billion annually from the global sports industry.
Disney Stock
DIS stock eased 1.4% early Wednesday. Shares on Tuesday fell 0.6% to 113.30, back toward the 50-day line.
Disney is working on a 118.63 buy point for a large cup-with-handle base stretching back to April.
Shares are holding support above their 50-day line after bouncing above that level at the end of January.
Investors could use a strong move from the 50-day line, clearing last week's high of 115.18, as an early entry.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
