Disney shares declined 8% following Q4 revenue of $22.46 billion, which missed analyst estimates, and a warning regarding a protracted distribution dispute with YouTube TV. The company reported a 6% drop in entertainment revenue, primarily due to a 21% decline in linear network revenue and lower advertising, though its direct-to-consumer operating income surged 39%, partially offsetting these challenges. The ongoing carriage disagreement underscores the pressures on legacy media distribution as Disney navigates content value in the streaming era.
Disney shares plunged 8% after reporting fiscal Q4 revenue of $22.46 billion, which missed analyst expectations of $22.75 billion, despite adjusted EPS of $1.11 surpassing the $1.05 forecast. This market reaction highlights investor concern over top-line growth and the ongoing challenges in its legacy businesses. Entertainment revenue declined 6% year-over-year, primarily driven by a 21% drop in linear network revenue due to lower advertising rates and viewership. Conversely, the direct-to-consumer (DTC) unit's operating income surged 39%, partially offsetting the 35% decline in overall entertainment operating income, with Disney+ and Hulu reaching 196 million subscribers. The protracted distribution dispute with YouTube TV, which led to millions losing access to Disney channels, presents a significant near-term headwind. CFO Hugh Johnston indicated negotiations could be prolonged, while CEO Bob Iger emphasized the necessity of a deal reflecting Disney's content value, underscoring increasing friction in content distribution.
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