Shares of The Walt Disney Co. rose in extended trading after its management said capital spending and outlays for movies and TV shows are coming in lower than projected.
Disney expects content spending this year to total about $27 billion, mainly due to production cuts tied to writer and actor strikes in Hollywood. Disney also forecasts capital spending of $5 billion, lower than projected previously, as the company shifts the timing of some projects.
For the quarter, Disney's sales rose 3.8 percent to $22.3 billion, but missed expectations, while EPS of $1.03 beat the $0.99 consensus projection.
Disney’s online video operation cut its loss to $512 million from more than $1 billion a year ago. Just three months ago, management predicted the direct-to-consumer business would lose more than $750 million in the quarter. Chief Executive Officer Bob Iger also told investors that the company will crack down on password sharing, echoing the recent effort from rival Netflix Inc. that has boosted subscriber numbers.
Additionally, the company will raise the price of its streaming service, including a 27 percent hike for the ad-free version of Disney+.
It’s the second price increase for Disney+ in less than a year — and underscores the company’s drive to make its streaming business profitable by September 2024. The lowest-priced plans, Disney+ and Hulu with ads, will remain at $8 a month.
As part of the changes, Disney introduced an ad-free version of Disney-Hulu bundle priced at $20 a month. An ad-free version of a bundle with Disney+, Hulu and ESPN+is increasing to $25 monthly from $20, while a subscription to that package with ads will rise to $15 monthly from $13.
Rival Netflix Inc. charges $15.50 a month for its ad-free service, while Warner Bros. Discovery Inc. prices the Max service at $16.
(With Inputs From Agencies.)
