Walt Disney Co soothed fears about the future of streaming television by adding 7.9 million new Disney+ subscribers, though the firm warned that supply chain interruptions and rising salaries could put financial strain on the company.

From January to March, Wall Street expected 5.3 million additional Disney+ subscribers. Disney still has a long way to go to meet its long-term goals, but its expansion comforted investors following Netflix Inc’s losses.

On a conference call with analysts, officials said the company is working to combat inflationary pressures and issues in the global supply chain.

“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,” said Chief Financial Officer Christine McCarthy.

After initially rising after the results announcement, the company’s stock fell 3 per cent in after-hours trade following the call.

To meet the low end of their goal of 230 million to 260 million Disney+ members by the end of September 2024, Disney needs to gain about 9.1 million new consumers per quarter on average. On Wednesday, Chief Executive Bob Chapek reaffirmed that goal.

The world’s largest entertainment firm is betting its future on establishing a streaming TV business to compete with Netflix, the company that popularised subscription video in the first place.

Last month, Netflix alarmed Wall Street when it revealed it had lost subscribers in the first three months of 2022 and predicted additional losses through June. continue reading

The Netflix results dragged down media companies and caused investors to rethink their expectations for internet video.

The firm said Wednesday that total subscriptions for Disney+, which started in November 2019, had reached 137.7 million, thanks to new releases such as Marvel’s “Moon Knight” series and Pixar’s “Turning Red.”

“In spite of less-than-optimal results overall, because of the positive streaming numbers, Disney will do well,” said Shahid Khan, partner at Arthur D. Little, a technology and management consulting firm. “As households rationalize their streaming choices, given the inflation, Disney+ will become one of the top choices and will become a real threat to Netflix.”

According to IBES statistics from Refinitiv, Disney posted adjusted profits per share of $1.08, missing analyst expectations of $1.19, due to a rise in the effective tax rate on overseas earnings.

Revenue came in at $19.2 billion, missing the consensus forecast of $20.03 billion. Early termination of a film and television licencing agreement so that Disney may use the programming on its own streaming services cost the firm $1 billion in income.

Following protracted pandemic-related closures and visitor limitations, Disney’s theme park industry continues to improve strongly.

The parks division’s operating income was $3.7 billion, up 50 per cent from the previous year.

Closures of Asian theme parks due to COVID-19, however, might impact operating profits by much to $350 million in the fiscal third quarter, according to the business.

(Adapted from Businessbucks.com)