Media, Entertainment, Parks, and Experiences

The Walt Disney Co. (DIS) is a diversified global entertainment company that operates theme parks, resorts, cruise lines, broadcast television networks, and related products. It’s a favorite blue-chip dividend-paying stock for many investors. The company also produces live entertainment events and produces and streams a broad array of film and TV entertainment content through its new digital content streaming services.

Disney faces an unusually large number of competitors, including Paramount Global (PARA), Comcast Corp. (CMCSA), Sony Group Corp. (SONY), AT&T Inc. (T), Netflix Inc. (NFLX), Apple Inc. (AAPL), and Amazon.com Inc. (AMZN); and smaller niche rivals, including theme park and resort companies Six Flags Entertainment Corp. (SIX), SeaWorld Entertainment Inc. (SEAS), and Hilton Worldwide Holdings Inc. (HLT).

Disney’s Financials

In early February 2024, Disney announced February financial results for the first quarter (Q1) of the fiscal year (FY), the three-month period ended Dec. 30, 2023. The company posted net income of $2.15 billion, almost up 58% to Q1 2022. Revenue rose less than 1% year over year (YOY) to $23.55 billion. Disney uses operating income as the profit metric for its individual business segments. Segment operating income rose 27% to $3.88 billion in fiscal Q1.

In its earnings report, Disney highlighted the adverse impacts of the COVID-19 pandemic since early 2020. Its Parks, Experiences and Products segment has been affected the most by those impacts. Disney was forced to close theme parks and resorts and suspend cruise ship sailings and guided tours. However, beginning in May 2020, the company has gradually reopened its theme parks, albeit at reduced capacity. Disney’s domestic parks and experiences are now generally operating without significant mandatory capacity restrictions. Its cruises and guided tours also have begun to return to service. Disruptions to film and TV production also have contributed to less content for its media and entertainment business.

Disney’s Business Segments

Starting in fiscal 2023, Disney reorganized its reportable business segments. The company now operates through three main business segments: Entertainment, Sports and Experiences (renamed from Disney Parks, Experiences and Products). The first of these segments, which is composed of Disney’s media and entertainment businesses, is further separated into three components: Linear Networks; Direct-to-Consumer; and Content Sales/Licensing and Other. Disney provides a breakdown of revenue and operating income for each of these segments. Prior to this change, the company operated through two primary business segments: Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products (DPEP).

Entertainment: Linear Networks

Disney’s Linear Networks segment operates a long list of properties, including domestic and international cable networks such as Disney, ESPN, and National Geographic; ABC broadcast television network and eight domestic television stations; and a 50% equity investment in A+E Television Networks.

The Linear Networks segment posted revenue of $2.8 billion in Q1 FY 2024, only slightly lower than revenue in the YOY quarter. Operating income fell 7% YOY to $1.2 billion. The segment accounts for about 28% of total revenue and carries total operating income.

Entertainment: Direct-to-Consumer

Disney’s Direct-to-Consumer (DTC) segment is composed of its various streaming services, including Disney+; Disney+ Hotstar; ESPN+; Hulu; and Star+.

The DTC segment posted revenue of $5.55 billion in Q1 FY 2024, up 15% from the same three-month period a year ago. The segment reported an operating loss of $138 million, widening from the operating loss of $984 million reported in the year-ago quarter. The DTC segment accounts for 55.57% of total revenue.

Entertainment: Content Sales/Licensing and Other

Disney’s Content Sales/Licensing and Other segment sells film and television content to third-party TV and subscription video-on-demand (VOD) services. The segment also includes the following operations: theatrical distribution; home entertainment distribution, such as DVD and Blu-ray; music distribution; staging and licensing of live entertainment events on Broadway and around the world; post-production services through Industrial Light & Magic and Skywalker Sound; and a 30% ownership interest in Tata Sky Ltd., an India-based operator of a direct-to-home satellite distribution platform.

The Content Sales/Licensing and Other segment posted revenue of $1.63 billion in Q1 FY 2024, down 38% from the year-ago quarter. The segment reported an operating loss of $224 million, a significant deterioration from operating loss of $1 million posted in the year-ago quarter. The Content Sales/Licensing and Other segment accounts for 16% of total revenue.

Experiences

Disney’s Experiences segment is composed of theme parks and resorts in Florida, California, Hawaii, Paris, Hong Kong, and Shanghai. It also includes a cruise line and vacation club. Revenue comes mainly from selling theme park admissions, food, beverages, various merchandise, resort and vacation stays, and royalties from licensing intellectual properties.

The Experiences segment reported revenue of $9.13 billion in Q1 FY 2024, rising 6.87% from the year-ago quarter. The segment posted operating income of $3.1 billion, an 8% increase YOY. The segment accounts for about 39% of Disney’s total revenue and about 80% of total operating income.

A note to readers: The segment revenue and operating income figures in the breakdowns above and in the pie charts do include intersegment transactions.

Disney’s Recent Developments

On Feb. 15, 2022, Reuters reported that Disney has appointed one of the company’s executives to lead its metaverse strategy. Chief Executive Officer (CEO) Bob Chapek appointed Mike White, an executive in the company’s Media and Entertainment Distribution group, to take up the new role of senior vice president of Next Generation Storytelling and Consumer Experiences. In his new role, White will be in charge of designing the consumer experience of Disney’s forthcoming metaverse.

In Disney’s fiscal Q1 earnings report released on Feb. 7, 2024, the company discussed the performance of its DTC business. Total subscriptions across Disney+ and Hulu rose less than 1% YOY to 199.3 million subscribers. Disney+ finished the quarter with 149.6 million subscribers, up less than 1% YOY.

On Jan. 19, 2022, Disney announced that it was creating a new hub for international content creation to support the expansion of its streaming services business. The company appointed Rebecca Campbell as chairperson of International Content and Operations to lead the new content creation hub. Under her newly expanded role, Campbell will focus on local and regional content production for the company’s streaming services and continue to oversee its global international media teams.

How Disney Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Disney and its commitment to diversity, inclusiveness, and social responsibility. We examined the data that Disney releases to show you how it reports the diversity of its board and workforce, to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Disney discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a . It also shows whether Disney breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.