How Disney Cut $1 Billion of Losses From Its Streaming Business
There aren't many instances in which Wall Street would celebrate Walt Disney (NYSE: DIS) posting a $400 million loss, but investors just witnessed one of them. The entertainment giant announced in early November that its direct-to-consumer segment, home to the Disney+ streaming service, slashed its operating losses to $400 million from $1.4 billion in the fiscal fourth quarter.
The savings helped cash flow rise this fiscal year to its highest level in five years. Management has aggressive plans for continued cuts ahead, too. The good news is that Disney didn't rely solely on reduced content spending to arrive at that much stronger earnings profile. Let's look at the main factors pointing to an end to losses ahead for this core business unit.
The biggest lift arrived on the growth side. Disney added 7 million subscribers to its streaming base, mainly from international markets. That expansion came along with rising average revenue per user both in the U.S. and outside of the country. Stronger advertising revenue helped push that metric higher, and so did increased prices. Together, those trends pushed sales higher by 13% year over year in the Q4 period that ran through late September.
Source Fool.com
