Disney drama stays off the books

Disney drama stays off the books

The getaway pays off for Disney,

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although the entertainment giant itself cannot completely free itself from the world it inhabits.

Disney’s second-quarter fiscal results released Wednesday afternoon beat Wall Street estimates in key business areas such as streaming, national theme parks and television advertising. Revenue for the second fiscal quarter ended April 2 increased 23% year-over-year to $19.3 billion, and operating profit jumped 50% to $3.7 billion. dollars. The company added 7.9 million subscribers to its Disney+ streaming service, 52% more than analysts expected, while domestic theme park revenue of $4.9 billion nearly matched the pre-pandemic peak for this segment.

A solid report, in other words, especially given the cloud that has gathered over streaming activity in general after Netflix NFLX -6.35%

surprised investors last month with a drop in paid subscribers for the same quarter. That suggested a possible cap for streaming services, with the market leader now boasting around 222 million subscribers worldwide. But on Wednesday, Disney stuck to its plan to surpass that number for the Disney+ service by the end of its 2024 fiscal year.

However, getting there will not be a straight line. Chief Financial Officer Christine McCarthy said on Wednesday night’s call that the company still expects second-half subscriber additions to exceed the number added in the first half, but she suggested the difference wouldn’t be as high given the strength of the recent additions. The company also warned that closures of its theme parks in Asia due to the Covid-19 outbreaks could reduce operating profit in the third quarter. Disney’s stock price, which initially rose 3% after the results, fell 3% on the after-hours trading call.

Disney’s much larger national theme park business was the real bright spot, with operating profit of nearly $1.4 billion, close to pre-pandemic levels and beating Wall Street forecasts by 18%. But that venture also put Disney Square in the middle of America’s culture war. The company’s belated opposition to Florida’s “Don’t Say Gay” law prompted that state’s legislature to vote to kill off Disney’s special tax district, leaving open the question of who might be responsible for nearly a billion dollars in municipal bonds.

Disney avoided that topic on Wednesday’s call, and no analysts spoke about it. But the politics of what is effectively Disney’s second home is also troubling the company internally, with some now protesting the company’s plan to move about 2,000 theme park division employees to Florida. It created further controversy for chief executive Bob Chapek, who was already facing the dual challenge of inheriting control of the company at the start of the pandemic while filling the shoes of a widely admired predecessor.

Even the happiest place on earth doesn’t seem to make everyone happy.

Write to Dan Gallagher at dan.gallagher@wsj.com

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