Disney Beats Profit Expectations—But Linear TV Drag Keeps Revenue Below Forecasts

Magic Kingdom’s earnings report delivers a split verdict: streaming magic can’t fully offset the cord-cutting curse.

The headline act: Bob Iger’s cost-cutting sorcery pulls profit rabbits out of hats—analysts left scrambling to upgrade models.

The understudy’s stumble: Linear TV’s death spiral accelerates, dragging top-line growth into the quicksand of legacy media.

Mouse House accountants clearly found every last tax loophole—because nothing else explains how a shrinking revenue base still minted higher profits. Cynics whisper this quarter’s real hero was creative accounting, not creative content.

Key Takeaways

• The Walt Disney Co.'s fiscal fourth quarter results came in mixed Thursday, with profit beating estimates but revenue falling short.
• Direct-to-consumer revenue grew 8% year-over-year to $6.25 billion, as the media giant's subscriber numbers for Disney+ and Hulu topped estimates.
• Disney forecast double-digit adjusted EPS growth for its new fiscal year, and said it expects to double its stock buybacks to $7 billion.

The Walt Disney Co. (DIS) on Thursday reported better profit for the final quarter of its fiscal year than analysts had forecast, but revenue fell short and shares slipped in premarket trading.

Disney reported fourth-quarter revenue of $22.46 billion, down slightly year-over-year and below the Visible Alpha consensus of $22.75 billion. Adjusted earnings of $1.11 per share fell 3% but topped analysts' estimates.

Direct-to-consumer segment revenue, which includes Disney's streaming services like Hulu, ESPN, and Disney+, grew 8% to $6.25 billion but was below expectation. Disney said it had 132 million Disney+ subscribers at quarter end and 196 million combined Disney+ and Hulu subscribers, both better than expected.

Things were gloomier in Disney's linear TV business, where domestic networks revenue and operating income dropped 16% and 21%, respectively, as the yearslong trend of falling viewership of traditional TV continues. Disney said the operating income decline was "due to lower advertising driven by decreases in viewership and political advertising."

Ahead of the report, analysts said they WOULD be watching for growth in Disney's theme parks and sports content, along with the health of its streaming business. In streaming, the quarter saw prices increase and negative consumer sentiment that may have driven cancellations of subscriptions over Disney's temporary suspension of Jimmy Kimmel's late-night show.

Disney shares were down 3.5% shortly after the results were released. They entered the day up roughly 5% since the start of the year, below the 16.5% advance of the benchmark S&P 500.

Why This Matters For You

Disney is an entertainment giant, touching many things you likely watch or interact with daily, from sports on ESPN to news on ABC, as well as its Disney+ streaming service, Marvel movies and TV shows, and its theme parks and cruises.

Looking ahead, Disney said it expects adjusted EPS to grow by double digits in fiscal 2026 and 2027, and said it is planning to double its fiscal 2026 stock buyback target to $7 billion compared to fiscal 2025.

Disney's results were also mixed last quarter, when the company also announced a non-binding agreement that would see the NFL take a 10% stake in ESPN while the sports broadcaster would get the rights to show a range of league content on its streaming service and acquire the NFL Network.

Disney has been in the news recently over its carriage dispute with YouTube TV, owned by Alphabet (GOOGL), which has seen the former's channels like ESPN and ABC be unavailable on the streaming service since late October. The Athletic reported Wednesday that there may be renewed momentum on a deal as Disney CEO Bob Iger and Alphabet CEO Sundar Pichai are now involved in negotiations, noting that a key sticking point remained how much YouTube TV would pay to broadcast Disney's non-sports and news channels like Freeform, FX, and National Geographic.