Disney's Q1 Earnings: Theme Parks and Streaming Drive Revenue Growth, But Linear TV Weakness Weighs on Profits

The Walt Disney Company kicked off its fiscal year with a mixed financial performance, showcasing the ongoing transformation of the entertainment giant. While its theme parks and streaming platforms delivered robust growth, persistent struggles in its linear television networks dragged down profitability.

For the quarter ended December 2024, Disney's revenue climbed 5% year-over-year to $26 billion, slightly ahead of analyst expectations. The company's Experiences segment, encompassing its global parks, resorts, and cruise lines, was a standout performer, posting record revenue of $10.01 billion. Meanwhile, its combined streaming services—Disney+ and Hulu—saw revenue jump 11% to $5.35 billion, buoyed by recent price increases and subscriber growth.

Yet, the bottom line told a different story. Operating income declined 9% to $4.6 billion. The decline was primarily attributed to the continued erosion of its linear TV business (which includes ABC and cable channels), a costly carriage dispute with YouTube TV, and higher programming and sports rights costs. Net income settled at $2.4 billion, down from $2.6 billion a year ago.

"Our results this quarter reflect the strategic pivot we've undertaken," said CEO Bob Iger in a statement. "We are navigating a period of transition, managing legacy challenges while aggressively investing in our direct-to-consumer and experiences businesses, which are our engines for future growth."

Segment Breakdown:

• Entertainment: Revenue rose 7% to $11.61 billion, but operating profit plummeted 35% to $1.1 billion. Theatrical releases like "Zootopia 2" and "Avatar: Fire and Ash" boosted content sales, but these gains were offset by the linear TV slump and increased streaming investment costs.
• Sports (ESPN): Revenue was nearly flat at $4.91 billion, but operating profit fell 23% to $191 million, pressured by soaring rights fees. The segment did see a 10% rise in advertising revenue.
• Experiences: The clear bright spot, with both revenue and operating profit up 6%, driven by increased attendance, guest spending, and the successful launches of new cruise ships, the Disney Treasure and Disney Destiny.

Looking ahead, Disney reaffirmed its expectation for double-digit adjusted earnings per share growth for the full fiscal year 2026. The company also remains on track to merge Disney+ and Hulu into a single app later this year and recently bolstered ESPN's offerings through a key acquisition of NFL media assets.

Reader Reactions:

Michael R., Media Analyst in New York: "The 5% revenue growth is solid, but the 9% drop in operating income is the real headline. It underscores how difficult and expensive it is to manage this dual transition—away from cable bundles and toward streaming profitability—while still feeding the content beast. The parks are carrying a lot of weight right now."

Sarah Chen, Theme Park Enthusiast from Orlando: "As a longtime passholder, I'm thrilled to see the parks performing so well. The new investments in cruise ships and lands like World of Frozen are exactly what fans want. This part of the business feels innovative and healthy, which is reassuring."

David L., Former Cable Executive (Sharply Critical): "This is a company in denial about the scale of its linear TV meltdown. They're touting streaming 'profitability' that's still minuscule after burning billions, while the cash cow that built the empire is bleeding out. Iger's successor will inherit a mess—the magic is fading, replaced by financial engineering and hope."

Priya V., Streaming Subscriber in London: "The upcoming merger of Disney+ and Hulu makes sense for usability, but I'm wary of the constant price hikes. The value proposition needs to be clear if they want to keep subscribers like me from churning every other month."