Disney Defies Downturn Fears

Walt Disney defied expectations in the second quarter with a stronger-than-expected profit performance, buoyed by a rebound in its US theme park business that helped offset continued weakness at its traditional television networks.

The entertainment group reported net income of $5.3bn for the three months to the end of June, significantly ahead of Wall Street’s forecast of $2.3bn. That figure was boosted by a one-off $3.3bn tax benefit. Adjusted earnings per share rose 16% year-on-year to $1.61, beating analysts’ consensus estimate of $1.44.

The standout performer was Disney’s domestic parks division. Despite ongoing concerns about a slowdown in US consumer spending, visitor numbers and in-park spending remained resilient. Operating income from Disney’s US resorts and cruise lines climbed 22% to $1.7bn, as holidaymakers continued to prioritise experience-led spending.

“Consumers generally these days are willing to pay for value,” said chief financial officer Hugh Johnston. “Our consumer still sees, especially with the investments we’ve been making with parks and cruise ships, a tremendous amount of value.”

The results provided a much-needed boost to Disney’s broader financial outlook, with the company slightly raising its full-year profit guidance.

That optimism stands in sharp contrast to the group’s television networks, which continue to suffer from the accelerating shift away from linear TV. Revenue from traditional networks such as ABC and the Disney Channel fell 15% to $2.3bn.

“To be down double digits is not surprising,” Johnston added. “The shift from linear to direct-to-consumer continues.”

Disney’s streaming operations saw modest improvement. Revenues from services including Disney+ and Hulu rose 6% to $6.2bn, while operating income in the segment reached $346mn. Disney+ added 1.8mn subscribers over the quarter, pushing the total to 128mn globally.

Nevertheless, investor reaction was muted. Disney’s shares dropped more than 3% in early Wednesday trading, reducing the stock’s year-to-date gain to just 2.4%.

The company also confirmed a key strategic move for its sports business, announcing it would sell a 10% stake in ESPN to the National Football League. The investment comes ahead of a planned streaming launch for ESPN later this month, a high-stakes move as Disney seeks to capture younger, digital-first audiences and monetise premium sports content more effectively.

Chief executive Bob Iger said he was “pleased with our creative success and financial performance”, pointing to a stabilising balance between legacy assets and growth platforms.

Still, Disney’s path forward is not without challenges. Advertising across both traditional and streaming platforms remains subdued, international park performance is uneven, and macroeconomic uncertainty continues to loom over the broader consumer sector.

But the resilience of its core US parks — and early signs of traction in streaming — suggest Disney may be better placed than many of its media peers to navigate the structural changes underway in the entertainment industry.