Disney Earnings Rise on 'Toy Story 5' Success, Theme Park Growth

Walt Disney Co. reported a significant boost in earnings for the June quarter, largely driven by the success of "Toy Story 5," which fueled merchandise sales, streaming engagement, and theme park attendance. Shares of the company saw a 3% increase in morning trading following the announcement.

CEO Josh D’Amaro, who assumed leadership in March, emphasized his strategy of leveraging popular franchises like "Toy Story" to engage audiences beyond traditional theatrical releases. This approach was detailed in a recent letter to shareholders.

In a notable development, Disney and TikTok have agreed to a partnership that will permit TikTok creators to incorporate characters and scenes from Disney's film and television properties into their short-form videos. This marks the first such collaboration between the social media platform and a major traditional media company.

Disney reported total revenue of $25.2 billion for the quarter, a 7% increase compared to the previous year, though this figure slightly missed Wall Street's forecast of $25.4 billion. However, the company's adjusted earnings per share rose 28% year-over-year to $2.06, surpassing analyst expectations of $1.86 per share.

The company also announced its intention to sell its 50% stake in A+E Global Media to co-owner Hearst Corp., anticipating approximately $1.2 billion in cash proceeds. These funds are earmarked for share repurchases, increasing the total planned for fiscal year 2026 to at least $9 billion.

Performance by Division

The Entertainment group, which includes film and streaming, generated $11.3 billion in revenue, a 6% increase from the prior year. This growth was partly attributed to the strong performance of "Toy Story" and a 15% rise in subscription fees for Disney+ and Hulu. Segment operating income for Entertainment saw a substantial jump of 64%, reaching nearly $1.7 billion.

Disney's Parks and Experiences division reported nearly $10 billion in revenue, up 10% year-over-year. This increase was supported by a 4% rise in global theme park attendance and a 3% gain at its domestic parks. Operating income for this segment grew by 20% to $3 billion, partly benefiting from a $100 million tariff refund received during the quarter following a Supreme Court ruling that invalidated certain global tariffs. This performance contrasts with concerns raised by analysts regarding softening attendance trends at Universal theme parks.

Conversely, the Sports division reported $4.5 billion in revenue. However, operating income fell 17% to $858 million, impacted by lower-than-anticipated contributions from the early rounds of the NBA playoffs.

Future Outlook

Looking ahead, Disney projects fourth-quarter segment operating income of $4.9 billion, with continued healthy growth anticipated in its parks division. The company noted that the weaker-than-expected box office performance of the live-action adaptation of "Moana" would have an impact on the entertainment segment's results.