Disney Will Cut $2 Billion From Costs in 2024, Focus on Growing Disney+ and Hulu

The Walt Disney Co. said Wednesday it would cut $2 billion from its planned spending over the next year amid plans to finally make its streaming offerings — including Disney+ and Hulu — turn a profit by the end of 2024.

The company added seven million new core Disney+ subscribers from the previous quarter, driving its total subscriber count to more than 150 million, after accounting for Hostar users. Disney also narrowed its losses on streaming by 70%, reporting a loss of $420 million compared to $1.4 billion.

The entertainment giant said its primary focus will be to grow its direct-to-consumer offerings through a series of new bundles and offerings across its platforms. Disney last week said it would pay at least $8.61 to Comcast to purchase its 33% stake in the company, giving it complete ownership.

Disney CEO Bob Iger told investors the company will begin testing an app next month that will combine Disney+ and Hulu into a single experience with a planned launch in spring 2024; Disney expects that combining both streaming services into one experience will increase engagement, generate greater ad revenue and reduce customer acquisition costs.

“We are bullish about the future of our streaming business,” Iger said.

Disney has been looking to find minority partners to acquire a stake in ESPN, as the company prepares to transform the pre-eminent sports platform primarily into a streaming service. While Iger said that there was "serious interest" in partnering with Disney on turning ESPN into a direct-to-consumer platform, he declined to name any potential partners.

He added that the platform is targeted to launch on streaming in 2025.

"As we transition ESPN to a streaming future, and more fully integrate general entertainment content into Disney Plus, we will have a [direct-to-consumer] offering unlike any other in the industry," Iger said.

Disney reported revenue of $21.2 billion, narrowly missing analysts' expectations of $21.3 billion, according to estimates compiled by Refinitiv. Although a slight loss, this marks the second consecutive time that Disney has missed expectations on revenue and its first consecutive revenue miss since 2018.

The larger advertising revenue miss was partially due to a decrease in ad revenue from ABC Network and other television stations, which suffered from low political advertising revenue. Disney has reportedly explored options to sell ABC to buyers such as Nexstar Media Group, the largest owner of television stations in the country.

The company is also "aggressively managing its cost base" and is planning to cost $2 billion more in costs than it had previously said; in February, the company cut 7,000 positions as part of a $5.5 billion cost reduction plan. That efficiency target has now grown to $7.5 billion, Disney said.

The company's theme parks and experiences division — which also includes Disney's cruise line and vacation clubs — grew 30% for the division year-over-year, largely due to gains from its international theme parks and cruises. However, Disney said that revenue for Walt Disney World in Florida was weaker.

Disney also reported earnings per share of 82 cents, above analysts’ expectations of 67 cents per share, according to estimates compiled by Morningstar.

Disney stock climbed more than 3% in after-hours trading after its earnings were released.