Disney Booms Back to Where It Started

Disney’s theme-park business came roaring back, with revenue from both domestic and international parks more than doubling year over year and coming in well above analysts’ targets.

Photo: Joseph Prezioso/Zuma Press

Updated Feb. 9, 2022 6:24 pm ET

It’s a good sign when Disney’s DIS 3.33% stream no longer has to float the ship.

That stream, specifically Disney+, was one of the few bright spots in the entertainment giant’s business during the heart of the pandemic until the streaming service hit some speed bumps. A disappointing number of new subscribers for the company’s fiscal fourth quarter ended Oct. 2 came as other key businesses like theme parks were still working their way out of the pandemic’s hole. Disney’s share price slumped nearly 16% between the fourth-quarter results in early November and the latest results announced Wednesday afternoon.

The latest report was much better all around. The company added 11.7 million paying subscribers to Disney+ during the December quarter—far above the 6.6 million Wall Street expected, according to FactSet. But the theme-park business came roaring back as well, with revenue from both domestic and international parks more than doubling year over year and coming in well above analysts’ targets. The result: overall company revenue of $21.8 billion and operating earnings of nearly $3.3 billion—both well ahead of analysts’ estimates and nearly on par with the same quarter two years ago, before the global outbreak. Disney’s share price jumped 8% after hours following the results Wednesday.

Disney’s improved bottom line is important, since the streaming business still generates losses and is expected to do so for at least the next couple of years. The performance of the parks business is especially impressive given the resurgence of Covid-19 during the quarter. Theme-park revenue and operating margins were on par with the segment’s pre-pandemic levels. And much came from enhancements that visitors seem willing to pay extra for; Disney Chief Executive Bob Chapek said on the company’s call Wednesday that actual park attendance was lower than 2019 levels.

The launch of Disney+ has brought a bit of magic to a company whose stock had taken a nosedive after the coronavirus shut down theme parks and movie theaters. WSJ explains how Disney’s streaming platform has become a top competitor in an already crowded field. Photo illustration: Jacob Reynolds/WSJ

Streaming is still key to Disney’s outlook, and the company on Wednesday reiterated its prior warning that growth there will not be “linear.” Disney will also have to keep navigating the minefield of balancing between theatrical releases and streaming content. The booming success of Sony’s “Spider-Man: No Way Home” during the quarter seems to have convinced Disney to at least keep its Marvel movies on a theatrical track. Mr. Chapek confirmed Wednesday that the next “Dr. Strange” movie will go to theaters in the summer. But he noted that the movie audience hasn’t come back for many other genres, adding, “We do not subscribe to the belief that theatrical distribution is the only way to build a Disney franchise.” Fortunately, Disney’s fans still seem willing to show up somewhere.