The Walt Disney Company On Track to Meet $7.5 Billion in Overall Cost Reductions by End of Fiscal 2024, $2 Billion More Than Originally Targeted

Brit Tuttle

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The Walt Disney Company On Track to Meet $7.5 Billion in Overall Cost Reductions by End of Fiscal 2024, $2 Billion More Than Originally Targeted

During today’s Q4 2023 and fiscal 2023 earnings report from The Walt Disney Company, CEO Bob Iger shared a look at the company’s overall financial gains from the previous quarter and year-over-year update.

The Walt Disney Company Q4 2023 and Fiscal Year 2023 Update

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According to the Q4 2023 and fiscal 2023 earnings report from The Walt Disney Company, revenues for the quarter and year respectively increased by 5 percent and 7 percent when compared to the prior year. Higher attendance at Shanghai Disney Resort and Hong Kong Disneyland offset a decline in advertising revenue at ABC, according to Reuters.

Looking at the year-over-year results, Q4 2024 revenue ended at $21.2 billion, up $1 billion from 2022. For the full year, revenue for fiscal year 2023 was $88.9 billion, an increase of $6.2 billion over 2022.

All three of Disney’s business segments saw an increase in fourth quarter operating income. Restructuring enabled the company to be more efficient, which the company expects to lead to significant operating cost reductions of $7.5 billion by the end of fiscal 2024 — $2 billion more than the originally targeted $5.5 billion.

Fiscal 2023 spend on produced and licensed content, including sports rights, was $27.2 billion, coming in almost $3 billion below the prior year. Content spend is expected to decrease by $2 billion in fiscal 2024, to approximately $25 billion.

Capital expenditures in fiscal 2023 totaled $5 billion, which Disney considers roughly comparable to the prior year. As for fiscal 2024, expenditures are projected to total $6 billion, driven by higher spend in Disney’s Experiences division, which includes the Disney Parks. Disney estimates that capital expenditures at Experiences in fiscal 2024 will look more comparable to 2019, and includes spending at Disney Cruise Line ahead of the launch of three new ships in fiscal years 2025 and 2026.

Diluted earnings per share (EPS) from continuing operations for the quarter increased to $0.14 from $0.09 in the prior-year quarter and prior year, and decreased to $1.29 from $1.75 in the prior year. Excluding certain items, diluted EPS for the quarter rose to $0.82 from $0.30 in the prior-year quarter and for the year, and increased to $3.76 from $3.53 in the prior year.

Experiences operating income increased by over 30 percent versus the prior year quarter, with year-over-year growth at all international sites, Disney Cruise Line, Disney Vacation Club, and Disneyland Resort. At Walt Disney World, Disney continues to manage against wage inflation and challenging comparisons to the prior year from the 50th anniversary celebration.

As of now, core Disney+ subscribers are at 112 million as of the end of fiscal 2023, including an increase of nearly 7 million in Q4 2023. Disney credits this to the streaming releases of “Elemental,” “The Little Mermaid” live-action film, “Guardians of the Galaxy, Vol. 3,” and original series “Ahsoka” and the Korean original series “Moving.”

Ad-supported Disney+ subscribers grew by approximately 2 million in Q4 2023. More than 50 percent of new U.S. subscribers chose the ad-supported tier versus other tiers, and have spent 34 percent more time watching the service overall.

Domestic ESPN grew in revenue and operating income in fiscal 2022 and 2023. This fiscal year also saw the network deliver the best overall viewership in four years, and the highest viewership in the 18-24 year-old demographic in the same time period.

Disney’s next goal is to turn streaming into a profitable growth business, with Disney estimating that its streaming services will achieve profitability in Q4 2024, though progress “may not look linear from quarter to quarter.” Iger also expects that cracking down on account sharing for Disney+ will not make a major impact until 2025.

Our results this quarter reflect the significant progress we’ve made over the past year. While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again. We have a solid foundation of creative excellence and innovation build over the past century, which has only been reinforced by the important restructuring and cost efficency work we’ve done this year, and we’re on track to achieve roughly $7.5 billion in cost reductions. Combined withour portfolio of valuable businesses, brands and assets — and the way we manage them together — Disney has a strong hand that differentiates us from others in our industry.

As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences businesses. We have already made considerable advancements in these four areas and will continue to move forward with a sense of purpose and urgency, and I’m bullish about the opportunities we have before us to create lasting growth and increase shareholder value.

Disney CEO Bob Iger

Disney expects to grow free cash flow in fiscal 2024 significantly versus fiscal 2023, hoping to approach levels last seen before the COVID-19 pandemic.

Check out our other reports from today’s earnings call below:

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Author

  • Brit Tuttle

    Brit didn't grow up going to the Disney Parks, but had basically the next best thing: the Phantom Manor ride operations simulator flash game and the Disney Sing-Along Songs Beach Party at Walt Disney World VHS. You can email them at brittan[email protected].

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