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Walt Disney handily beat Wall Street’s expectations in its latest quarterly earnings and unveiled shareholder-friendly measures including a $3bn stock buyback and a 50 per cent dividend increase, as it prepares for proxy battles with activist shareholders.
The company emphasised its cost-cutting efforts, saying it had reduced expenses by $500mn in the first quarter and it forecast it would meet or exceed its target of $7.5bn in annualised savings this year.
Disney is facing proxy battles with Nelson Peltz’s Trian Partners and Blackwells Capital, which are seeking board seats and other changes aimed at boosting its share price. The stock is up 9 per cent this year and rose 7.25 per cent in after-hours trading on Wednesday to $106.33.
Losses at the group’s streaming services, which include Disney+, Hulu and ESPN+, fell by $300mn compared with the previous quarter thanks to price rises and higher ad revenue. Disney said it expected to meet its target of reaching profitability in its streaming division by this autumn.
Bob Iger, chief executive, said the results proved Disney had “turned the corner and entered a new era”.
Disney also announced a $1.5bn investment in Epic Games, the group behind Fortnite and Grand Theft Auto. The two companies will collaborate on building a “Disney universe” over the next couple of years, a move that is expected to be the Hollywood group’s largest move into gaming so far.
Earnings of $1.22 per share were well ahead of Wall Street forecasts of 98 cents, due in part to cost cuts. Operating income at Disney’s theme park business rose 8 per cent to $3.1bn. But its movie business was hurt by weak cinematic releases including The Marvels and Wish.
