Disney to cut content spend & raise savings target as it nears streaming profitability

Disney+ added almost seven million new subscribers globally in the fourth quarter, with the Mouse House stating that it is still on track to achieve streaming profitability by the end of 2024 as CEO Bob Iger raised its savings target by a further $2bn, and reduced planned content spend for 2024 by the same amount.

The media giant is continuing to “aggressively manage [its] cost base” and has now increased its cost reductions target to $7.5bn, up from the previous goal of $5.5bn.

CEO Bob Iger said that the increased target was thanks to the “important restructuring and cost efficiency work we’ve done this year,” which has led to more than 8,000 job cuts at the Mouse House in the past 12 months.

Iger also revealed a planned content spend of $25bn over the next 12 months, down by $2bn on the $27bn spent on content this year, with a focus on fewer titles of higher quality.

Overall, Disney reported a Q4 2023 revenue rise of 5% from the prior year quarter, up to $21.2bn, and up by 7% on the full year to $88.9bn, in its Q4 and full-year earnings report.

Bob Iger

Streaming revenue growth

Revenues for the streaming businesses, Disney+, Disney+ Hotstar, Hulu and ESPN+, were up by 13% to $5.5bn on the prior quarter figure of $4.9bn, and rose by 12% YOY to $21.9bn, up from $19.5bn in 2022.

Operating losses dropped by a substantial 74%, down to just $387m in Q4 2023, versus $1.47bn during the same period in 2022. This was a 35% reduction on losses YOY, down to $2.6bn from $4bn last year.

The extra seven million subscribers added to Disney+ for the quarter brings its global total to 112.6 million – or 150.2 million if including Indian service Disney+ Hotstar, which lost 2.8m subs in Q4.

The company credited series including Ahsoka and Moving and movies such as Elemental, Little Mermaid and Guardians Of The Galaxy Vol. 3 as among the titles driving traffic to the service.

Hulu, meanwhile, rose from 48.3 to 48.5 million paid subs in the quarter overall, with a small drop in SVOD only customers, while making gains of around 300,000 live TV & SVOD bundle subs.

Ahsoka (Source: Disney+)

Last week, Disney set plans in motion to take full ownership of the US streamer by acquiring Comcast-owned NBCUniversal (NBCU)’s 33% stake in the business for an initial price tag of $8.6bn.

Disney said that that figure, which it expects to have paid by 1 December, represents NBCU’s percentage of the $27.5bn “guaranteed floor value” of Hulu that was set when the companies entered into their agreement in 2019, minus any related costs owed by NBCU to Disney.

The Mouse House expects its combined streaming businesses to reach profitability in Q4 of next year, but cautioned that “progress may not look linear from quarter to quarter.”

Linear networks revenue meanwhile dropped by 9% on the prior-year quarter, down to $2.6bn from $2.9bn in 2022. Disney said that domestic operating income losses were driven by a drop in advertising revenue primarily at the ABC Network and as a knock-on effect of the strikes.