Disney’s revenue grew 5% to $26 billion in its fiscal first quarter, driven by record results in its theme parks and cruise business, as well as growth at Disney+ and Hulu and higher sales thanks to twin blockbusters “Zootopia 2” and “Avatar: Fire and Ash.”
But the company’s operating profit fell 9% to $4.6 billion, weighed down by continued weakness in its linear TV business, the impact of the YouTube TV carriage dispute, a decline in ad revenue from its spinoff of Star India and higher programming, production and marketing costs from streaming price hikes, more theatrical releases in the quarter, the Fubo deal and sports rights.
Here are the quarter’s results:
Net income: $2.4 billion, compared to $2.6 billion a year ago.
Earnings Per Share: $1.34 per share, down 4% year over year. Excluding one-time items, EPS came in at $1.63, down 7% year over year, compared to $1.58 per share expected by analysts estimates compiled by Yahoo Finance. Looking ahead, Disney expects double-digit adjusted EPS growth for fiscal 2026.
Revenue: $26 billion, up 5% year over year, compared to $25.6 billion expected by analysts estimates compiled by Yahoo Finance.
Operating income: $4.6 billion, down 9% year over year, compared to $5.1 billion a year ago
“We are pleased with the start to our fiscal year, and our achievements reflect the tremendous progress we’ve made,” Disney CEO Bob Iger said in a statement. “As we continue to manage our company for the future, I am incredibly proud of all that we’ve accomplished over the past three years.”
The company expects $19 billion in cash provided by operations and is on track to repurchase $7 billion of stock in fiscal 2026. For the first quarter, cash provided by operations fell 77% to $735 million.
Disney stock fell 4% in pre-market trading following the earnings announcement.
Disney talks succession, WBD bidding war, OpenAI deal
Disney plans to announce Iger’s successor with the next two months, with the company’s board reportedly set to vote on the matter this week. Experiences Chairman Josh D’Amaro is the widely anticipated frontrunner to replace Iger.
“When I came back three years ago, I had a tremendous amount that needed fixing. But anyone who runs a company also knows that it can’t just be about fixing. It has to be preparing a company for its future and really putting place, taking steps to create opportunities for growth,” Iger told analysts during the company’s earnings call on Monday. “The good news is that the company is in much better shape today than it was three years ago, because we have done a lot of fixing, but we’ve also put in place a number of opportunities, including the investment across our experiences business to essentially expand in every location we do business and on the high seas.”
In a rapidly changing world, Iger said that trying to “preserve the status quo” is a mistake.
“I’m certain that my successor will not do that,” Iger added. “They’ll be handed a good hand in terms of the strength of the company, a number of opportunities to grow, and also the exhortation that in a world that changes, you also have to continue to change and evolve as well. “
When asked how the Warner Bros. Discovery bidding war may impact Disney’s strategy, Iger told analysts that the battle should “emphasize or cause investors to appreciate the tremendous value” of the entertainment giant’s assets and IP. He added that Disney’s $71.3 billion deal for Fox’s entertainment assets in 2019 was “ahead of its time” and “extremely well priced” given what’s being offered for WBD.
“We have a great hand. I don’t really feel that we need to buy more IP,” Iger said. “We’re just going to continue to create our own and we’ve got an unbelievable bedrock of stories already told to grow from.”
Iger also offered more details about Disney’s $1 billion, three-year deal with OpenAI, which will license around 250 Disney characters to prompt Sora to create 30-second videos. The characters do not include a human voice or face.
“What this deal does is, by giving us the ability to curate what has been basically created by Sora onto Disney+, is it jump starts our ability to have shortform video on Disney+,” he said. “Additionally, it’s our hope that we will use the Sora tools to enable subscribers of Disney+ to create short form videos on our platform.”
Iger believes the feature will “greatly enhance” engagement and does not expect it to impact viewership of Disney’s other programming. At the moment, the company is only focused on videos that are 30 seconds or shorter.
Disney doesn’t have a specific timeframe for when its Sora functionality will roll out on Disney+ and is still working through technical details, though Iger expects it’ll be sometime in fiscal 2026.
Disney Entertainment
Disney’s entertainment segment, which includes Disney+, Hulu and the company’s linear networks, saw total revenue grow 7% to $11.61 billion, while operating profit slid 35% to $1.1 billion. The entertainment segment reported an operating margin of 9.5%.
The increase in revenue was driven by an 8% increase in subscription and affiliate fees to $7.25 billion as a result of a rate increase and more impressions, subscriber growth and the deal to merge its Hulu + Live TV service with Fubo.
Also boosting the results was a 22% increase in content sales to $1.94 billion from higher theatrical distribution, which saw the release of “Zootopia 2,” “Avatar: Fire and Ash,” “Predator: Badlands” and “Tron: Ares.” The prior-year quarter reflected the release of “Moana 2” and “Mufasa: The Lion King.” Disney’s 2026 film slate includes “The Devil Wears Prada 2,” “The Mandalorian and Grogu,” “Toy Story 5,” the live-action “Moana” and “Avengers: Doomsday.”
The gain was offset by the temporary carriage dispute with YouTube TV that lasted more than two weeks in the period and a decline in ad revenue due to the Star India deal, as well as an increase in programming and production costs due to the Fubo deal, more expenses at its streaming services due to higher subscriber-based license fees and higher production, marketing, technology and distribution costs. Ad revenue fell 6% year over year to $1.8 billion, reflecting the inclusion of Star India, higher political advertising revenue in the prior-year period and the Fubo deal.
Streaming revenue, which includes Disney+ and Hulu but excludes Hulu + Live TV and Fubo, grew 11% to $5.35 billion, with subscription fees climbing 13% to $4.4 billion and advertising and other revenue up 4% to $922 million. Streaming reported an operating margin of 8.4%.
Taking a cue from Netflix, Disney no longer discloses subscribers and average revenue per user for Disney+ and Hulu, though the services posted a combined profit of $450 million, up 72% from $261 million a year ago. Meanwhile, profits in the rest of Disney’s entertainment segment plunged 55% to $650 million.
Disney+ and Hulu are on track to merge into a unified app experience later this year. As part of this change, Hulu has replaced the Star brand in international markets and Disney+ has rolled out new homepage updates, including better personalization and improved recommendations.
For the second fiscal quarter, Disney expects entertainment operating income to be similar to the same quarter a year ago, with a streaming profit of approximately $500 million, a roughly $200 million year-over-year increase. The rest of the entertainment segment is expected to post an operating profit of $700 million.
For full year fiscal 2026, Disney expects double-digit operating income growth for entertainment, weighted to the second half of the year, and an SVOD operating margin of 10%.
ESPN Closes NFL Network Acquisition
Disney Sports
Disney’s sports segment, which includes ESPN and ESPN+, saw revenue rise 1% to $4.91 billion, while operating profit tumbled 23% to $191 million.
The results were weighed down by an increase in programming and production costs driven by price increases and sports rights costs, a 2% decrease in subscription and affiliate fees to $2.98 billion due to fewer subscribers, the YouTube TV carriage dispute and the Star India deal. That was offset by few regular season NBA games due to the timing under its new media rights deal and ad revenue growth of 10% to $1.48 billion due to higher rates. The temporary suspension of programming during the YouTube TV dispute hurt sports operating profit by approximately $110 million.
Disney executives said they are “pleased with the adoption and engagement” with the new ESPN app, but declined to provide specifics.
Over the weekend, ESPN closed its acquisition of the NFL Network, the linear RedZone Channel and NFL Fantasy. In exchange, the league is being given a 10% stake in the sports network. Prior to the deal closing, Disney owned 80% of ESPN, while Hearst owned the remaining 20%.
The NFL Network will be integrated into ESPN’s direct-to-consumer streaming service at the start of the 2026 season in the fall. Fans can currently get the NFL Network through NFL+ and in the ESPN DTC-NFL+ Premium bundle. The distribution of NFL RedZone TV to pay TV providers will also begin with the 2026 season and will continue to be a part of NFL+ Premium. NFL Fantasy will also be combined with ESPN’s Fantasy starting with the 2026 season.
Iger declined to weigh in on how the partnership would impact Disney’s relationship with the NFL, and said it was “premature” to speculate on the possibility of an early renewal of its ESPN/ABC’s media rights deal with the league.
For the second quarter, sports revenue is expected to be similar to a year ago, but operating income will decline by $100 million due to higher rights expenses. For the full year, sports profit growth is expected to be in the low single digits.
Disney Experiences
Disney’s experiences segment, which includes its theme parks, hotels, Disney Cruise Line and consumer products, was a bright spot with revenue and operating profit each climbing 6% to $10.01 billion and $3.31 billion, respectively.
The results were attributed to higher volumes from increases in passenger cruise days, attendance and occupied room nights, increased guest spending, offset by higher costs, including the fleet expansion at Disney Cruise Line, inflation and higher operations support expenses. Additional passenger cruise days reflected the launches of the Disney Treasure in December 2024 and the Disney Destiny in November, while the increased attendance reflected the comparison to Hurricane Milton in the prior-year quarter.
Domestic revenue grew 7% to $6.91 billion and profit climbed 8% to $2.15 billion, while international revenue rose 7% to $1.8 billion and profit grew 2% to $428 million.
Consumer products revenue was flat at $1.34 billion and profit increased 3% to $732 million.
Theme parks and admissions revenue grew 7% to $3.3 billion, while resorts and vacations revenue climbed 9% to $2.41 billion and parks & experiences merchandise, food and beverage revenue jumped 8% to $2.35 billion. Parks & experiences licensing revenue was flat at $610 million.
For the second quarter, experiences operating income growth will be modest due to factors including “international visitation headwinds” at its U.S. theme parks, pre-launch costs from the Disney Adventure cruise ship and pre-opening costs from Disneyland Paris’ World of Frozen. For the full year, Disney expects high-single digital growth in operating income compared to fiscal 2025, weighted to the second half of the year.
Disney plans to open a new theme park in Abu Dhabi to expand its global reach.
