The streaming wars entered yet another iteration on Wednesday as Disney announced a major change to the division that it calls direct-to-consumer: Disney+ will integrate Hulu’s operations, transforming into something that looks a lot like the old linear TV bundle. As CEO Bob Iger told investors on the company’s third-quarter earnings call, “combining Hulu into Disney+ [will] create a unified app experience, featuring branded and general entertainment, news, and sports, resulting in a one-of-a-kind entertainment destination for subscribers.”
The night before Disney released its third-quarter earnings, the company confirmed it had struck a deal with its longtime partner in sports, the National Football League, an asset and equity swap that sees the NFL getting a 10% stake in Disney’s ESPN division and ESPN/Disney acquiring several streaming assets from the NFL. The NFL’s 10% stake in ESPN is valued between $2 billion and $3 billion, per estimates from Octagon.
ESPN will gain the rights to three additional NFL games per season, previously broadcast by the NFL’s own networks, meaning more of America’s highest-rated TV shows, live football broadcasts, will be Disney’s as the company fortifies its streaming war chest. Disney has been reconstructing ESPN to survive the decline of linear TV with the launch of a stand-alone streaming service, and it will now plug in content beloved by football fanatics: the NFL Network, NFL RedZone distribution rights, and NFL Fantasy Football. In streaming, Netflix and Amazon have each acquired more NFL rights over recent years, so Disney’s move shows it’s playing defense and some offense, too, on this front.
Disney also announced an expanded agreement with the WWE, another recent Netflix partner, which subsequently emerged as a $1.6 billion deal that will make Disney the home of the marquee event, WrestleMania. Iger said on the earnings call that ESPN “will be the exclusive home for WWE Premium Live Events, further expanding ESPN’s rights portfolio.” On Disney’s plans in this area, Iger added Disney is “building ESPN into the preeminent digital sports platform with our highly anticipated direct-to-consumer sports offering.”
Disney revealed in its earnings that the sports division, anchored by ESPN, saw revenue fall 5% to $4.3 billion, mainly because of higher NBA and college-sports rights fees. Segment profit, however, soared 29% to $1 billion as a merger in its Indian unit took some losses off its balance sheet.
Streaming profitable amid linear TV, movie studio decline
Overall, third-quarter earnings showed resilience in key business segments for Disney such as streaming and theme parks, even as its traditional TV and film studio divisions showed fatigue. Total revenue for the quarter ended June 28 rose 2% year over year to $23.7 billion, just under Wall Street forecasts, while adjusted earnings per share climbed 16% to $1.61, surpassing analyst expectations of $1.47. Net income before taxes rose 4% to $3.2 billion.
A headline achievement for Disney was the solid performance of its streaming business, which posted a 6% revenue increase to $6.2 billion and achieved operating profit of $346 million—a substantial turnaround from a $19 million loss reported in the same quarter last year.
Subscriber metrics reflected steady gains, with Disney+ ticking up 1% quarter over quarter for a total of 128 million and Hulu by the same margin to 55.5 million subscribers. The combined Disney+ and Hulu subscriber base climbed to 183 million, up 2.6 million versus the previous quarter. Disney also finalized its acquisition of the remaining stake in Hulu from Comcast NBCUniversal in June, setting the stage for a tighter integration of its streaming brands later this year.
Meanwhile, Disney’s studio entertainment segment saw more modest 1% revenue growth to $10.7 billion, weighed down by a 15% drop in operating income to $1 billion. Theatrical releases, including original animated and live-action remakes, underperformed compared with last year’s strong box-office showing with Inside Out 2. Additionally, Disney’s linear TV networks, including ABC and Disney Channel, recorded a 15% year-over-year decline in revenue to $2.3 billion, underscoring ongoing challenges from cord-cutting and lower international results following the Star India deal.
Looking ahead, Disney expects total subscriptions for Disney+ and Hulu to rise by over 10 million in the next quarter, driven in part by an expanded agreement with Charter Communications.
Theme parks and experiences shine
Disney’s “Experiences” segment—which covers theme parks, cruise lines, and consumer products—delivered robust numbers, outstripping earlier forecasts. Third-quarter revenue increased 8% year over year to $9.1 billion, fueled by a 22% surge in operating income at domestic parks and experiences to $1.7 billion. Disney pointed to strong guest spending and higher occupancy rates at its parks and cruise lines, especially at Walt Disney World, despite the highly anticipated opening of competitor Universal’s Epic Universe in Orlando. Executives emphasized the “continued resilience” of Disney’s park business in the face of new competition.
Guidance raised, optimism for 2025
Notably, Disney raised its guidance for fiscal 2025, projecting adjusted earnings of $5.85 per share—an 18% increase over the prior year. The company also anticipates double-digit segment operating income growth in entertainment and sports, with an 8% gain in experiences for the full year. CEO Bob Iger affirmed Disney’s commitment to global expansion, noting more active park expansions than at any time in Disney’s history and highlighting ongoing strategic investments in streaming, theme parks, and sports as drivers for future growth.
“Disney is not done building, and we are excited for the future,” Iger said, following the earnings release.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
