Disney's revenue is on the rise, but streaming subscriber losses mar CEO Bob Iger's boost as he takes another jab at Florida's Ron DeSantis
Walt Disney Co. CEO Bob Iger.Charley Gallay/Stringer/Getty Images
Walt Disney Co. reported $21.79 billion in revenue for its fiscal second quarter, topping Wall Street expectations and ...

Disney's revenue is on the rise, but streaming subscriber losses mar CEO Bob Iger's boost as he takes another jab at Florida's Ron DeSantis

Walt Disney Co. reported $21.79 billion in revenue for its fiscal second quarter, topping Wall Street expectations and ...

  • Disney announced its fiscal second quarter earnings, with 13% revenue growth in the three months ending April 1.
  • Streaming losses shrank while legacy TV businesses were impacted by cord cutting and a soft ad market.

Bob Iger touted revenue gains, faced streaming subscriber losses, and took another shot at Ron DeSantis on Disney's Wednesday earnings call.

Noting that Disney paid above minimum wage and had plans to invest $17 billion in Florida in the coming years, the CEO also appeared to issue an ominous threat in his ongoing legal battle with the Florida governor over how the Orlando theme park Walt Disney World is governed.

"Does the state want us to invest more, employ more people, and pay more taxes or not?" Iger asked during the Q&A segment of the call.

During the more predictable introductory remarks, Walt Disney Co. reported $21.79 billion in second quarter revenue, which topped Wall Street expectations for the period and marked 13% growth for the three months through April 1, the company's fiscal second quarter.

Disney's direct-to-consumer business shrank losses and showed strength as the company's legacy TV networks continue to fade and bear the cost of increasingly expensive sports rights in the midst of an advertising recession.

Linear networks revenues for the quarter fell 7% to $6.6 billion while operating income fell 35% to $1.8 billion, as pay-TV subscribers continue to drop their packages. The company noted decreases in advertising revenue at non-sports channels including both ABC network and A&E cable channels.

Still, Disney's direct-to-consumer unit grew revenue by 12% in the second quarter to $5.5 billion while its operating losses decreased. Disney reported a decrease in operating losses at two of its streaming services, Disney+ and ESPN+, and noted lower operating income at Hulu, where it spent more on programming and dialed back marketing costs. The company increased average revenue per user at Disney+ thanks to price increases.

Subscriber ranks at Disney+ declined by 2%, however, with the majority of those losses coming — as in the previous quarter — from India's Disney+ Hotstar, where subscriptions fell by 8% in the quarter. Domestic Disney+ subscriptions fell by 600,000.

Disney stock was down about 4% in after-hours trading immediately following the report.

Over the past six months since replacing his onetime successor CEO Bob Chapek, Iger has been wrestling with the scope of the company's assets — from ESPN to ABC and the film studios to its three separate streamers, Disney+, ESPN+, and Hulu (which is co-owned by Comcast).

The fate of Hulu — whether Disney would move to own it in full or sell it to Comcast, or perhaps continue it as a joint venture — has been a subject of intense debate around Hollywood. Iger said Wednesday that the two companies have had "constructive" conversations about Disney acquiring Hulu; he also revealed plans to combine Hulu and Disney+ into one streaming app by the end of the year.

On the company's last earnings call in February, Iger announced it would cut 7,000 staff as part of a move to save some $5.5 billion in costs. Two of three rounds of layoffs have been completed, affecting film and TV execs, marketing and communications teams, and the company's entire next-generation storytelling and experiences unit — aka its metaverse team — of about 50.

But Iger has made more headlines with his political and cultural battle against DeSantis, and listeners who tuned into the earnings call expecting the next salvo were not disappointed..

Responding to an analyst's question, Iger noted that if Florida is going to challenge Disney's operations within its special district, then the law should be applied evenly to some 2,000 other entities that were given the same incentives to help fuel investment in the state. They include the Daytona Speedway and retirement community The Villages, he said.

Disney sued the governor last month, claiming DeSantis was retaliating against the company for exercising its free speech rights about Florida legislation dubbed "Don't Say Gay" that prevents public elementary school teachers from discussing sexual orientation or gender identity in the classroom.

"This is plainly a matter of retaliation while the rest of the special districts continue operating as they were," Iger said. "We never wanted and certainly never expected to be in the position of defending our business interests in federal court."

The back-and-forth between Disney and the governor, who is a presumptive GOP presidential candidate, has worsened since Iger last spoke publicly at the company's annual shareholders meeting last month, calling DeSantis' actions "anti-business" and "anti-Florida."

Iger is also dealing with a strike by Hollywood writers who create the content Disney distributes to viewers. The Writers Guild of America work stoppage has thrown a wrench in plans to set out the company's future content strategies to advertisers at an upfront presentation on May 16. Those advertisers commit billions on the strength of Disney's lineup.

Disney Channel series "Bunk'd" is among the shows that have suspended production due to the strike, Deadline reported. Along with other topical late night shows, "Jimmy Kimmel Live!" has not aired new episodes since May 1; Kimmel has for years skewered his employer at its annual upfront event but it's a question mark whether he'll participate this year as the Writers Guild of America has said it will picket the studio events.

Wall Street would like Disney to focus its efforts on putting an end to the red ink it — along with other big entertainment companies — has lavished on loss-making streaming initiatives. Those billions spent on programming were once welcomed in a chase to show Netflix-style growth. Now profitability and free cash flow are prioritized; Netflix for one has stopped offering guidance on its subscriber counts, though it will continue to report them.

As part of Iger's broader reorganization, the company has instituted a new financial structure that sees executives in finance report to both CFO Christine McCarthy and their respective bosses in Disney's new three reporting units: Disney entertainment, ESPN, and Parks, Experiences and Products.