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    For Disney, Streaming Losses and TV’s Decline Are a One-Two Punch

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    The company experienced a sharp decline in its traditional TV business for the second straight quarter and will raise subscription prices for its streaming services.Robert A. Iger’s urgent need to overhaul Disney — to turn its streaming division into a profitable enterprise and pull back on its troubled traditional television business — came into sharp relief on Wednesday.Disney’s streaming operation lost $512 million in the most-recent quarter, the company said, bringing total streaming losses since 2019, when Disney+ was introduced, to more than $11 billion. Disney+ lost roughly 11.7 million subscribers worldwide in the three months that ended July 1, for a new total of 146.1 million.All the decline came from a low-priced version of Disney+ in India. Last year, Disney lost a bid to renew the expensive rights to Indian Premier League cricket matches. Excluding India, Disney+ gained 800,000 subscribers, primarily overseas.To make streaming profitable, Mr. Iger, Disney’s chief executive, has shifted the focus at Disney+ away from brisk subscriber growth, which requires expensive marketing campaigns. Instead, Disney has been trying to make more money from the Disney+ subscribers it already has. The monthly price for access to an ad-free version of Disney+ rose to $11 in December, from $8.Another hefty price increase is on the way. Starting on Oct. 12, the ad-free version will cost $14, Disney said. Hulu, which is also controlled by Disney, will begin charging $18 for ad-free access, up from $15. As an incentive, Disney will begin selling a new streaming package — ad-free access to both Disney+ and Hulu — for $20 a month starting on Sept. 6.The ad-supported options for both Disney+ and Hulu will remain the same, at $8. “We’re obviously trying with our pricing strategy to migrate more subs to the advertiser-supported tier,” Mr. Iger told analysts on a conference call. The pricing news, along with a vow by Mr. Iger to follow Netflix by cracking down on password sharing, sent Disney shares up roughly 2 percent in after-hours trading.Disney still relies on old-line channels like ESPN and ABC for roughly a third of its operating profits — and those outlets are being maimed by cord cutting, sports programming costs and advertiser pullback. Disney’s traditional channels had $1.9 billion in quarterly operating income, down 23 percent from a year earlier. Disney cited lower ad sales at ABC, partly because of viewership declines, and lower payments from ESPN subscribers, along with higher sports programming costs. (On a positive note, ESPN ad sales increased 10 percent.)It was the second consecutive quarter in which Disney’s traditional TV business recorded a sharp decline in operating income.Disney is exploring a once-unthinkable sale of a stake in ESPN. Bob Levey/Getty ImagesDisney is now exploring a once-unthinkable sale of a stake in ESPN. Not all of it, Mr. Iger has made clear. But he wants “strategic partners that could either help us with distribution or content,” he said during an interview with CNBC last month. Disney has held talks with the National Football League, the National Basketball Association and Major League Baseball about taking a minority stake.Earlier this summer, Mr. Iger brought in two former senior Disney executives, Kevin Mayer and Thomas O. Staggs, to consult on ESPN strategy with James Pitaro, the channel’s president, and help put together any deal. Mr. Mayer and Mr. Staggs were both viewed as possible successors to Mr. Iger when they were at Disney, ultimately leaving when they were passed over to start their own media company, Candle Media, with the private equity firm Blackstone as the backer.Their return has sent the Hollywood and Wall Street gossip mills into overdrive. Are Mr. Mayer and Mr. Staggs now back in the running for Disney’s top job? Is Blackstone a potential investor in ESPN? Maybe the whole company is being prepped for a sale — with Apple as the buyer?The first two questions did not come up on Disney’s conference call, and Mr. Iger batted away the third. “I just am not going to speculate about the potential for Disney to be acquired by any company, whether it’s a technology company or not,” he said. “Obviously, anyone who wants to speculate about these things would have to immediately consider the global regulatory environment. I’ll say no more than that.”ESPN on Tuesday announced a 10-year deal with a casino company to create an online sports betting brand and push more aggressively into the lucrative world of online gambling. Notably, the $2 billion deal allows ESPN to rake in gambling money without — in keeping with Disney’s family-friendly brand — becoming a sports book itself.Mr. Iger is also contending with dual strikes in Hollywood. Unionized screenwriters have now been on strike for 100 days and actors for 27. They want higher pay from streaming services and guardrails around the use of artificial intelligence by studios.On the conference call, Mr. Iger addressed the strikes for the first time since mid-July, when he told CNBC — from an elite gathering of chief executives in Idaho — that union leaders were not being “realistic,” prompting an eruption of vitriol on picket lines. On Thursday, reading from a script, Mr. Iger said it was his “fervent hope that we quickly find solutions to the issues that have kept us apart these past few months.”“I am personally committed to working to achieve this result,” he added, saying that he had “deep respect and appreciation” for actors and writers.Disney’s quarter included some encouraging signs. The $512 million streaming loss was 32 percent less than analysts had predicted, for instance. In the fall, quarterly streaming losses reached $1.5 billion. In other words, Mr. Iger’s effort to drastically reduce losses is working. “In spite of a challenging environment in the near term, I’m overwhelmingly bullish about Disney’s future,” Mr. Iger said, noting that the company was on track to exceed a goal, announced in February, to cut $5.5 billion in costs.An 11 percent increase in profitability at Disney’s theme park division — despite weakness at Walt Disney World in Florida — allowed the company to salvage the quarter, to a degree. Companywide revenue totaled $22.3 billion, a 4 percent increase from a year earlier; analysts had expected slightly more. About $2.7 billion in one-time restructuring charges resulted in net loss of $460 million, compared with $1.4 billion in profit a year earlier.Excluding the charges, which were related to the removal of more than 30 underperforming shows and movies from Disney+ and Hulu, Disney reported earnings per share of $1.03. Analysts had expected 95 cents.Growth at Disney’s theme park division came largely from overseas. A year ago, the Shanghai Disney Resort was closed because of the Chinese government’s Covid-19 restrictions. The Shanghai property was open for all of the most-recent quarter. Hong Kong Disneyland also reported improved results. Disney’s five-ship cruise line has also been running at near capacity.Economists have long watched Disney’s domestic theme parks as informal barometers of consumer confidence. Historically, when budgets get tight, families cut back on expensive trips to Disney World. Whether for that reason or another, attendance at the Florida mega-resort declined. Attendance rose at Disneyland, in California.Other theme park operators in Florida have seen similar attendance declines. Some analysts have blamed ticket price increases. Others have said that tourist demand has shifted away from locations that reopened earlier in the pandemic — like Florida — and toward destinations that remained closed for a longer period. More

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      Disney’s Losses From Streaming Narrowed in the Last Quarter

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      The company’s earnings were buoyed by its theme parks and cruise ships. It also announced it would soon put Hulu content on Disney+.To understand the forces that have been roiling the biggest media companies, look no further than Disney’s earnings. Streaming economics are improving — considerably so. But not fast enough to offset declines in traditional television, which is in free fall.Disney said on Wednesday that losses in its streaming business for the most recent quarter totaled $659 million, an improvement from a year earlier (and a vast improvement from the October-to-December period, when losses totaled $1.1 billion). Streaming revenue climbed 12 percent, reflecting a sharp increase in revenue per paid Disney+ subscriber, a metric investors watch closely.The problem: Disney still relies on old-line TV channels for a colossal portion of its profit — and those outlets are being maimed by cord cutting, sports programming costs and advertiser pullback. Disney’s linear networks (ESPN, Disney Channel, ABC, National Geographic, FX) reported $1.8 billion in operating income, down 35 percent from a year earlier. Revenue fell 7 percent.Robert A. Iger, Disney’s chief executive, called the decline of traditional television “a worrisome circumstance” in an earnings-related conference call with analysts. Disney shares fell by more than 4 percent in after-hours trading on Wednesday.As part of its push toward streaming profitability, Disney announced that content from Hulu would be made available on Disney+ to subscribers of both services in the United States. Mr. Iger said this “one app experience” would roll out by the end of the year. Hulu, which does not operate overseas, will also continue as a stand-alone product.Disney+ content is primarily aimed at children and families. The addition of more generalized Hulu content would “increase engagement and increase our opportunity in terms of serving digital ads — growing our advertising business,” Mr. Iger said.Disney said it would raise the price for ad-free subscriptions to Disney+ later this year, in part to push more viewers toward cheaper subscriptions that allow for advertising (which, in turn, would allow Disney to increase advertising rates). Disney most recently raised the ad-free price in December: Those subscriptions now cost $11, up 38 percent from what Disney previously charged. The option with advertising costs $8.Disney owns 67 percent of Hulu, with Comcast holding the balance. Under a 2019 agreement, Disney has an upcoming opportunity to buy out Comcast. (Estimates start in the $9 billion range.) Mr. Iger indicated on Wednesday that Disney would like to make that deal.“We’ve had some conversations with them already,” he said. “I can’t really say where they end up.” Mr. Iger notably started the conference call by congratulating Comcast, an archrival, on the success of its animated “Super Mario Bros. Movie,” which has collected $1.2 billion worldwide.Disney+ subscriber counts have abated over the past six months, in part because Disney has pulled back on expensive “subscriber acquisition” efforts — marketing campaigns that try to persuade people to subscribe. Disney+ now has about 158 million subscribers worldwide, a 2 percent decline from December, with most of the loss coming from ultra-low-priced subscriptions in India. Disney+ peaked with 164 million subscribers in October.Disney had 231.3 million subscriptions across Disney+, Hulu and ESPN+ in the quarter, down from 234.7 million in December.“The Mandalorian” is one of several lavish original Disney+ productions.Lucasfilm Ltd.Unlike most of its competitors, Disney has a safety net in the form of theme parks. Operating profit in the company’s Parks, Experiences and Products division climbed 22 percent, to $2.2 billion, as Disney resorts in Shanghai and Hong Kong finally began to recover from the pandemic. Disneyland Paris continued its attendance surge, which started last summer with the opening of a Marvel-themed expansion.Attendance also increased at Disney World in Florida and Disneyland in California, although higher costs — the introduction of a new “Tron”-themed roller coaster, for instance — dented profitability in Florida. Disney Cruise Line bookings were strong, partly because of a recent expansion of its fleet, the company said.It was Disney’s first full quarter under the second reign of Mr. Iger, who returned as the chief executive in November. He replaced Bob Chapek, who was ousted by the board following a series of blunders, including the company’s response to contentious education legislation in Florida. The fallout from that matter has led to a legal battle with Gov. Ron DeSantis over Disney World’s future expansion and oversight.On Wednesday, Mr. Iger said the company was “evaluating where it makes the most sense to direct future investments” for theme park construction, a clear reference to the standoff in Florida. Disney said last month — before the deteriorating situation with Mr. DeSantis — that it had earmarked $17 billion for Disney World expansion projects over the coming decade.When asked by analysts about the tense situation in Florida, Mr. Iger reiterated that Disney viewed it as unconstitutional retaliation for its opinion on the education legislation.As a whole, Disney generated $21.8 billion in sales, a 13 percent increase compared with last year, slightly surpassing analyst projections. Disney reported earnings per share of 93 cents, excluding certain items affecting comparisons, on par with analyst expectations.Disney is in the midst of eliminating roughly 7,000 jobs, or roughly 4 percent of its global total, as part of a campaign to cut costs by $5.5 billion. There have been two rounds of layoffs so far; the final round is expected by the end of the month.The company continues to pour money into original Disney+ programming. The third season of “The Mandalorian” arrived on the service in March. Another lavish series set in the “Star Wars” universe, “Ahsoka,” is scheduled to roll out on Disney+ this summer.At the same time, however, Disney said it would begin removing some content from its streaming services, particularly in overseas markets where growth potential is limited. It did not give any examples of the content. Because content costs are amortized over time, early removal would cost Disney up to $1.8 billion. But the move will save Disney money over the long term because the company will not need to pay residual fees (a type of royalty) to show creators. More

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      Disney’s Iger Returns to Familiar Stage, but With Different Challenges

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      The company reports quarterly earnings on Wednesday, and Wall Street is expecting it to lay out a new streaming strategy and operating structure.When it comes to reporting quarterly earnings, Robert A. Iger is an old pro. He has done it 58 times as Disney’s chief executive. But the next one, scheduled for Wednesday, will require him to give a performance for the corporate ages.“It has to be an impactful, meaningful, tone-setting, agenda-changing day,” said Michael Nathanson, an analyst at SVB MoffettNathanson who has followed Disney for 18 years.Another veteran Disney analyst, Jessica Reif Ehrlich of BofA Securities, agreed. “I don’t know that we’re going to see answers to everything, but Iger’s overall messaging is going to be critical,” she said.So, no pressure.On Wednesday, Mr. Iger will publicly face Wall Street and Hollywood for the first time since he came out of retirement to retake the reins of a deeply troubled Disney. In late November, the Disney board fired Bob Chapek as chief executive and rehired Mr. Iger, 71, who ran the company from late 2005 to early 2020. He is also contending with Nelson Peltz, the corporate raider turned activist investor. Mr. Peltz, 80, whose Trian Partners has amassed roughly $1 billion in Disney stock and is fighting for a board seat for himself or his son, wants the world’s largest entertainment company to revamp its streaming business, refocus on profit growth, cut costs, reinstate its dividend and do a much better job at succession planning.Most of those things were in motion at Disney before Mr. Peltz started his proxy battle, and analysts expect Mr. Iger to provide updates on at least some fronts on Wednesday.More on the Walt Disney CompanyLabor Tensions: Unions that represent about 32,000 full-time workers at Disney World said that members had voted overwhelmingly to reject the company’s offer for a new five-year contract.Splash Mountain’s Closure: As Disney takes steps to erase the racist back story of the Walt Disney World ride, some are claiming to be selling water from the attraction online.Return to Office: Starting on March 1, the Walt Disney Company will require employees to report to the office four days a week, a relatively strict policy among large companies.Pricing Policies: After complaints by visitors about the costs at its domestic theme parks, Disney revised policies related to ticketing, hotel parking, ride photos and annual passes.How are the content pipelines to Disney’s streaming services (Disney+, Hulu and Disney+) going to be managed? At 6:30 a.m. on his first day back, Mr. Iger ousted Disney’s top streaming executive and ordered a restructuring of a restructuring that Mr. Chapek had put into place.For months, Disney has been talking about cost cutting and layoffs. Where are they? “This can’t drag on,” Ms. Ehrlich said. “It’s not good for company morale.” (Speaking of morale, some Disney employees have been circulating a petition to protest Mr. Iger’s decision last month to require everyone to report to the office four days a week.)Shareholders are increasingly worried about the decline of Disney’s traditional television business, which includes ABC and 15 cable networks, led by ESPN, Disney Channel, FX, Freeform and National Geographic. Disney’s cable portfolio has held up better than those owned by some rival companies (notably NBCUniversal), but Americans have been cutting the cable cord at an alarming pace — total hookups declined by a record 6.2 percent from October to December.“We need an honest and appropriate view of the future of Disney’s television business,” Mr. Nathanson said. “Is there an asset change? Does spending change? Under Chapek, the messaging was never very clear.”Even in decline, traditional television remains Disney’s largest business, delivering $8.5 billion in operating income in the fiscal year that ended in October.Disney and other old-line media companies are facing a simple equation that has proved astoundingly difficult to solve: Profit from traditional television is declining at a faster rate than streaming losses are moderating. In Disney’s case, traditional television earnings are expected to decline by $1.6 billion in 2023, while losses from streaming will abate by only about $900 million, according to Mr. Nathanson.In November, Disney said that losses from its streaming portfolio totaled $1.5 billion from July through September, compared with $630 million a year earlier.But Mr. Chapek, who led the company’s November earnings call, reiterated a promise that Disney+ would turn a profit by next October. Wall Street has been skeptical of that assertion, and Mr. Iger may revise it on Wednesday, along with guidance that Disney+ would have 215 million to 245 million global subscriptions by 2024. Disney+ currently has about 164 million worldwide.Companies always try to put the rosiest spin possible on numbers when talking to analysts, shareholders and the news media on quarterly earnings conference calls. But the upbeat tone struck by Mr. Chapek in the November session did not sit well given the numbers that Disney was reporting. Along with widening losses in streaming, Disney had disappointing profit margins at its theme park business and missed Wall Street’s overall expectations for both revenue and net income, a rarity for the company. (When one senior Disney executive privately told Mr. Chapek before the call that his planned remarks were too positive, he called her Eeyore, the gloomy donkey from “Winnie the Pooh.”)Mr. Iger will undoubtedly highlight some of Disney’s recent achievements. “Avatar: The Way of Water,” released by Walt Disney Studios, has generated $2.2 billion worldwide since it arrived in theaters on Dec. 16. Disney received more Oscar nominations last month (23) than any other company. Over the end-of-year holidays, Disney’s theme parks were gridlocked, easing fears about consumer belt-tightening.“Despite the macro headwinds, the parks still feel incredibly strong,” Ms. Ehrlich said.But Mr. Iger will also need to contend with a lackluster set of overall numbers, at least if analysts’ forecasts are correct. Analysts are expecting per-share earnings of about 79 cents from Disney, down from $1.06 for the same period a year ago, and revenue of $23.4 billion, up from $21.8 billion a year ago.Analysts polled by FactSet estimate that Disney+ will have 163 million subscribers, a slight erosion from the previous quarter.Mr. Iger will probably not directly address Mr. Peltz’s proxy battle, unless an analyst prods him about it. Disney has already made its position clear, saying in a Jan. 17 securities filing that Mr. Peltz had “no strategy, no operating initiatives, no new ideas and no plan.” In a fresh eruption late last week, Trian said there was an “urgent need” for Disney shareholders to drop Michael B.G. Froman from the company’s board and give the seat to Mr. Peltz or his son. In response, Disney aggressively defended Mr. Froman, a senior Mastercard executive and former U.S. trade representative who has been a Disney director since 2018.Some prominent analysts have taken Disney’s side.“He hasn’t made a good enough case for why he needs a seat on the board,” Mr. Nathanson said, referring to Mr. Peltz.Richard Greenfield, a founder of the LightShed Partners research firm, was one of Mr. Iger’s most ardent critics during his previous tenure at Disney — so much so that Mr. Iger blocked him on Twitter and refused to take questions from him on earnings calls. Mr. Greenfield, however, recently published an aggressive defense of Disney titled “Disney Would Be Wise to Keep Peltz Off the Jedi Council.”Perhaps Mr. Iger will take a question from Mr. Greenfield on Wednesday. More

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      Netflix Adds 2.4 Million Subscribers, Reversing a Decline

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      Netflix, which has about 223 million subscribers worldwide, will soon introduce a lower-priced service with ads in a bid to attract more customers.Netflix said Tuesday that it added more than 2.4 million subscribers in the third quarter — mainly from outside the United States — snapping a streak of customer losses this year that spurred unease among investors and questions about how much more the streaming business could grow.The streaming giant said it now has 223 million subscribers worldwide, after beating its earlier forecast of about one million additions for the quarter. Netflix lost 200,000 subscribers in the first quarter, and nearly one million in the second.“After a challenging first half, we believe we’re on a path to re-accelerate growth,” Netflix said in its quarterly letter to shareholders. “The key is pleasing members.”Netflix is preparing to introduce advertising on its service on Nov. 3, part of a bid to attract more customers with a lower-cost subscription. The advertising-supported tier, priced at $6.99 a month in the United States, will show subscribers four to five minutes of ads per hour of content they watch.Netflix generated about $7.9 billion in revenue in the third quarter, a nearly 6 percent increase from the same period last year. The company generated about $1.4 billion in profit, a 3 percent decrease from a year earlier.The Race to Rule Streaming TVNetflix Ads: The streaming company said it will soon offer a cheaper ad-supported subscription, which will show people four to five minutes of ads per hour of content they watch.Late-Night Talk Shows: TV executives are mulling the future of the genre, which is struggling to make the leap to the streaming world.Apple’s Will Smith Movie: After a long discussion, Apple said it will release the film “Emancipation” — the actor’s first since his infamous slap at the Oscars — in December.Cable Cowboy: The media mogul John Malone opened up about the streaming wars, the fast-changing news business and his own future.Netflix shares were up more than 10 percent in after-hours trading.Netflix said in its letter to shareholders that it expected to add 4.5 million subscribers in the fourth quarter, a 46 percent decrease from the 8.3 million subscribers it added during the same period last year. Netflix also said it would stop providing guidance to investors on its projected subscriber count beginning next quarter.Rich Greenfield, an analyst for Lightshed Partners, said the results indicated that Netflix would flourish as competitors continue to lag behind.“I think the reports of streaming’s death or maturity have been greatly exaggerated,” Mr. Greenfield said.The decision to introduce an advertising option on Netflix was an about-face for the company, which for years had highlighted its ad-free experience as a selling point for customers. But this year, after announcing subscriber losses on the company’s first-quarter earnings call, the co-chief executive Reed Hastings reversed course, saying that an advertising-supported plan would allow customers to choose their experience.Streaming has become an increasingly competitive industry in recent years. Disney, for instance, reported in August that it had about 221 million subscriptions across its bundle of services. It will start offering a lower-priced advertising tier for Disney+ in December.Mr. Hastings expressed relief about the company’s financial results during a video interview conducted by an analyst that was posted by Netflix on Tuesday evening.“Well, thank God we’re done with shrinking quarters,” Mr. Hastings said, laughing.Netflix is breaking with convention in other ways this fall. The company plans to release “Glass Onion: A Knives Out Mystery” in 600 theaters across the United States for one week beginning on Nov. 23 ahead of its streaming debut, the first time the company has struck a deal with the nation’s largest theater chains at once. The movie, written and directed by Rian Johnson, is the anticipated follow-up to the 2019 hit starring Daniel Craig as the Delphic detective Benoit Blanc.Netflix told employees this year that it was also planning to crack down on password sharing, which allows users to watch content without paying for a subscription. The research firm MoffettNathanson estimates that 16 percent of Netflix users share passwords, more than any other major U.S. streaming service. Netflix said in April that passwords were being shared with an additional 100 million households, according to its estimate.The company has also cracked down on costs. In May, Netflix laid off about 150 workers across the company, primarily in the United States, or about 2 percent of its total work force. Netflix said in a statement that the cuts had been spurred by the company’s slower revenue growth.Despite the changes, Netflix hasn’t yet been able to reverse a precipitous decline in its share price. The company’s stock has tumbled more than 60 percent over the last year amid a broader market slump, as investors and analysts grapple with the economics of streaming video.During the third quarter, Netflix released a mix of films and TV shows, including “The Gray Man,” a big-budget action film starring Ryan Gosling and Chris Evans and directed by Joe and Anthony Russo, the sibling filmmakers behind “Avengers: Infinity War.” Other popular titles included the serial killer show “Monster: The Jeffrey Dahmer Story”; the romantic drama “Purple Hearts”; and “Stranger Things,” which released the second half of Season 4 near the end of last quarter. More

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      Regal Cinemas Parent Cineworld Files for Bankruptcy

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      The British movie theater chain Cineworld, weighed down by a mammoth debt pile, filed for Chapter 11 bankruptcy in the United States on Wednesday, having failed to rebound from the pressure inflicted by the pandemic.Cineworld, the world’s second-largest theater chain after AMC Theaters, will seek to significantly reduce its debt through reorganization, the company said in the filing.The company, which is based in London and operates Regal Cinemas in the United States, reported $8.9 billion in debt at the end of 2021, including $4 billion in lease liabilities. Some of the debt was taken on in the pandemic as the company sought to outlast lockdowns that had sapped its revenue.Cineworld said Wednesday in its filling that it had secured $1.94 billion in debtor-in-possession financing that would allow it to keep up its operations while it restructures its obligations.Movie theaters worldwide have faced financial challenges in the last few years, brought on by popular streaming services like Netflix and pandemic shutdowns. Some theater chains have resorted to a number of tactics to bring in revenue, including membership packages, mobile food ordering and expanded alcohol sales.The period from May to October typically accounts for 40 percent of annual ticket sales, but theaters struggled this summer despite strong turnout for films like “Jurassic World Dominion,” “Minions: The Rise of Gru” and “Thor: Love and Thunder.”Cineworld did not immediately respond to a request for comment.“The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point,” Mooky Greidinger, the company’s chief executive, said in the filing. “This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit of a de-leveraging that will create a more resilient capital structure and effective business.”Shares of Cineworld, which are traded on the London Stock Exchange, have lost close to 86 percent of their value since the beginning of the year and the company reported a loss of $565.8 million in its most recent earnings report.The filing signals a substantial decline for the company. Before the pandemic, Cineworld had entered an agreement to acquire the Canadian company Cineplex, but it backed out of the deal in June 2020 after the pandemic hit. Cineplex sued for breach of contract, winning a fine of close to $1 billion from a Canadian judge, which Cineworld has yet to pay. More

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      Disney+ Added 7.9 Million Subscribers Last Quarter

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      Disney+ added 7.9 million subscribers in the most recent quarter for a total of 138 million worldwide, the company announced Wednesday, helping it avoid the streaming slowdown that has lately tanked the stock price of Netflix.Like most media companies, Disney’s stock has been pummeled in the wake of Netflix’s announcement last month that it had lost 200,000 subscribers in the first three months of the year and that it expected to lose two million more this quarter. After years of applauding media companies for losing billions on streaming, investors are now applying pressure to find a path to profitability.The release of films like Pixar’s “Turning Red” helped Disney+ attract subscribers in the first quarter, which ended April 2. Shares of Disney were down about 3 percent in after-hours trading following the earnings announcement.Disney’s results are a bit of good news for Bob Chapek, the chief executive, who has been dealing with a public relations crisis stemming from the company’s response to Florida school legislation that, among other things, restricts classroom discussion of sexual orientation and gender identity. (Disney is the state’s largest private employer.)The company initially refrained from speaking out against the bill publicly but reversed itself after an internal revolt. Mr. Chapek then denounced the legislation, which earned him the ire of conservatives, including Florida Gov. Ron DeSantis. Last month, Republican lawmakers in Florida revoked a 1967 law that allowed Walt Disney World to function as its own quasi government. In the wake of the uproar, Geoff Morrell, who joined Disney in January as its most senior government relations and communications executive, resigned last month.Revenue at Disney increased 23 percent compared with last year, to $19.2 billion, but missed analyst expectations. Disney said it took a hit from a decision to pull some of its content back from other distributors in favor of its own channels, which meant a reduction of $1 billion in licensing revenue as part of a trade-off to grow its direct-to-consumer business.Disney reported earnings per share of $1.08, missing analyst expectations of $1.17.Disney’s theme parks unit came roaring back from a year ago, when the Covid-19 pandemic stunted in-person attendance. Revenue in the division doubled compared with the same period last year, with a new line-skipping system driving increases.As streaming services look for more subscribers, India is shaping up to be an important market. Deep-pocketed media companies are preparing to bid for rights to show cricket matches from the popular Indian Premier League. Disney currently has the rights to stream the matches on its Hotstar service, which it acquired in its 2019 megadeal with 21st Century Fox. Losing those rights could be a blow. However, Mr. Chapek has said that Disney can reach its subscriber targets even if it does not retain those rights.On a call following the earnings announcement, Mr. Chapek said that Disney would eventually become more aggressive about moving major live sports onto the ESPN+ streaming service. The cash generated by the lucrative portfolio of ESPN cable channels currently makes that untenable, so the company is taking a measured approach to sports streaming, Mr. Chapek said.“What we’re doing is sort of putting one foot on the dock if you will, and one foot on the boat,” Mr. Chapek said.Mr. Chapek also responded to an analyst question about the lack of new Disney movies that have opened in the Chinese theatrical market, where the company has had an uneven record in recent years. Mr. Chapek said that Disney films were performing well without help from moviegoers in China, pointing to the success of “Doctor Strange in the Multiverse of Madness.”“We’re pretty confident that even without China — if it were to be that we continue to have difficulties in getting titles in there — that it doesn’t really preclude our success,” Mr. Chapek said. More

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      IMAX Looks Beyond Movies to Live Events

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      To combat the decline of theatergoing, the large-format cinema company will show events like concerts, stand-up comedy and e-sports tournaments.As Kanye West thundered through “Black Skinhead” at the Los Angeles Coliseum in December as part of a benefit concert, young fans in the front row threw their bodies around in wild abandon. Others pumped their fists in the air and shouted along to the lyrics: “Pardon, I’m getting my scream on!”Except these fans were nowhere near the Coliseum. They were inside a suburban movie theater. IMAX, the large-format cinema company, had teamed up with Mr. West to expand the concert’s live footprint by beaming his performance in real time to 35 IMAX theaters, adding more than 10,000 seats. Although the first-of-its-kind event was also available to stream live on Amazon Prime Video, IMAX sold out its shows.“It’s hard to beat a six-story Kanye standing in front of you,” Richard L. Gelfond, IMAX’s chief executive, said in a phone interview.Kanye X Drake Concert IMAX Reaction🔥👀 pic.twitter.com/1uwHgz0dM5— Rap301 (@_Rap301) December 12, 2021
      Mr. Gelfond needs a lot of ticket buyers to agree with him — and not just for events involving Mr. West, who did another live collaboration with IMAX on Tuesday night, this time in 60 theaters, with a near-sellout crowd of almost 18,000 and tickets costing $20 to $30. In the coming months, IMAX intends to expand its menu to include stand-up comedy and e-sports tournaments. A company spokesman said negotiations were underway with several pop stars for concerts. H.E.R., the R&B sensation, has already agreed to collaborate with IMAX on a project. (One challenge: artist punctuality. Mr. West started his Tuesday performance more than two hours late.)Other events will revolve around exclusive film screenings, with stars and filmmakers participating in live question-and-answer sessions. Frances McDormand and the director Joel Coen did one tied to “The Tragedy of Macbeth,” a film that was primarily distributed on Apple TV+. Peter Jackson fielded questions after an IMAX-only release of his Disney+ documentary, “The Beatles: Get Back.” Both streaming services were looking for ways to “eventize” the content — to focus attention on “Macbeth” and “Get Back” so they didn’t get lost in the torrent of streaming-service offerings.A discussion featuring the actor Frances McDormand and the filmmaker Joel Coen was shown at 17 IMAX theaters after a screening of “The Tragedy of Macbeth” in December.Loren Wohl for IMAXIn December, Gwen Stefani hosted an IMAX fan event live from her house, where she screened her favorite holiday film (“Elf,” which had never been shown in the IMAX format) and promoted her Christmas album. Steven Spielberg and members of his “West Side Story” cast also participated in an IMAX event.“If you don’t keep reinventing yourself, you’re not going to move your business forward,” Mr. Gelfond said. “So we’ve been working for the last few years on events, what we informally call IMAX 3.0. The world is changing, and the movie industry is changing.”Mr. Gelfond was referring to the ascendance of streaming services and the decline of traditional moviegoing. Both trends have been percolating for years, but they intensified during the pandemic, when many theaters were closed. Studios are now diverting most of their dramas, musicals, comedies and modestly budgeted action movies to affiliated streaming services. Leviathan fantasy franchises and sequels will continue to flow to theaters. But how will theater operators fill the gaps in their schedules?Megan Colligan, the president of IMAX Entertainment, noted that live events “often bring in audiences that haven’t been to an IMAX theater and, in many cases, have not been to a movie theater at all in a very long time, sometimes ever.”Ms. Colligan emphasized that IMAX events were not just about throwing content onto a really big screen, but would specifically make use of the company’s premium-format technology. Mr. West and his team, for instance, used 16 extra-high-resolution IMAX cameras to capture the December benefit performance (out of 20 cameras in total).“There was a lot of smoke and mist, and making sure we were capturing that correctly was something that was really important to them,” Ms. Colligan said. She added that the Oscar-nominated cinematographer Larry Sher was the project’s director of photography.Five Movies to Watch This WinterCard 1 of 51. “The Power of the Dog”: More

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      in Music

      Spotify Defends Handling of Joe Rogan Controversy Amid Uproar

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      The company released earnings figures a week after Neil Young and others pulled their music to protest what they called vaccine misinformation on Rogan’s podcast.As Spotify released an earnings report Wednesday underscoring the importance of podcasts to its business model, company officials said that they did not expect their subscriber numbers to be affected by the uproar over accusations that its most popular podcaster, Joe Rogan, had spread misinformation about Covid-19 and vaccines.The company has been embroiled in controversy since Neil Young removed his music from the streaming platform last week, citing Rogan’s podcast and calling Spotify “the home of life- threatening Covid misinformation.” Joni Mitchell and several other artists and podcasters followed suit amid widespread calls on social media to boycott the company. Officials responded by publishing the service’s platform rules and saying that Spotify would begin adding content advisories to podcasts about the coronavirus.But in an earnings call on Wednesday afternoon, Daniel Ek, Spotify’s chief executive and co-founder, said that the company’s expectations of premium users in the current quarter did not anticipate “churn” caused by the controversy over “The Joe Rogan Experience.”“In general, what I would say is, it’s too early to know what the impact may be,” Ek said in the call. “And usually when we’ve had controversies in the past, those are measured in months and not days. But I feel good about where we are in relation to that and obviously top line trends looks very healthy still.”Ek defended the measures the streaming service is taking to combat misinformation, and spoke of “supporting greater expression while balancing it with the safety of our users.”“I think the important part here is that we don’t change our policies based on one creator nor do we change it based on any media cycle, or calls from anyone else,” he said. “Our policies have been carefully written with the input from numbers of internal and external experts in this space. And I do believe they’re right for our platform. And while Joe has a massive audience — he is actually the number one podcast in more than 90 markets — he also has to abide by those policies.”Spotify has been facing pressure over Rogan’s podcast since late December, when a coalition of 270 medical professionals published an open letter criticizing an episode featuring an interview with Dr. Robert Malone, who had been previously banned from Twitter for repeatedly posting misinformation about Covid-19. The letter said Rogan had a history of propagating “false and societally harmful assertions” about the virus, including discouraging vaccination among young people and promoting an unproven treatment for the virus, and called on Spotify to “establish a clear and public policy to moderate misinformation.”The situation reached a boiling point when Young announced he would be removing his catalog, leading several artists to follow, including Mitchell and the guitarist Nils Lofgren. The R&B artist India Arie said Tuesday that she, too, would be pulling her music from the service, citing Rogan’s comments on race. And on Wednesday several of Young’s former bandmates, David Crosby, Graham Nash, and Stephen Stills, asked their record labels to remove their recordings from Spotify.Pushback also came from several of the company’s other high-profile podcast hosts. On Saturday, Brené Brown, the influential author and host of the Spotify exclusive podcasts “Unlocking Us” and “Dare to Lead,” said she would pause releasing new episodes. On Monday, another popular Spotify podcast, “Science Vs.,” said it would cease publishing new episodes other than those meant to “counteract misinformation being spread on Spotify.” In recent days, the podcast hosts Mary L. Trump, Roxane Gay and Scott Galloway have also said they would either remove their shows from the platform or cease publishing.The company reported strong performance overall in the fourth quarter of 2021, including year-over-year growth in both paid subscribers — up 16 percent for a total of 180 million — and monthly active users — up 18 percent for a total of 406 million. It also said revenue from advertisements had reached a record 15 percent of total revenue. Podcasts — Spotify says there are now over 3.6 million episodes on its platform — have been an important part of its revenue strategy.Whether that trajectory will continue is uncertain. The company’s stock dropped in after-hours trading.“Obviously, it’s been a few notable days here at Spotify,” Ek said during the call. He added that “there’s no doubt that the last several weeks have presented a number of learning opportunities.” More

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      Netflix Earnings Results: Q3 2021

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      It’s been a tale of two Netflixes over the last few weeks, as a long-anticipated Dave Chappelle special drew sharp condemnations from staffers and critics alike and as the South Korean sleeper hit “Squid Game” became a global sensation, making it the streamer’s most-watched series to date. (Both detail a grim view of the world.)Neither contributed much to the company’s results in the third quarter, which ran through Sept. 30 (“Squid Game” debuted in the last week of September and Mr. Chappelle’s special became available in October), but Netflix gained 4.4 million new subscribers in the period, beating its own estimate of 3.5 million. Netflix now has 222 million customers, about 67 million of them in the United States. The company booked $7.5 billion in revenue and $1.4 billion in profit, slightly better than expectations.Both shows do matter to the company’s current quarter, for which Netflix anticipates adding 8.5 million new customers, one of the biggest quarterly forecasts in the company’s history. Netflix also said it expected to generate $365 million in profit on $7.7 billion in sales. In other words, as far as Wall Street is concerned, what controversy?Mr. Chappelle’s show became a rare public relations nightmare for Netflix as critics saw it as a hostile invective toward the transgender community rather than the boundary-pushing stand-up routine that Ted Sarandos, the company’s co-chief executive, defended it as. Employees have threatened to walk out in protest on Wednesday, and some in the creative community have called out Mr. Sarandos.Jaclyn Moore, the head producer for the Netflix series “Dear White People,” said she would no longer work for the company if “they continue to put out and profit from blatantly and dangerously transphobic content.”Then there’s “Squid Game.” The dystopian series pits indebted citizens against each other in a set of children’s games where losers die and the winner walks away with millions in cash. The show has stormed the globe and has become one of Netflix’s most valuable new franchises, inspiring memes and costumes just in time for Halloween.“A mind-boggling” 142 million accounts watched at least the first two minutes of the show in its first month, making it the No. 1 program in 94 countries, including the United States, the company said. “The breadth of ‘Squid Game’s’ popularity is truly amazing.”A set of leaked internal documents revealed that “Squid Game,” which cost $21 million to make, is worth at least $891 million by one Netflix metric, according to a recent report in Bloomberg News. The story revealed for the first time how Netflix determines the value of its programming, a mystery that has long frustrated Hollywood’s producers.Unlike traditional television, where economics are governed by ratings and cable licensing fees, Netflix has a completely different set of financial goals. It has no live programming, no commercials, no prime time. Unlike network TV, Netflix doesn’t make more money when viewers watch more hours of programming. It makes more money when people sign up.The company can estimate whether subscribers joined to watch a specific show or even if a program kept customers from leaving. Based in part on that data, Netflix ascribes an “efficiency” metric to a show based on the value of each viewer, according to the documents leaked to Bloomberg. “Squid Game” has a very high “efficiency” rating, akin to a profit measure.Netflix’s share of the streaming pie has continued to shrink as competitors like Disney+, AppleTV+ and HBO Max have entered the market. The company’s “demand interest” — a measure of the popularity of shows and streaming services created by Parrot Analytics and a key barometer of how many new subscribers services are likely to attract — has started to fall. Netflix’s share of interest dropped 2.5 percentage points to 45.8 percent in the third quarter, while Disney+ and AppleTV+ gained in market share, the measurement firm said.Netflix said it would start disclosing different data points on viewership such as hours viewed and would no longer report the number of accounts watching a particular program.Netflix is looking for new ways to keep customers glued to its service and has started experimenting with games. The company recently acquired Night School Studio, the producer of the story-based game Oxenfree.“It remains very early days for this initiative and, like other content categories we’ve expanded into, we plan to try different types of games, learn from our members and improve our game library,” Netflix said on Tuesday. More