As people stuck at home seek ways to entertain themselves, Disney reached 100 million paid subscribers across Disney+, ESPN+ and Hulu. Overall, Disney’s direct-to-consumer segment grew 2% to $4 billion.
Hulu subscribers increased 27% year over year 35.5 million. People opting for Hulu’s live TV and SVOD offering increased 55% to 3.4 million. And SVOD subscribers grew to 32.1 million. Disney+ amassed 57.5 million subscribers globally, with an average revenue per user of $4.62. Because movie theaters continue to be closed, Disney+ will premier “Mulan” for $29.99.
Disney CEO Bob Chapek also echoed WarnerMedia’s observations around the dynamics of acquiring and retaining streaming subscribers.
“New content tends to bring in new subscribers, but the catalog increases engagement and helps us retain subscribers,” Chapek.
Advertising business cuts
Disney’s media business was in strong shape compared to its parks business. Disney’s broadcast revenue increased 12% to $2.5 billion in the quarter, and its cable network revenue declined just 10% to $4 billion
ESPN lost live sports like the NBA season, which dampened ad revenue. But because it deferred paying sports rights, and because it receives fees to carry its channels, the cable networks operating income increased by 50%.
Disney’s broadcast revenue increase of 12% outperformed NBCUniversal’s decline of 1.6%. On the cable side, Disney’s 10% decline put it ahead compared to its peers’ declines: WarnerMedia’s sports-heavy Turner declined 12% year over year and NBCUniversal reported a decline in cable revenue of 14.7%.
With huge portions of its parks and theatrical revenue evaporating, Disney is holding on to $23 billion in cash to help weather the pandemic – too much cash for at least one analyst, who chastised CFO Christine McCarthy for Disney’s conservatism. But given the uncertainty of the pandemic, Disney would rather have too much cash than the alternative.
“What kills a company is a lack of liquidity,” McCarthy responded.