Disney shares sink as streaming business falls shy of profitability

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Disney reported fiscal second-quarter results on Tuesday. Its combined streaming business of Disney+, Hulu and ESPN+ came very close to turning a profit.

Disney’s combined streaming business of Disney+, Hulu and ESPN+ came close to making money in the second quarter. The entertainment giant said Tuesday that its combined streaming business saw revenues of $6.19 billion and an operating loss of just $18 million in the second quarter. That operating loss represented a decrease of 97% from the same period last year. Shares were lower during midday trading. Things were rosier for Disney’s entertainment streaming business of Disney+ and Hulu.

Iger noted that Disney’s path to streaming profitability "will not be linear." "While we’re anticipating a softer third quarter due in large part to the seasonality of our India sports offerings, we fully expect streaming to be a growth driver for the company in the future, and we have prioritized the steps necessary to achieve this," he added.

The company has several streaming initiatives in the pipeline. For Disney+, it will start cracking down on subscribers lending their accounts to non-household members, with the company planning a global password crackdown rollout "in earnest" in September, Iger said. The streaming service will also start offering an in-platform ESPN tile in the U.S. "by the end of this calendar year.

Johnston declined to give a specific timeline for achieving that while speaking with analysts and investors during the earnings call Tuesday morning. Instead, he said the streaming business "is in great shape and we feel good about the growth prospects." Overall, Disney generated $22.08 billion in revenue in the second quarter, up from $21.82 billion in the same three-month period last year but below Wall Street estimates.

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