Disney shares drop as streaming costs drag on earnings

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Walt Disney Co said on Tuesday its marquee streaming service, Disney+, gained more subscribers than Wall Street had expected, but investment costs dragged quarterly earnings below analysts' targets.

Disney+ signage is seen above the convention floor at Comic-Con International in San Diego, California, U.S., July 21, 2022. REUTERS/Bing Guan/File Photosaid on Tuesday its marquee streaming service, Disney+, gained more subscribers than Wall Street had expected, but investment costs dragged quarterly earnings below analysts' targets.

Disney's net income from continuing operations rose 1% to $162 million. Excluding some items, Disney earned 30 cents per share, missing Wall Street's target of 55 cents per share. The company repeated comments in August that losses from its direct-to-consumer business would peak in fiscal 2022 which ended Oct. 1.

The ad-supported version of the Disney+ service will launch in the United States on Dec. 8, bringing a new source of revenue to underwrite the billions the company spends creating original movies and series for the services. Macquarie Research analyst Tim Nollen estimated the ad tier could bring an additional $800 million in ad sales next year.

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