The Walt Disney Company Reports $7.5 Billion in Overall Cost Reductions for Fiscal Year 2023, $2 Billion More Than Originally Targeted

According to the Q4 2023 and fiscal 2023 earnings report from The Walt Disney Company, revenues for the quarter and year increased by 5 percent and 7 percent when compared to the prior year, and reached major reductions when compared to previous estimates.

All three of Disney’s business segments saw significant increases in fourth quarter operating income. Restructuring enabled the company to be more efficient, leading to significant operating cost reductions of $7.5 billion — $2 billion more than targeted earlier this year.

Diluted earnings per share (EPS) from continuing operations for the quarter increased to $0.14 from $0.09 in the prior-year quarter and prior year, and decreased to $1.29 from $1.75 in the prior year. Excluding certain items, diluted EPS for the quarter rose to $0.82 from $0.30 in the prior-year quarter and for the year, and increased to $3.76 from $3.53 in the prior year.

Experiences operating income increased by over 40 percent versus the prior year quarter, with year-over-year growth at all international sites, Disney Criuse Line, Disney Vacation Club, and Disneyland Resort. At Walt Disney World, Disney continues to manage against wage inflation and challenging comparisons to the prior year from the 50th anniversary celebration.

As of now, core Disney+ subscribers are at 112 million as of the end of fiscal 2023, including an increase of nearly 7 million in Q4 2023. Disney credits this to the streaming releases of “Elemental,” “The Little Mermaid” live-action film, “Guardians of the Galaxy, Vol. 3,” and original series “Ahsoka” and the Korean original series “Moving.”

Ad-supported Disney+ grew by approximately 2 million in Q4. More than 50 percent of new U.S. subscribers chose the ad-supported tier versus other tiers, and have spent 34 percent more time watching the service overall.

Domestic ESPN grew in revenue and operating income in fiscal 2022 and 2023. This fiscal year also saw the network deliver the best overall viewership in four years, and the highest viewership in the 18-24 year-old demographic in the same time period.

Iger stated during the initial remarks that Disney is beyond the period of fixing and building its businesses again. Their next goal is to turn streaming into a profitable growth business, with Disney estimating that its streaming services will achieve profitability in Q4 2024, though progress “may not look linear from quarter to quarter.” Iger also expects that cracking down on account sharing for Disney+ will not make a major impact until 2025.

Disney expects to grow free cash flow in fiscal 2024 significantly versus fiscal 2023, hoping to approach levels last seen before the COVID-19 pandemic.

Our results this quarter reflect the significant progress we’ve made over the past year. While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again. We have a solid foundation of creative excellence and innovation build over the past century, which has only been reinforced by the important restructuring and cost efficency work we’ve done this year, and we’re on track to achieve roughly $7.5 billion in cost reductions. Combined withour portfolio of valuable businesses, brands and assets — and the way we manage them together — Disney has a strong hand that differentiates us from others in our industry.

As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences businesses. We have already made considerable advancements in these four areas and will continue to move forward with a sense of purpose and urgency, and I’m bullish about the opportunities we have before us to create lasting growth and increase shareholder value.

Disney CEO Bob Iger

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