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Disney Reports Strong First Quarter Despite Warning Signs for Theme Parks
The Walt Disney Co. posted robust financial results for its first quarter, driven primarily by successful theatrical releases including “Zootopia 2” and “Avatar: Fire and Ash.” The entertainment giant reported earnings of $2.4 billion, or $1.34 per share, for the three months ended December 27, though this represents a decline from $2.64 billion, or $1.40 per share, earned in the same period last year.
Adjusted earnings reached $1.63 per share, exceeding analysts’ expectations of $1.57 per share as projected by Zacks Investment Research. Revenue came in at $25.98 billion, just shy of Wall Street’s forecast of $25.99 billion.
“We are pleased with the start to our fiscal year, and our achievements reflect the tremendous progress we’ve made,” CEO Bob Iger said in a statement. “We delivered strong box office performance in calendar year 2025 with billion-dollar hits like Zootopia 2 and Avatar: Fire and Ash, franchises that generate value across many of our businesses.”
The company’s Disney Entertainment division, which encompasses movie studios and the streaming service, saw a 7% revenue increase. Meanwhile, the Experiences division, which includes theme parks and cruise operations, posted a 6% revenue gain, reaching a record $10 billion with operating income rising to $3.31 billion.
Despite these positive results, Disney cautioned investors about potential headwinds in the second quarter. The company warned that its Experiences division will likely see only modest operating income growth, partly due to declining international tourism to the United States.
This drop in foreign visitors has been attributed to several factors, including political uncertainty following President Donald Trump’s return to the White House, increased tariffs, immigration policy changes, and controversial statements about potentially acquiring territories like Canada and Greenland.
The company has already pivoted its strategy in response to these challenges. Chief Financial Officer Hugh Johnston explained during the earnings call that Disney has redirected its marketing, sales, and promotional efforts toward domestic audiences to maintain park attendance levels. This strategy appears to be working so far, with attendance at domestic parks increasing by 1% during the quarter.
In the Sports segment, operating income fell to $191 million from $247 million a year earlier. While advertising revenue increased, this gain was offset by higher programming and production costs, along with a decrease in subscription and affiliate fees. A temporary dispute with YouTube TV negatively impacted operating income by approximately $110 million.
That dispute, which resulted in a blackout of Disney channels including ABC and ESPN for YouTube TV subscribers for over two weeks, was resolved in November when the companies reached a new distribution agreement. The resolution came as a relief to millions of subscribers who had lost access to popular Disney content during the standoff.
The Burbank, California-based entertainment conglomerate has been implementing strategic shifts under Iger’s leadership since his return to the company. These efforts appear to be bearing fruit in certain segments, particularly in theatrical releases and theme park operations, despite the emerging challenges in international tourism.
Following the earnings release, Disney’s shares slipped 2% in premarket trading, suggesting investors may be concerned about the cautionary outlook for the company’s theme park business in the coming quarter.
As Disney navigates these complex market dynamics, industry analysts will be watching closely to see if the company’s domestic-focused strategy can effectively counter the decline in international visitors and maintain the momentum in its Experiences division, which has been a reliable profit center for the entertainment giant.
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12 Comments
While the box office success is great news, the slight miss on revenue expectations is a bit concerning. Disney will need to keep a close eye on costs and margins to ensure they maintain profitability.
That’s a fair point. Even with the strong earnings, Disney can’t afford to be complacent. Controlling expenses and optimizing their operations will be crucial going forward.
It’s interesting to see Disney’s movie studio performance outpacing their theme parks in this quarter. That shift in emphasis could signal a strategic pivot for the company going forward.
Definitely, the movie business appears to be carrying more weight for Disney at the moment. It will be worth watching if they continue to prioritize film and streaming over the parks.
It’s impressive that Disney was able to post strong financial results despite some potential warning signs for their theme parks. Their ability to leverage successful movie franchises across multiple business units is a real strength.
Diversifying their revenue streams is crucial for Disney, especially with the challenges the theme park industry has faced lately. Relying on box office hits helps offset any softness in other areas.
I wonder how much of Disney’s success can be attributed to the continued popularity of ‘Avatar’ and the ‘Zootopia’ franchise. Those seem to be the key drivers behind their impressive quarterly performance.
You make a good point. Established franchises like those are invaluable assets that Disney can leverage across their business segments.
Wow, Disney is really firing on all cylinders with their box office hits! ‘Zootopia 2’ and ‘Avatar: Fire and Ash’ must be pulling in big crowds. I’m curious to see if they can keep this momentum going throughout the year.
You’re right, Disney has a knack for creating blockbuster franchises. These films likely provide a nice boost to their bottom line.
CEO Bob Iger’s positive comments about the company’s progress are encouraging, but I wonder if there are any underlying challenges or risks that haven’t been fully addressed yet. The entertainment industry can be volatile.
That’s a good observation. Even successful companies like Disney need to remain vigilant and adaptable to navigate the constantly evolving media landscape.