Yesterday, the group unexpectedly reached an agreement with Charter. This resolves their previous issues, with the group ensuring the continuation of a crucial distribution channel, and Charter securing the relevance of their sports and ESPN-based offer.
This development prompts us to analyze Disney's four business segments and its overall evolution. Here are the key figures from their latest annual report:
The "linear" segment, traditional television, still generates $28.3 billion in revenues and $8.5 billion in operating profit. It remains profitable but is facing a long-term decline.
The direct-to-consumer segment, streaming, brings in $19.6 billion in revenues but records an operating loss of $4 billion. Despite rapid revenue growth, it is currently operating at a loss.
The licensing segment generates $8.1 billion in revenues but shows inconsistent ability to generate operating profits. Predicting its performance is challenging.
Lastly, theme parks bring in $28.7 billion in revenue with $7.9 billion in operating profit. Considering the record attendance of the previous year, surpassing these results seems challenging.
In the media sector, Disney funds its streaming segment's development using profits from its "linear" segment, which still enjoys a comfortable margin, although this source is gradually diminishing.
Recently, profits from theme parks have been used to reduce the Group's debt. Disney is also considering a partial sale of ESPN, which would help improve its financial situation but might impact the "linear" profits.
Market skepticism is justified. No major streaming player has proven its ability to generate satisfactory returns on investment. Specifically, Disney has doubled its sales over the last decade but has also seen its consolidated profits cut in half.