Disney profit doubles amid USD3.3 billion Hulu income tax benefit

Walt Disney Co on Wednesday said it is taking "major steps forward in streaming" as revenue in its Experiences segment - its theme parks - drove third-quarter top line gains.

The Burbank, California-based media and entertainment company said net income doubled in its third quarter that ended June 28 to USD5.26 billion from USD2.62 billion a year earlier. Diluted earnings per share rose to USD2.92 from USD1.43.

Revenue edged up just 2.1% to USD23.65 billion from USD23.16 billion, but earnings also benefited from a Hulu Inc-linked tax benefit.

Income tax for the quarter swung to a EUR2.73 billion credit from a EUR251 million expense the year prior. Disney said the quarter included a USD3.3 billion non-cash tax benefit recognised upon the change in Hulu's income tax classification.

Back in November 2023, Disney said it would purchase the remaining 33% stake of the streaming service for USD8.6 billion, and in June last year said it will pay an additional USD439 million to complete the transaction.

Supporting its top line, Experiences revenue rose 8.3% to USD9.09 billion from USD8.39 billion, while Entertainment revenue edged 1.2% higher to USD10.70 billion from USD10.58 billion.

By contrast, Sports dragged on the top line as revenue fell 5.5% to USD4.31 billion from USD4.56 billion.

Shares in the business were down 1.8% at USD116.19 during pre-market dealings in New York.

Looking to the full-year, Disney is targeting adjusted EPS of USD5.85, up 18% on the prior financial year.

"The company is taking major steps forward in streaming with the upcoming launch of ESPN's direct-to-consumer service, our just-announced plans with the NFL, and our forthcoming integration of Hulu into Disney+, creating a truly differentiated streaming proposition that harnesses the highest-calibre brands and franchises, general entertainment, family programming, news, and industry-leading sports content."

The National Football League sold its NFL Network and Sunday RedZone television show to Disney's ESPN Inc on Tuesday in exchange for 10% stake in the US-based sports television network.

Iger continued: "We have more expansions underway around the world in our parks and experiences than at any other time in our history. With ambitious plans ahead for all our businesses, we're not done building, and we are excited for Disney's future."