By Darasimi Kikelomo
After years of anticipation, Disney’s streaming services have nearly turned a profit, signaling a significant shift in the media landscape as cable TV’s dominance wanes.
In the fiscal second quarter, Disney reported a substantial improvement in its streaming units, with Disney+, Hulu, and ESPN+ collectively losing just $18 million compared to a staggering $659 million loss a year ago. Excluding ESPN+, Disney+ and Hulu even managed to generate $47 million in profit, a stark contrast to last year’s $587 million loss in the same quarter.
This development underscores a long-held belief among major media companies that streaming would eventually supplant cable TV as the primary revenue source. While this transition hasn’t fully materialized, Disney’s latest earnings report suggests that the tipping point is imminent. Notably, the company’s traditional linear TV results were dismal in comparison.
Disney’s reluctance to offer ESPN outside of the cable bundle, a decision driven by the network’s profitability within traditional TV, is now changing rapidly. The decline in linear TV viewership, coupled with rising programming costs associated with events like the College Football Playoff, contributed to a 9% drop in operating income for ESPN, despite a 3% revenue increase to $4.21 billion. The boost in ESPN advertising partially offset the decline in cable subscribers.
Moreover, Disney’s other linear networks, including ABC, Disney Channel, FX, National Geographic, and Disney Junior, experienced even steeper declines. Revenue from linear networks, excluding ESPN, plunged by 8% to $2.77 billion, while operating income plummeted by a staggering 22% to $752 million.
Disney’s successful foray into streaming, coupled with the challenges faced by its traditional linear TV business, marks a significant milestone in the ongoing transformation of the media industry. As streaming services continue to gain momentum, the decline of cable TV appears inevitable, signaling a new era for consumers and content creators alike.
