Disney Reports Steaming Profits Surged In 1Q

Disney's streaming profits surged in its fiscal first quarter (ended Dec. 27, 2025), while international visitation to U.S. theme parks slowed, as investor focus intensifies on an imminent announcement of the company's next CEO—potentially as early as this week.

Disney+ and Hulu's combined operating income jumped 72% year-over-year to $450 million, surpassing Wall Street estimates and company guidance. CFO Hugh Johnston credited the growth to strong viewership of legacy films like Avatar and Zootopia (tied to recent sequels), hits such as ABC's High Potential, and reduced cancellations from bundles with the new direct-to-consumer ESPN service.

The company reported total revenue of $25.98 billion, up 7% from the prior year, with adjusted earnings per share beating expectations. Net income fell 6% to $2.4 billion.In contrast, non-streaming entertainment operating income dropped 55% to $650 million amid ongoing cord-cutting pressures.

Last fall, during the YouTube TV blackout, Wall Street analyst estimates pegged Disney's daily losses at around $4.3 million. However, the actual impact proved significantly higher.  The 15-day carriage dispute, which removed the ESPN suite of networks from Google's YouTube TV platform, led to a $110 million reduction in ESPN's operating income for Disney's fiscal year-end quarter. This equates to more than $7 million in daily losses for ESPN alone.

The experiences segment (theme parks, cruises, consumer products) saw revenue rise 6% to $10 billion and operating income increase 6% to $3.3 billion, driven by 1% higher domestic park attendance, 4% growth in per-guest spending, and added cruise bookings from a new ship. However, the company warned of only modest operating income growth in the current quarter, citing "international visitation headwinds" at domestic parks. 

Johnston declined to specify causes—amid broader concerns over diplomatic tensions, tariffs, and visa policies under the Trump administration—and noted a pivot toward more domestic-focused marketing for Disneyland and Walt Disney World.

Streaming profitability remains vital as linear TV declines, while the experiences business continues generating the bulk of profits. The next CEO will need to sustain streaming momentum, navigate traditional TV's ongoing contraction, and drive further experiences growth.

Disney's board is meeting this week in Burbank, California, to vote on Bob Iger's successor. Uncertainty over succession has weighed on the stock for years, following the failed 2020 handoff to Bob Chapek, which led to Iger's return. Recent reports indicate the race has narrowed to internal candidates: Experiences Chairman Josh D'Amaro and Entertainment Co-Chairman Dana Walden, with speculation and internal advocacy intensifying in recent months.