Disney stock surges 7% after beating Wall Street expectations

Disney announced a new sports streaming service with Warner and Fox due in autumn. It also confirmed a tie-up with Fortnite.

Disney has announced a new sports streaming service in partnership with Warner and Fox that is set to launch in the fall. This news comes as the company reported better-than-expected earnings, driven by record results at its theme parks and continued cost-cutting efforts.

In addition to the streaming service, Disney has also announced a partnership with Epic Games to bring its beloved characters to Fortnite. This collaboration will allow consumers to "play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more," according to a press release.

Disney CEO Bob Iger expressed excitement about the collaboration, stating that it marks Disney's biggest entry into the world of games and offers significant opportunities for growth and expansion. The company will invest $1.5 billion to acquire an equity stake in Epic Games as part of the multiyear project.

The tie-up with Epic Games will enable Disney to bring together its collection of stories and experiences for a broad audience in groundbreaking new ways. Tim Sweeney, CEO and founder of Epic Games, emphasized the potential of the collaboration, stating that it will build a persistent, open and interoperable ecosystem that will bring together the Disney and Fortnite communities.

The news of the tie-up comes as Disney reported its quarterly earnings for the end of 2023. The company's board of directors also authorized a $3 billion share repurchase program and declared a dividend of 45 cents a share.

Disney reported earnings of $1.22 per share, surpassing analysts' consensus forecast of 99 cents per share for October through December. The company also cut $500 million in costs during the quarter and remains on track to meet or exceed $7.5 billion in savings by the end of the current fiscal year.

Disney's Experiences unit, which includes its theme parks and consumer products, posted record revenue, operating income, and operating margins. The company reaffirmed guidance that its streaming business would reach profitability by September, with streaming operating losses reduced to $138 million in the quarter.

The company's Entertainment unit, which includes its traditional TV business, streaming, and film, reported revenue of $9.98 billion, with the streaming business showing a 15% improvement from a year ago. The results were dragged down by lower ad revenue at ABC and lower fees from the continued losses of cable subscribers.

Overall, Disney's quarterly earnings exceeded expectations, demonstrating the company's return to a period of sustained growth and shareholder value creation. The tie-up with Epic Games and the upcoming sports streaming service are part of Disney's ambitious plan for growth and expansion.