Walt Disney (NYSE:DIS) reported fiscal first-quarter results that exceeded market expectations, supported by continued strength in its theme parks and experiences business, even as a contractual dispute with Alphabet-owned YouTube weighed on overall profitability.
Revenue rose 5.2% year-on-year to $25.98 billion, ahead of Bloomberg consensus estimates of $25.69 billion.
Disney’s experiences segment — which includes theme parks, resorts and cruise operations — posted a 6.3% increase in revenue to $10.01 billion, also beating Wall Street forecasts. The performance was driven by higher guest spending, solid attendance at U.S. parks and the debut of the new Disney Destiny cruise ship. Operating income for the division climbed 6.4% to $3.31 billion.
The entertainment segment, which houses Disney’s streaming platforms and film studios, also benefited from stronger theatrical distribution revenue. New releases such as “Zootopia 2” and “Avatar: Fire and Ash” lifted box-office performance, pushing entertainment revenue up 6.8% to $11.25 billion.
However, higher marketing costs for those releases, increased streaming-related expenses and the acquisition of FuboTV pressured profitability in the segment. Operating income in entertainment fell 35% to $1.1 billion in the quarter ended December 27.
At group level, total segment operating income declined 9% to $4.6 billion. Disney said the drop was largely due to a contract dispute with YouTube TV that resulted in a temporary blackout of Disney-owned channels on the platform. The disruption reduced earnings by about $110 million, with the impact felt most acutely in the company’s sports business.
Despite those challenges, CEO Bob Iger said he was “pleased” with the company’s start to the new fiscal year, as attention increasingly turns to succession planning at the top of the group.
According to a Wall Street Journal report citing people familiar with the matter, Iger has told associates that he intends to step down from the role and reduce his day-to-day involvement before his contract expires on December 31. The WSJ also reported that Disney’s board is expected to meet soon to vote on his successor, with several media outlets naming experiences division chair Josh D’Amaro as the leading candidate.
Shares in Disney, which said it expects to deliver double-digit growth in adjusted earnings per share in fiscal 2026, were higher in U.S. premarket trading on Monday.