Disney is starting to shed streaming subscribers

Disney’s (DIS-1.95%) streaming business once again turned a profit last quarter. But its flagship platform is starting to lose subscribers.

The House of Mouse on Wednesday released its fiscal first-quarter results, with growth being driven primarily by the company’s box office dominance and profit gains in its streaming business.Disney stock rose about 1% during pre-market trading Wednesday.

“Overall, this quarter proved to be a strong start to the fiscal year,and we remain confident in our strategy for continued growth,” Disney CEO Bob Iger said in a statement. He noted that the company had the top three movies last year: Inside Out 2, Deadpool & Wolverine, and Moana 2.

But on the streaming side, paid subscriptions for Disney+ fell 1% from the previous quarter, to 124.6 million subscribers. The company also said it expects another “modest decline” in the second quarter.

Despite this, Disney reported that its overall streaming business, which includes Hulu and ESPN+, turned a profit, with operating income rising more 100% to $293 million in the three months ending Dec. 31. That compared with a loss of $138 million during same period in 2023.

Disney may have been late to the streaming game — Disney+ launched in 2019, more than a decade after Netflix (NFLX+1.38%) — but it seems to have finally hit its stride, as long as it can stop or minimize shedding subscribers. After five years, the company’s streaming division finally urned a profit for the first time last year. And more recently, Disney expanded its portfolio by acquiring the sports-centric FuboTV. Disney has also raised its prices.

Overall, Disney’s profit rose 38% in in the three months ending Dec. 31 to $2.6 billion, from $1.9 billion in the same period the prior year. The company’s revenue was up 5% year-over-year to $24.7 billion in its fourth quarter, from $23.5 billion.. Its earnings per share came to $1.76, outperforming Wall Street expectations of $1.45, according to a consensus estimate from analysts surveyed by FactSet (FDS+0.24%)

Amid all this, Disney continues to struggle with its traditional television assets, which include the broadcast network ABC and its cable channels National Geographic, FX, and others. The company reported that its operating income from the linear networks fell 11% to $1 billion million in its fourth fiscal quarter, from $1.2 billion in the same quarter in 2023.

Unlike some of its competitors, the company remains committed to its broadcast and cable networks — for now.