The Walt Disney Co DIS CEO Bob Chapek said on the company's fourth-quarter earnings call on Tuesday that the entertainment giant had reached a turning point in streaming.
Why It Matters: Chapek said losses should narrow from this point and Disney+ is expected to be profitable by the end of 2024.
Chapek laid out three factors that lead to the belief that Disney+ will achieve profitability.
"First, the benefit of both price increases and the launch of the Disney+ ad tier next month. Second, a realignment of our costs, including meaningful rationalization of our marketing spend."
The final factor, according to Chapek, is that the company is leveraging its "learnings and experience" in direct-to-consumer (DTC) to optimize its content and distribution approach.
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Why It Matters: DTC operating losses were $1.5 billion in the fourth quarter, according to Disney CFO Christine McCarthy.
The company is set to launch its ad-supported Disney+ variant on Dec. 8 and will raise the price of its existing basic plan.
Chapek said Disney had secured more than 100 advertisers for its U.S. launch window across categories and “strong base pricing."
Disney's fourth-quarter earnings per share of 30 cents missed the Street estimate of 56 cents per share, according to Benzinga data.
Price Action: On Tuesday, Disney shares dropped 6.9% to $93.01 in the after-hours trading after closing 0.5% lower at $99.94 in the regular session, according to data from Benzinga Pro.
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