Disney's Iger may have to add slowing growth to his turnaround checklist
(Reuters) - Walt Disney Co's quarterly revenue growth is expected to hit its lowest in nearly two years, underlining the hurdles that Chief Executive Bob Iger faces in revitalizing a company that is now caught in what could be a long strike by Hollywood writers.
The results, slated for Wednesday, will mark the first full quarter since Iger returned in November to kick off an overhaul that has seen the company outline 7,000 job cuts, lower theme park ticket prices and prioritize streaming profitability.
"Disney continues to face big challenges despite deflecting its second activist investor revolt in less than six months," said Insider Intelligence analyst Paul Verna, referring to a board seat tussle that Nelson Peltz called off in February.
Disney is also embroiled in a legal fight with Florida Governor Ron DeSantis over state efforts to control Disney World. Last week, DeSantis signed a bill into law that gives a new board he controls the power to void development agreements its predecessor body signed with Disney.
The Hollywood writers' strike has added to the uncertainty, though analysts said streaming services are "best positioned" during the strike as many of them have a stockpile of content.
"A roughly 90-day strike would enable many companies to reduce content spend for a quarter and clean up their books in the short term," Brandon Katz of Parrot Analytics said.
"Yet on a long enough timeline, the slowdown of new content would likely lead to an increase in (subscriber) churn at a time when every major media player is striving for streaming profitability."
The media and entertainment giant's Disney+ streaming service is expected to add a net 1.3 million subscribers in the second quarter, compared with additions of 7.9 million a year ago, according to Visible Alpha.
"Star Wars" spin-off "The Mandalorian" was Disney+'s most in-demand series both in the U.S. and worldwide during the quarter, according to data provider Parrot Analytics.
The streaming unit's operating loss is expected to widen to about $750 million from a loss of nearly $670 million a year earlier.
The losses will likely be cushioned by a strong showing for Disney's parks, experiences and products unit, where revenue is set to jump 14%, while operating profit for the division is likely to rise 20%.
Overall revenue for Disney is expected to rise 7.5% from $20.27 billion a year earlier, according to Refinitiv data, when there was a $1 billion revenue reduction due to an early contract license termination.
That would mark the slowest growth since the second quarter of 2021, as the company's cable business also takes a hit from an ad market slowdown.
(Reporting by Chavi Mehta, Akash Sriram and Aditya Soni in Bengaluru; Editing by Shounak Dasgupta)