Industry Insider: Disney Ends FY25 With Streaming Strength and a $7B Buyback Plan
The Walt Disney Company completed fiscal year 2025 with a fourth quarter that demonstrated both the strength of its diverse portfolio and the company's accelerating transition to a more digitally integrated future. Despite flat quarterly revenue of $22.5 billion compared to the same period last year, Disney's profitability improved dramatically, with income before taxes of $2.0 billion, more than doubling the previous year's $948 million. Revenue increased 3% year on year to $94.4 billion, while adjusted earnings per share increased 19% to $5.93.
Management positioned FY25 as a year of stabilization and disciplined execution, especially in streaming and experiences, two segments that now anchor Disney’s long-term roadmap. “This was another year of great progress as we strengthened the company by leveraging the value of our creative and brand assets,” CEO Bob Iger told investors.
The company set clear priorities for FY26: increase direct-to-consumer margins, maintain sports leadership through ESPN's new streaming platform, advance global franchise output across its studios, and accelerate shareholder returns. Disney anticipates double-digit adjusted EPS growth in FY26, along with a significant capital return program that includes a 50% dividend increase and a plan to double share repurchases to $7 billion.
One of Disney's most notable accomplishments this fiscal year was its consistent profitability in direct-to-consumer streaming. For fiscal year 2025, Entertainment DTC generated $1.3 billion in operating income, up from $143 million the previous year.
DTC operating income increased 39% to $352 million in the fourth quarter, driven by higher subscription revenue, ARPU increases, and subscriber growth across Disney+ and Hulu. Disney+ finished the quarter with 131.6 million subscribers, while Hulu had 64.1 million, bringing the total to nearly 196 million. This represents a sequential increase of 12.4 million subscriptions.
Iger emphasized the importance of this milestone by pointing to Disney’s recent past: “Just three years ago, our DTC business was running a $4 billion operating loss.” The return to profitability, he said, validates Disney's unified app strategy, which is consolidating Hulu and Disney+ domestically while positioning Hulu as the global general entertainment brand within Disney+ markets abroad.
The company intends to continue improving the product experience by improving personalization algorithms, creating a more visually appealing interface, and expanding exclusive perks for subscribers. With these changes underway, Disney expects to reach a 10% operating margin for Entertainment DTC SVOD in fiscal 2026.
Disney's sports division also underwent a significant transformation. The launch of the fully enhanced ESPN streaming service marked the first time fans could access the entire ESPN network lineup without a traditional pay-TV package.
Iger described the product launch as "a real success," citing strong adoption among new users, high engagement with features such as Multiview and personalized SportsCenter feeds, and significant traction for the premium Ultimate tier, which attracts a sizable proportion of cord-nevers.
Importantly, roughly 80% of new ESPN app subscribers also subscribed to the Trio Bundle, which includes Disney+ and Hulu.
Sports operating income for the fourth quarter was $911 million, just slightly lower than the previous year. Domestic ESPN saw an increase in advertising, subscription, and affiliate revenue, which was partially offset by higher marketing and programming costs related to the DTC launch and new sports rights agreements.
Q4 sports ratings on ESPN and ABC increased 25% year on year, boosted by strong performances in college football, Monday Night Football, the WNBA, MLB, and the US Open.
Disney's film studios finished the year with several notable wins, including the runaway success of the live-action Lilo & Stitch. The film became the highest-grossing Hollywood release of the calendar year, with 14.3 million Disney+ views in its first five days and Stitch merchandise sales exceeding $4 billion.
Over the last two years, Disney has delivered four global films worth more than $1 billion, while no other studio has achieved even one. This momentum continued with Predator: Badlands, which had the biggest opening in the franchise's history.
Television viewing was also a highlight. FX's Alien: Earth had the largest premiere ever on Disney+ and Hulu, while ABC's Dancing with the Stars became the first fall series in Nielsen electronic measurement history to grow its audience for six weeks after its debut.
Looking ahead to FY26, Disney’s slate includes Zootopia 2, Avatar: Fire and Ash, The Mandalorian and Grogu, The Devil Wears Prada 2, Toy Story 5, the live-action Moana, and Avengers: Doomsday. Iger called it “about as strong as it’s been in a while.”
Still, the Q4 entertainment segment's operating income fell to $691 million, owing primarily to difficult comparisons to the previous year's quarter, which included Inside Out 2 and Deadpool & Wolverine. Disney expects a similar headwind in Q1 FY26, with management estimating a $400 million negative impact from theatrical slate comparisons.
Disney's Experiences segment once again served as a consistent growth engine, delivering a record Q4 operating income of $1.9 billion, up 13% from the previous year. Full-year operating income was $10.0 billion, also a record. Domestic parks demonstrated continued strength, while international parks experienced a 25% increase in operating income in Q4. Consumer products expanded as well, boosted by Stitch merchandise demand.
Disney Cruise Line remains a major driver of long-term growth. The Disney Destiny would make its maiden voyage in November 2025, while the Disney Adventure, the company's first Asia-based ship, will launch in March 2026. These additions will increase the fleet to eight ships, with five more planned beyond fiscal 2026. Disneyland Paris will also open the World of Frozen attraction this spring, as part of a larger wave of park investments that includes plans for a new park in Abu Dhabi. The company expects modest near-term expense pressures in the cruise business, including $90 million in pre-opening costs and $60 million in dry dock costs in Q1 FY26.
Disney expects fiscal 2026 to be a year of continued earnings expansion. The company is guiding to:
Double-digit adjusted EPS growth.
10% operating margin for Entertainment DTC SVOD.
High-single-digit operating income growth in Experiences.
Low-single-digit operating income growth in Sports, with results weighted to Q4.
$24 billion in combined content investment across Entertainment and Sports.
$19 billion in operating cash flow.
$9 billion in capital expenditures.
The Board approved a $1.50 per share dividend, payable in two installments, and increased the buyback program to $7 billion, doubling the repurchase level for FY25. CFO Hugh Johnston stated that as multi-year investments plateau, Disney expects strong ongoing free cash flow growth, providing "a lot of flexibility" for shareholder returns.
Disney's businesses ended FY25 with tangible momentum, including rising DTC profitability, strong sports engagement, expanded high-growth international and experiential assets, and a studio pipeline anchored by globally recognized franchises.
The company's ability to balance disciplined cost management with targeted investment remains critical to its future strategy. As Disney progresses into FY26, the integration of its streaming ecosystem, the evolution of ESPN, and the expansion of its Experiences footprint will be critical drivers shaping the company's next chapter of transformation.
With renewed financial strength and a strategy that prioritizes scalability, digital convergence, and global franchise value, Disney appears to be poised for another year of significant growth and reinvestment.
