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Disney posted mixed results for the June 2026 quarter, as Disney+ and Hulu continued to boost profits and the theme parks division turning in solid performance. And Disney CEO Josh D’Amaro revealed his latest move to restructure
the media conglomerate’s operations: He’s moving most of consumer products out of Disney Experiences and into the entertainment unit.
In a letter to shareholders accompanying the earnings results Wednesday, Disney CEO Josh D’Amaro said that starting in the first quarter of fiscal 2027 (which runs October-December 2026) Disney will be moving “much” of its consumer products business results from the experiences segment to the entertainment segment. That means that sales for merchandise for “Avengers: Doomsday,” for example, would fall under entertainment revenue and put the bulk of the consumer products biz under Disney Entertainment’s studios group. The consumer products business accounted for $1.1 billion in revenue this quarter, the strongest year-over-year growth in five years.
“We believe this shift will have strategic and operational benefits by bringing the monetization of our IP through consumer products closer to the studios that create that IP,” D’Amaro, who previously ran Disney Experiences before stepping into the CEO job in March, wrote in the letter to shareholders. “Additionally, we believe this presentation will better reflect the returns our Entertainment segment is generating from the content it produces and make our Entertainment segment more comparable to peer reporting methodologies.”
On the streaming front, revenue from Disney+ and Hulu was up 11% for the April-June quarter, to $5.53 billion — and operating income in the entertainment streaming segment more than doubled, to $712 million, compared with $329 million in the year-earlier period. Disney said overall streaming subscription revenue was up 15%, to $4.7 billion, and ad sales increased 3%. The company no longer discloses total subscriber figures on a quarterly basis.
In the letter, D’Amaro also outlined some AI developments at the company, including the Parks division’s recently implemented large-scale use of Disney’s proprietary AI tool, J.A.R.V.I.S.
“We made our J.A.R.V.I.S. AI tool available to our more than 2,000 Imagineers earlier this year, giving them instant access to over 70 years of institutional knowledge,” D’Amaro wrote. “We’re using AI-powered digital twins and simulation tools to design and stress-test new attractions, including leveraging these tools for the Abu Dhabi park. And we’re applying AI to simplify the booking and planning journey for our guests, while equipping our cast members with AI-assisted tools to better serve guests in the moment.”
Disney continued to tout the blockbuster success of “Toy Story 5” in the latest quarterly earnings results, revealing the film’s release has also led to the franchise as a whole reaching more than 2 billion hours streamed on Disney+ and record consumer products sales.
Overall, Disney reported net income of $2.63 billion on $25.2 billion in revenue, with adjusted EPS of $2.06 (up from $1.51 with the exclusion of income tax and one-time impairment and severance charges) for the quarter ended June 27. Revenue was up 7% year over year while net income increased 28% (without those favorable exclusion, income was down 48%) for the period, which is Disney’s Q3 of fiscal 2027. Wall Street analysts on average forecast earnings per share (EPS) of $1.85 on $25.4 billion in revenue for the three months ended June 30 (Disney’s Q3 of fiscal 2026), according to data provider LSEG.
Total segment operating income was up 21% to $5.6 billion. Free cash flow came in at $3.1 billion.
Following recent layoffs, D’Amaro noted that Disney remains “highly focused on reducing costs across the enterprise to create incremental capacity to invest for growth and are evaluating a variety of levers, including reductions in labor and SG&A.” The CEO says the company is “mid-stream in this work” and “will provide future updates on our progress.”
Previously, Disney had set an $8 billion goal for share repurchases in fiscal 2026, which ends in September. With the confirmation of the sale of Disney’s 50% stake in A+E Global Media to an affiliate of co-owner Hearst, Disney said it will use the approximately $1.2 billion in cash from the sale to increase its total share repurchases for the year to at least $9 billion.
Disney took a $812 million impairment charge during the quarter due to its investment in A+E. Severance costs for the quarter were $88 million.
Overall, Disney’s entertainment segment (which includes film and TV studios and networks as well as the streaming business) revenue was up 6% to $11.3 billion for the quarter. The division continued to receive a boost from the acquisition of a large stake in Fubo last fall, which it combined with the Hulu live TV business. The addition of Fubo contributed a 4% lift in subscription and affiliate fees revenue, which was up a total of 12%.
Ad sales for the entertainment division were down 1% on lower rates. Content sales decreased 6% due to a decrease in TV/video-on-demand and home entertainment distribution sales.
On the movie front, Disney praised “Toy Story 5” for surpassing $1 billion in global box office, bringing the franchise’s lifetime global box office to more than $4 billion, while downplaying recent releases “Star Wars: The Mandalorian and Grogu” and the live-action “Moana” movie, both of which “underperformed our box office expectations,” Disney said.
ESPN revenue for the quarter was up 4% to $4.5 billion. Ad sales increased 5% on higher impressions. Operating income declined 17% to $858 million, a larger drop than the 14% that Disney previously estimated due to a double-digit percentage increase in programming expenses, including the timing of new rights agreements, on the close of the NFL Network deal. “Contributing to the lower-than-expected operating income were four-game sweeps in early rounds of the NBA Playoffs and the impact of a network carriage dispute,” Disney said.
Disney Experiences, which currently houses theme parks, cruises and consumer products, saw June quarter revenue of $10 billion (up 10%) and operating income of $3 billion (up 20%).
Attendance at Disney domestic parks grew 3% from April-June. Disney World in particular experiencing a “stand-out quarter, with healthy core attendance increases from domestic tourists and annual passholders, and effective summer promotions and new experiences that further supplemented growth,” though Disney notes it has “continued to face headwinds from international attendance at our domestic parks.”
For the July-September quarter, the company expects total segment operating income of approximately $4.9 billion, with the inclusion of financial results from a 53rd week of operations.
“Our strong fiscal Q3 results and reiterated full-year outlook reinforce our confidence that we are uniquely well positioned,” D’Amaro said in the letter to shareholders. “Decades of IP investment have built deep fan connections that translate into strong financial results. Our accelerating global guests growth at Experiences, ‘Toy Story 5’s’ theatrical and consumer products success, and strong ESPN viewership gains all helped expand our consumer reach this quarter. Together, our results show a unique ability to engage consumers at scale, both digitally and physically, even amid macro uncertainty.”
Also Wednesday, Disney struck a content deal with TikTok that will let the app’s creators (initially in the U.S.) make shorts tied to characters and stories from Marvel, Pixar, Star Wars, FX and other properties. The resulting creator videos will be available on both TikTok and on Disney+ in the form of “Verts,” the company’s vertical video format.
