Disney Q3 2025: Streaming Profits, Parks Strength & A Tax Twist

The Walt Disney Company, a titan in the global entertainment landscape, just released its quarterly financial report, giving us a fresh look under the hood of the Magic Kingdom. Let's dive into the numbers from their latest 10-Q filing for the quarter ended June 28, 2025, to see how the company is performing as it navigates a rapidly changing media world.

At first glance, the headline numbers are spectacular. Disney posted a net income of $5.26 billion, more than double the $2.62 billion from the same quarter last year. However, a closer look reveals this surge is not from operations but from a massive one-time tax benefit. The filing details a $3.3 billion tax benefit related to its acquisition of full ownership of Hulu. A more telling figure is income before taxes, which grew a modest 4% to $3.2 billion, painting a clearer picture of the company's operational performance.

The visual below breaks down how Disney's revenue flows through its costs to arrive at its net income for the quarter.

The Tale of Three Segments

Disney's performance is best understood by looking at its three core business segments, each telling a very different story.

Experiences: The Crown Jewel

The Experiences segment—which includes the iconic theme parks, resorts, and cruise lines—continues to be a powerhouse.

• Revenue: Grew 8% to $9.1 billion.
• Operating Income: Jumped 13% to $2.5 billion.

This growth was fueled by strong performance at its domestic parks, where operating income surged 22%. Disney is successfully leveraging its brand with higher guest spending and increased hotel occupancy, demonstrating robust consumer demand for its real-world attractions.

Entertainment: A Story of Transformation

The Entertainment segment, a sprawling division that includes streaming services, traditional TV networks, and movie studios, is in the midst of a dramatic pivot.

• Direct-to-Consumer (DTC): This is the highlight of the report. The streaming division, home to Disney+ and Hulu, achieved an operating income of $346 million, a remarkable turnaround from a $19 million loss last year. This milestone signals that Disney's massive bet on streaming is beginning to pay off. Disney+ subscribers grew 6% year-over-year to 127.8 million, while Hulu subscribers rose 9% to 55.5 million.
• Linear Networks: The decline of traditional cable continues to weigh on results. Operating income for networks like ABC and FX fell 28% to $697 million, hit by falling affiliate fees and advertising revenue as viewers cut the cord.
• Content Sales/Licensing: The movie studio arm swung to a loss of $21 million from a profit of $254 million last year, reflecting the volatile nature of the film business and higher marketing costs.

Sports: Leaner and More Profitable

The Sports segment, centered around ESPN, presents an interesting case.

• Revenue: Dropped 5% to $4.3 billion.
• Operating Income: Rose an impressive 29% to $1.04 billion.

This apparent contradiction is explained by the "Star India Transaction." Disney has deconsolidated its Indian sports business, which had significant revenue but also high costs and was operating at a loss. By shedding this asset, the segment's overall profitability improved dramatically, even as domestic ESPN faced headwinds with operating income declining 7%.

Looking Ahead

Disney's latest report showcases a company in deep transformation. The stellar performance of the Experiences segment provides a stable and highly profitable foundation. Meanwhile, the Entertainment division is successfully navigating the difficult transition to streaming, with its DTC business now in the black. However, this progress is happening against the backdrop of a rapidly declining legacy TV business.

The company is returning value to shareholders, having repurchased nearly $2.5 billion in stock over the first nine months of its fiscal year. While the path forward involves balancing growth in new ventures with the managed decline of old ones, Disney's ability to turn its streaming business profitable is a significant and encouraging step in its evolution.