Disney shares dropped 6 per cent on Monday as investors weighed its strong strong streaming results in Q1 against a far softer overall performance whilst CEO Bob Iger hinted at his resignation to be arriving sooner than expected.
Speculation has been mounting around Iger’s potential early departure, ahead of his contract expiration on the 31 December 2026. Iger seemingly confirmed these rumours in Disney’s most recent earnings report.
“As we continue to manage our company for the future, I am incredibly proud of all that we’ve accomplished over the past three years,” he said.
Disney’s chief financial officer Hugh Johnston also seemingly commented on the transition of leadership, telling CNBC Monday “Whomever the new CEO is, they’re getting a business that has a lot of momentum”.
The remarks have drawn close investor attention as Disney navigates a critical period of streaming growth and strategic change whilst battling broader financial struggles.
It is rumoured that the search for a new CEO has been whittled down to to two internal contenders: experiences chairman Josh D’Amaro and entertainment co-chairman Dana Walden. Both have remained quiet on the matter.
The numbers
Overall, Disney’s Q1 revenue increased 5 per cent to US$26 billion year-on-year.
Its entertainment division (which houses its streaming services) saw revenue climb 7 per cent year-on-year. However, its operating income declined, reducing its margin.
Specifically, its SVOD revenue increased 11 per cent compared to Q1 last year. Its advertising revenue decreased 6 per cebt year-on-year. It said the result reflected a net adverse impact of 11 ppts from the inclusion of Star India and higher political advertising last year and Fubo in Q1 of this year.
Streaming services Disney Plus and Hulu posted a 72 per cent year-on-year jump in operating income, reaching USD$450 million ($647 million), well above expectations, the company has warned that overall growth this quarter would be limited.
Johnston credited the surge in streaming to popularity of older films that received sequels in late 2025 including Avatar and Zootopia.
Bundling Hulu and Disney Plus with the new ESPN direct-to-consumer service also assisted in a reduction of streaming subscription cancellations.
Profitability of streaming is critical for the major entertainment companies as traditional TV networks and channels face a steady decline.
Increasing costs from sports rights and expansions in theme parks and cruise lines are putting financial strain on the broader business. The entertainment company also reported a decrease in international tourism as being a major pain point for the parks.
Disney’s non-streaming entertainment income fell 55 per cent to US$650 million (AU$935 million), and sports income dropped 23 per cent to US$191 million (AU$274 million), due mostly to a 15 day standoff with YouTube TV in a dispute over rates, costing US$110 million (AU$158 million).
