Walt Disney Co. posted a surge in Disney+ subscribers and lower losses at its COVID-crippled theme parks, helping the world’s largest entertainment company return to profit in the latest quarter.

Subscribers to the family-oriented video service grew to 94.9 million in the period, Disney said Thursday. That exceeded the 90.7 million average of Wall Street estimates compiled by Bloomberg. Sales and earnings also topped projections.

But Disney remains mired in a slump, with big movie releases in jeopardy and some of its parks still closed. Investors, who bid up the stock 25 per cent last year, gave a muted response to the latest news. The shares fell as much as 2.3 per cent to US$186.56 in New York trading Friday, after rising as high as US$198.77 in extended trading after the results were announced.

Chief Executive Officer Bob Chapek pointed to more than 21 million new Disney+ streaming customers as a sign that the shift away from traditional media is paying off. The service has benefited from high-profile programming, including the second season of the Star Wars spinoff “The Mandalorian” and the Christmas debut of “Soul,” a Pixar movie originally scheduled for theaters. The company plans to raise the price in the U.S. by a dollar to US$8 a month in March.

“Disney+ has exceeded even our highest expectations,” Chapek told investors on a conference call Thursday.

Excluding some items, profit for the first quarter ended Jan. 2 came to 32 cents a share, far better than the loss of 38 cents that analysts had forecast on average. The company had posted rare losses in the second half of fiscal 2020 in the teeth of the coronavirus pandemic. Revenue, while lower at US$16.2 billion, also beat estimates.

The numbers bolster Disney’s stature as a global streaming giant alongside Netflix Inc. The shares had already risen 23 per cent since mid-December, when the company updated investors on the fast growth of its streaming services and Chapek outlined plans for as many as 260 million Disney+ subscribers by 2024.

‘No Complaints’

“The results are speaking for themselves,” Disney’s former streaming chief, Kevin Mayer, said in an interview Thursday with Bloomberg TV’s Emily Chang. “He’s restructured the company, it looks like he’s emphasizing streaming, which is the same thing I would have done. Look where the stock is. Look at the results. No complaints about that.”

With several of its resorts still closed due to the virus, the parks business has been a drag on profit. But the division narrowed its losses after two especially difficult quarters. On the call, management told investors its properties in California and Paris would likely remain closed for the remainder of this quarter, while Hong Kong may reopen sooner.

Masks and social distancing would likely remain in place all year, although wider distribution of a vaccine could change that, Chapek said.

“If that happens, that is a game changer,” Chapek said. “That could accelerate our expectations and give people the confidence that they need to come back to the parks.”

Program Sales

Profit fell in content sales and licensing, the new name for Disney’s film and TV distribution businesses. The company has been selling fewer shows to third parties to focus production on its own streaming platforms, and there were no major films released theatrically in the quarter.

Chapek said he still intends to release the Marvel film “Black Widow” in theaters, but he’ll also experiment, sending some pictures directly to streaming, either included in the regular subscription price or for an additional fee.

Disney has been focusing more on streaming as traditional TV viewing shifts to the on-demand model. This is the first quarter in which the company reported sales and profit for a new division that combines its streaming services with the traditional TV and motion-picture operations -- a business dubbed Disney Media & Entertainment Distribution.

Losses at Disney’s direct-to-consumer business -- its streaming operation -- narrowed by 58 per cent, while profit fell slightly at traditional TV networks such as ESPN and ABC. That was due to a shift in the sports calendar, which led to higher expenses from college bowls and the NBA finals occurring in the period.