Walt Disney reports modest revenue growth in Q3 FY25 amid Star India transition

The Walt Disney Company reported a 2% increase in revenue for the third quarter of fiscal year 2025, reaching $23.7 billion compared to $23.2 billion in the same quarter last year. For the nine-month period, revenue grew by 5%, rising from $68.8 billion to $72.0 billion.

However, the company’s performance was significantly impacted by the completion of the Star India joint venture with Reliance Industries Limited (RIL), finalized on November 14, 2024. This strategic shift resulted in notable changes in how the company reports revenue and income from its Indian operations.

Linear Networks operating income declined by $269 million versus Q3 FY24, largely due to the Star India transaction. Similarly, international operating income dropped sharply by 92% year-over-year, coming in at just $12 million in Q3 from $157 million previously. The company attributed this decline directly to the Star India transaction.

In Q3 FY24, the company had reported an operating loss of $314 million from Star India, which was not repeated in the current quarter as Star India’s results are no longer consolidated. Instead, from the transaction date, Disney now records its 37% share of the India joint venture’s performance under “Equity in the income of investees.” The FY25 equity loss from the India JV stood at $200 million, driven by purchase accounting amortization.

Notably, in the sports segment, there was no revenue from Star India in Q3 FY25. This contrasts with Q3 FY24, where it contributed $279 million. The absence is due to the transaction completion in November 2024.

Despite the challenges in international operations, the company’s sports segment performed well. Segment operating income reached $1.0 billion in Q3 FY25, up by $235 million year-over-year. The increase reflects the absence of a $314 million loss from Star India recorded in Q3 FY24.

Entertainment revenue for the quarter rose 1% to $10.7 billion, while sports revenue for the same period declined by 5% to $4.3 billion, with no contribution from Star India. Over the nine-month period, entertainment revenue increased by 6% year-over-year, while sports revenue remained flat.

Direct-to-Consumer (DTC) operations continued to perform robustly. DTC revenue rose 6% to $6.18 billion in Q3 FY25, compared to $5.81 billion in Q3 FY24. For the nine-month period, DTC revenue was $18.37 billion, up by 8% from $16.99 billion. The company noted a 3 percentage point adverse impact in the DTC segment due to the exclusion of Disney+ Hotstar in the current quarter’s results following the Star India transition. Star India subscription revenue was absent for the same reason.

Disney+ and Hulu subscriptions combined reached 183 million, an increase of 2.6 million compared to Q2 FY25.

Revenue from Content Sales/Licensing and Other dropped by $275 million versus Q3 FY24, which Disney attributed to the performance of current titles versus the strong showing of Inside Out 2 in the prior-year quarter.

In the entertainment segment, linear network revenue in Q3 FY25 fell 15% to $2.27 billion, down from the same quarter last year. For the nine-month period, linear network revenue totalled $7.31 billion, an 11% decline from $8.23 billion. The company said this was due to lower results at Content Sales/Licensing, Linear Networks, and international operations, although partially offset by an improvement in DTC.

Corporate and unallocated shared expenses rose by $82 million during the quarter, from $328 million to $410 million. This was primarily due to a legal settlement, timing of allocations to segments, and higher compensation costs. These were partially offset by gains from a land sale.

Disney also recorded restructuring and impairment charges of $185 million in Q3 FY25, primarily related to the impairment of an equity investment.

Commenting on the results, Robert A. Iger, Chief Executive Officer of The Walt Disney Company, said, “We are pleased with our creative success and financial performance in Q3 as we continue to execute across our strategic priorities. The company is taking major steps forward in streaming with the upcoming launch of ESPN’s direct-to-consumer service, our just-announced plans with the NFL, and our forthcoming integration of Hulu into Disney+, creating a truly differentiated streaming proposition that harnesses the highest-caliber brands and franchises, general entertainment, family programming, news, and industry-leading sports content. And we have more expansions underway around the world in our parks and experiences than at any other time in our history. With ambitious plans ahead for all our businesses, we’re not done building, and we are excited for Disney’s future.”