How Disney Makes Money

Disney's Linear Networks business generates most revenue and profits

The Walt Disney Co. (DIS) is a diversified global entertainment company that operates theme parks, resorts, a cruise line, broadcast TV networks, and related products. The company also produces live entertainment events, and produces and streams a broad array of film and TV entertainment content through its new digital-content streaming services.

Disney faces an unusually large number of competitors including: ViacomCBS Inc. (VIAC), Comcast Corp. (CMCSA), Sony Corp. (SNE), AT&T Inc. (T), Netflix Inc. (NFLX), Apple Inc. (AAPL), and Amazon.com Inc. (AMZN); and smaller niche rivals including theme park and resort companies Six Flags Entertainment Corp. (SIX), SeaWorld Entertainment Inc. (SEAS), and Hilton Worldwide Holdings Inc. (HLT).

Key Takeaways

  • Disney is a diversified global entertainment company that operates theme parks, resorts, broadcast networks, and streams TV shows and movies.
  • Disney's Linear Networks currently generates the most revenue and profits as its Parks, Experiences and Products business has been hit hard by COVID-19.
  • Disney's theme parks and resorts have gradually been reopened but are generally operating at reduced capacity.
  • Disney+ finished Q3 FY 2021 with 116 million subscribers, up 101.7% YOY.

Disney’s Financials

Disney announced in August financial results for Q3 of its 2021 fiscal year (FY), the three-month period ended June 30, 2021. The company posted net income of $1.1 billion, a significant improvement from the net loss of $4.5 billion reported in the year-ago quarter. Revenue rose 44.5% year over year (YOY) to $17.0 billion. Disney uses operating income as the profit metric for its individual business segments. Segment operating income rose 116.7% to $2.4 billion in the fiscal third quarter.

In its earnings report, Disney highlighted the adverse impacts of the COVID-19 pandemic since early 2020 and which have continued into 2021. Its Parks, Experiences and Products segment has been the most affected by those impacts. Disney was forced to close theme parks and resorts and suspend cruise ship sailings and guided tours. However, beginning in May 2020 through to June 2021, Disney has gradually reopened its theme parks, albeit at reduced capacity. Its cruises and guided tours have also begun to return to service. Disruptions to film and television production has also contributed to less content for its media and entertainment business.

Disney’s Business Segments

Starting in Q1 FY 2021, Disney reorganized its reportable business segments. The company now operates through two main business segments: Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products (DPEP). The first of these segments, which is comprised of Disney's media and entertainment businesses, is further separated into three components: Linear Networks; Direct-to-Consumer; and Content Sales/Licensing and Other. Disney provides a breakdown of revenue and operating income for each of these segments. Prior to this change, the company operated through four primary business segments: Media Networks; Parks, Experiences and Products; Studio Entertainment; and Direct-to-Consumer & International.

DMED: Linear Networks

Disney's Linear Networks segment operates a long list of properties, including: domestic and international cable networks such as Disney, ESPN, and National Geographic; ABC broadcast television network and eight domestic television stations; and a 50% equity investment in A+E Television Networks. The Linear Networks segment posted revenue of $7.0 billion in Q3 FY 2021, up 15.7% compared to the year-ago quarter. Operating income fell 33.4% to $2.2 billion. The segment accounts for about 40% of total revenue and 82% of total operating income.

DMED: Direct-to-Consumer

Disney's Direct-to-Consumer (DTC) segment is comprised of its various streaming services, including: Disney+; Disney+Hotstar; ESPN+; Hulu; and Star+. The DTC segment posted revenue of $4.3 billion in Q3 FY 2021, up 56.9% from the same three-month period a year ago. The segment reported an operating loss of $293 million, an improvement from the operating loss of $624 million reported in the year-ago quarter. The DTC segment accounts for 25% of total revenue.

DMED: Content Sales/Licensing and Other

Disney's Content Sales/Licensing and Other segment sells film and television content to third-party TV and subscription video-on-demand services. The segment also includes the following operations: theatrical distribution; home entertainment distribution, such as DVD and Blu-ray; music distribution; staging and licensing of live entertainment events on Broadway and around the world; post-production services through Industrial Light & Magic and Skywalker Sound; and a 30% ownership interest Tata Sky Ltd., an India-based operator of a direct-to-home satellite distribution platform. The Content Sales/Licensing and Other segment posted revenue of $1.7 billion in Q3 FY 2021, down 23.0% from the year-ago quarter. Operating income fell 58.2% to $132 million. The segment accounts for nearly 10% of Disney's total revenue and under 5% of its total operating income.

Disney Parks, Experiences and Products (DPEP)

Disney's Parks, Experiences and Products segment is comprised of theme parks and resorts in Florida, California, Hawaii, Paris, Hong Kong, and Shanghai. It also includes a cruise line and vacation club. Revenue comes mainly from selling theme park admissions, food, beverages, various merchandise, resort and vacation stays, and royalties from licensing intellectual properties. The Parks, Experiences and Products segment reported revenue of $4.3 billion in Q3 FY 2021, falling 307.6% from the year-ago quarter. The segment posted operating income of $356 million, a significant improvement from the operating loss of $1.9 billion in Q3 FY 2020. The segment accounts for about 25% of Disney's total revenue and about 13% of total operating income.

A note to readers that the segment revenue and operating-income figures in the breakdowns above and in the pie charts do include inter-segment transactions.

Disney’s Recent Developments

In Disney's fiscal third quarter earnings report released on Aug. 12, 2021, the company highlighted the strong performance of its DTC business. Total subscriptions across Disney+, ESPN+, and Hulu rose 71.1% YOY to 173.7 million subscribers. Disney+ finished the quarter with 116.0 million subscribers, up 101.7%.

How Disney Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Disney and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Disney releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Disney discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Disney breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Disney Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors          
C-Suite          
General Management          
Employees ✔ (U.S. Only)      

Article Sources

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  1. The Walt Disney Co. "Fiscal Year 2020 Annual Financial Report," Pages 1-19. Accessed Sept. 24, 2021.

  2.  The Walt Disney Co. "Form 10-Q for the quarterly period ended July 3, 2021," Page 2. Accessed Oct. 5, 2021.

  3. The Walt Disney Co. "Form 10-Q for the quarterly period ended July 3, 2021," Page 12. Accessed Oct. 5, 2021.

  4. The Walt Disney Co. "THE WALT DISNEY COMPANY REPORTS THIRD QUARTER AND NINE MONTHS EARNINGS FOR FISCAL 2021," Page 2. Accessed Oct. 5, 2021.

  5. The Walt Disney Co. "Form 10-Q for the quarterly period ended January 2, 2021," Pages 8-10. Accessed Feb. 15, 2021.

  6. The Walt Disney Co. "Form 10-K for the fiscal year ended October 3, 2020," Pages 40-41. Accessed Nov. 26, 2020.

  7. The Walt Disney Co. "Form 10-Q for the quarterly period ended January 2, 2021," Page 9. Accessed Feb. 15, 2021.

  8. The Walt Disney Co. "Form 10-Q for the quarterly period ended July 3, 2021," Pages 41 & 42. Accessed Oct. 5, 2021.

  9. The Walt Disney Co. "Form 10-Q for the quarterly period ended January 2, 2021," Page 9. Accessed Feb. 15, 2021.

  10. The Walt Disney Co. "Form 10-Q for the quarterly period ended July 3, 2021," Pages 41 & 42. Accessed Oct. 5, 2021.

  11. The Walt Disney Co. "Form 10-Q for the quarterly period ended January 02, 2021," Page 10. Accessed Feb. 15, 2021.

  12. The Walt Disney Co. "Form 10-Q for the quarterly period ended July 3, 2021," Page 41. Accessed Oct. 5, 2021.

  13. The Walt Disney Co. "Form 10-Q for the quarterly period ended January 2, 2021," Page 32. Accessed Feb. 15, 2021.

  14. The Walt Disney Co. "THE WALT DISNEY COMPANY REPORTS THIRD QUARTER AND NINE MONTHS EARNINGS FOR FISCAL 2021," Page 6. Accessed Oct. 5, 2021.