The group's performance varies between segments, mainly due to its weak link: television. As with Paramount, the decline is faster than expected, with revenues falling 12% over the year and operating profit down 14%. Fortunately, this segment now accounts for only a tenth of Disney's revenue.
Investors' attention was naturally focused on the streaming segment. This segment, which accounts for a quarter of consolidated revenue, grew by 8%, while its operating profit increased ninefold. In other words, Disney intends to reassure the market.
The status quo remains for the sports segment, comprising ESPN, which accounts for just under a fifth of revenue and would undoubtedly benefit from being sold off. The theme parks and cruises segment, which accounts for a third of consolidated revenue, continues to deliver satisfactory performance, with operating profit up 8%.
The year ended with consolidated free cash flow of $10.1 billion (excluding stock options), a doubling of the dividend, and Bob Iger's promise to focus heavily on share buybacks next year. This comes at a time when Disney's market capitalization is currently 19 times its cash profit.
The group's valuation is at the same level as it was ten years ago. This is not unusual: operating profit and free cash flow are more or less comparable over the period; net debt has tripled; and the number of shares outstanding has increased significantly due to stock option compensation.
But this decade of transformation is ending on a high note for Disney, which has managed to make a real breakthrough in streaming—though not yet with the success of Netflix. Like Netflix, the group led by Bob Iger has denied any intention of acquiring Warner Bros. This leaves Paramount as the most likely buyer in the United States.
See Paramount Skydance's ever-expanding ambitions, published earlier this week in these columns.
