Disney shares were on track to hit an over one-month high in pre-market trade.
- Disney CEO Josh D’Amaro told investors that the company plans to move most of its consumer products business into its Entertainment division beginning in fiscal 2027.
- He said the restructuring will better align merchandise revenue with the studios creating its intellectual property.
- Disney also agreed to sell its 50% stake in A+E Global Media to Hearst for approximately $1.2 billion and announced a new content partnership with TikTok.
Shares of Disney (DIS) climbed in pre-market trade o Wednesday after the entertainment giant announced a major restructuring that will move most of its consumer products business into its Entertainment division, alongside mixed quarterly earnings..
DIS stock gained as much as 5% in pre-market trade and was on track to hit a more than one-month high before the opening bell. The shares were also among the top trending tickers on Stocktwits at the time of writing.
Although revenue of $25.2 billion came in slightly below Wall Street estimates of $25.4 billion, Disney reported adjusted earnings per share (EPS) of $2.06, ahead of analysts' expectations of $1.85. Net income for the second-quarter (Q2) rose to $2.63 billion.
Disney Brings Consumer Products Closer to Its Studios
CEO Josh D'Amaro stated that starting in the first quarter of fiscal 2027, Disney will move most of its consumer products business from the Disney Experiences segment into its Entertainment division. This would place the merchandising and licensing business closer to the studios studios creating hits like Toy Story, Marvel films, Star Wars and Frozen.
“We believe this shift will have strategic and operational benefits by bringing the monetization of our IP through consumer products closer to the studios that create that IP,” he wrote. “Additionally, we believe this presentation will better reflect the returns our Entertainment segment is generating from the content it produces and make our Entertainment segment more comparable to peer reporting methodologies.”
Meanwhile, the Disney Experiences division, which currently includes theme parks, cruise operations and consumer products, generated $10 billion revenue in Q2, up 10% from a year earlier.
Toy Story 5 Shows Why Disney Is Making the Change
In his letter to shareholders, D'Amaro stated that Toy Story 5 was one of the company's biggest success stories this quarter, saying the film's release lifted engagement across the broader franchise.
The company said the film helped push the Toy Story franchise past 2 billion hours streamed on Disney+, while merchandise tied to the franchise reached record sales. Consumer products generated $1.1 billion in quarterly revenue, marking its strongest year-over-year growth in five years.
The restructuring puts merchandise licensing and consumer products under the same division that develops franchises like Toy Story, making it easier to coordinate content creation with merchandising opportunities.
Disney Announces Hearst And TikTok Deals
Disney announced that it has agreed to sell its 50% stake in A+E Global Media to Hearst for approximately $1.2 billion, with the transaction expected to close in September.
The company also unveiled a global partnership with TikTok that will bring curated Disney creator content to Disney+ through a new feature called Verts, beginning with a U.S. pilot later this year.
On Stocktwits, retail sentiment around DIS stock remained in ‘bullish’ territory over the past day, accompanied by chatter at ‘high’ levels. Platform data showed an over 40% jump in message volume.
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