Streaming is no longer where dreams come to die for Disney. 

In its second-quarter earnings report on Tuesday, Disney announced its streaming business had, at long last, achieved profitability across a three-month span. Or, at least pieces of its streaming business had anyhow. That was the meticulously qualified silver lining the House of Mouse presented to investors as it braced for yet another quarter of all-too-familiar challenges for a legacy media empire in flux.

Stream Scenario

Disney’s dream of supplanting its once-lucrative linear TV business with a 21st-century direct-to-consumer business is both one step closer to fruition and hundreds of steps away from reality. In its second quarter, its Disney+ and Hulu platforms eked out $47 million in operating income — enough for Disney to claim a streaming profit. But Disney+ and Hulu are just two of its three streaming legs, and when taking the still-flailing ESPN+ streamer into account, the direct-to-consumer division still lost $18 million. 

That’s a major improvement from the $659 million loss the DTC business suffered in the same quarter a year ago, a dismal figure that’s been roughly routine for the company since Disney+ launched in late 2019. But DTC is still nowhere near the revenue-and-profit machine that linear TV once was — and linear TV itself remains in freefall: 

• In the second quarter, linear TV revenue, which excludes ESPN and related networks, fell 8% to just under $2.8 billion, while operating income plummeted 22% to $758 million. A decade ago, the unit regularly drove some $2 billion in profit each quarter.
• This quarter’s decline can be attributed, in part, to lower ad revenue across networks as well as the debut of a “skinny cable bundle” offered by Charter, the second-leading cable company in the US, which excludes eight Disney-owned channels that typically trafficked in lucrative carriage fees. Meanwhile, the unit that includes Disney’s film studios lost $18 million, as the company still recovers from last year’s dual Hollywood talent strikes.

Shareholders seemed unimpressed by the touted streaming profit; Disney’s share price fell 9.5% on Tuesday. “The initial market reaction is showing that there are more questions than answers for earnings over the next couple of quarters,” Brian Mulberry, a client portfolio manager at Zacks Investment Management, told Reuters.

One More Thing: The earnings call was not without bright spots and big announcements. The company’s experiences unit, which includes its parks, scored operating income of $2.3 billion in the quarter, up 12% year-over-year. Meanwhile, Hulu added 700,000 subscribers while Disney+ grew by more than 6 million — though part of Disney’s deal with Charter granted Charter subscribers a Disney+ login. Still, the subscriber boost puts Disney’s DTC business another inch closer to achieving Netflix-esque margins, and the company promises true DTC profitability by this year’s fourth quarter. With Nelson Peltz finally off his back, perhaps CEO Bob Iger can truly bring Disney into the future. And then successfully retire this time.

As the Swiss say, that’s cheese!

After two consecutive quarters of losses, Zurich-based banking giant UBS swung back to a profit in a big way, announcing on Tuesday that it posted a net income of $1.8 billion in this year’s first quarter. The company’s stock responded in kind, closing up 7%.

Digestif

A return to a calm, straightforward investment banking and wealth management business was exactly what UBS needed, given the chaos that came with its move to buy Credit Suisse in March 2023 — chaos that specifically involved clients pulling money from both UBS and Credit Suisse. Now, however, much of the flock — and then some — has returned: UBS said its wealth management business reaped $27 billion in net new assets, which helped revenue at the division jump 11%. Meanwhile, the company’s investment banking unit saw revenue rise 16%, as dealmaking has generally started to tick higher across the industry despite high interest rates.

But investors were likely applauding loudest at the Credit Suisse integration happening even faster than expected:

• UBS said that integration costs related to Credit Suisse were just over $1 billion for the quarter, well below the $3.75 billion it saw in the two previous quarters combined. The bank noted that it cut 2,000 jobs in the first quarter, bringing the total headcount shrink to 19,000 since the acquisition.
• Those costs aren’t exactly over. UBS said it expects integration-related expenses to tick up to about $1.3 billion in the second quarter and hit about $3.5 billion in 2024. It had said in February that it expects some amount of integration costs to continue until 2026.

Good Problem to Have: Now UBS can just get back to the business of worrying about regulatory oversight like any other bank. The company’s investors have been fretting about a proposal from Switzerland’s finance department that would increase the capital levels required for UBS to keep, with the Swiss finance minister saying it could mean $15 billion to $25 billion in additional capital for the bank. UBS has pushed back at the proposal, saying the higher requirement would put Swiss banks at a disadvantage to US and Asian competitors, which have relatively deeper capital markets. Welcome to normalcy, UBS.

Nobody wishes it was 2021 again — except maybe Peloton.

The COVID-era unicorn is rather lifeless today, and private equity vultures are reportedly circling above its powder-coated steel frame. But hey, who aren’t they circling these days?   

Ride Like Lightning, Crash Like Thunder

Peloton was one of the breakout stars of the pandemic as waves of people looking to socially distance but also stay active shelled out big money for its line of exercise bikes, treadmills, and rowing machines — and don’t forget subscriptions to its fitness app. Between 2020 and 2021, the company’s revenue increased 120% to more than $4 billion.

But then, all at once, it seemed like everyone started going for actual bike rides and Pelotons became just another way to dry wet towels:  

• Peloton has suffered more than a dozen consecutive quarters of losses, including $167.3 million in its most recent quarter. Its market cap has dropped to $1.5 billion from roughly $50 billion in 2021. Massive amounts of equipment were recalled last year, and the company announced it was cutting 15% of its workforce in the past week. In addition, CEO Barry McCarthy stepped down just a few days ago.
• With all the tell-tale signs of a dying business, Peloton has become the target of private equity firms, CNBC reported. People familiar with the matter told CNBC at least one PE firm has spoken with Peloton as it considers going private but details are still under wraps and no deal is certain. Shares of Peloton surged roughly 15% on the rumors Tuesday.  

Gym Amenities: Sitting on top of Peloton’s problems is about $1.7 billion in debt, and the company recently told shareholders it was working with JPMorgan and Goldman Sachs on a refinancing strategy. Something tells us Peloton’s recently announced partnership with Hyatt to stock 800 hotels with exercise equipment likely won’t be its saving grace.