Disney streaming ad revenue rises 2.5%, sparks growth concerns

Disney’s latest quarterly results show mixed signals beneath the headline numbers, with one analyst warning of deeper trouble in the streaming business. Revenue rose 7% and adjusted earnings per share jumped 28% year over year, but CNBC contributor Tom Rogers highlighted weak engagement and subscriber growth in Disney’s streaming division. The company no longer reports subscriber counts or engagement metrics, offering only an ad revenue increase of just 2.5% for entertainment streaming. Rogers said Disney’s sports rights, linear TV business, and reliance on ad-supported tiers—now 70% of new subscribers—should be driving far stronger ad growth. Instead, the tepid numbers suggest a core problem with either user engagement or subscriber acquisition that Disney hasn’t addressed.

Warner Bros Discovery (WBD) reported its own set of challenges the following day. Revenue fell about 11% year over year and missed analyst estimates, while adjusted EBITDA slipped 6%. Streaming was the only bright spot, with revenue up 10% and margins near 17%, driven by subscriber growth and distribution deals. Subscriber-related revenue accelerated 200 basis points sequentially to 10%, but the company’s other businesses struggled. Studio revenue dropped 39% due to weak box office results, advertising fell 22% largely because of lost NBA rights, and content revenue slid 26%. Despite the overall decline, profits came in better than expected, keeping shares afloat.

The contrast between the two companies underscores the growing divide in entertainment. Disney’s streaming growth relies on ad-supported tiers, yet ad revenue is barely keeping pace. Warner Bros is more reliant on streaming too, but its margins are improving and its content pipeline—including a new Harry Potter series—could help offset losses in other areas. Both companies are leaning on streaming for growth, but Disney faces deeper questions about whether its current strategy can sustain long-term engagement. For investors, the bigger question isn’t just which company’s streaming numbers look better today, but whether either can turn their growth engines into sustainable profits.