Disney has entered a landmark three-year licensing agreement with OpenAI, investing $1 billion to become its first major content licensing partner. Starting early 2026, Disney will enable users to create short-form videos featuring over 200 iconic characters from its franchises, including Disney, Pixar, Marvel, and Star Wars, through Sora and ChatGPT Images. This partnership comes as Disney faces challenges in linear television and streaming competition, prompting investors to adopt a cautious approach.
Disney’s fiscal fourth quarter revealed mixed results with revenues of $22.46 billion and adjusted earnings per share of $1.11, surpassing expectations. For the full fiscal year, the company reported $94.4 billion in revenues, reflecting a 3% year-over-year increase. The combined subscriber count for Disney+ and Hulu reached 196 million, with an operating income of $1.33 billion specifically from its direct-to-consumer segment. Despite these gains, challenges in linear networks, driven by declining advertising revenue, continue to affect financial performance.
Looking ahead, Disney projects double-digit adjusted EPS growth for fiscal 2026 and 2027, with an operating cash flow estimate of $19 billion. However, the company faces potential headwinds in the first quarter of fiscal 2026 due to tough comparisons against previous blockbuster releases and ongoing challenges, including political advertising shortfalls. Disney plans to implement a 50% dividend increase and allocate $7 billion for stock repurchases, yet investor sentiment remains cautious amid uncertainty over CEO succession and competitive pressures from rivals like Netflix and Amazon.
