Demand for Walt Disney Co.'s cruise line and its streaming services boosted the company's fiscal fourth-quarter earnings, despite a dent from lukewarm theatrical box office results that could not compare to blockbuster hits during the previous year.

The Burbank media and entertainment company reported $10.2 billion in revenue for its entertainment segment for the three-month period that ended Sept. 27, down 6% compared with the same quarter a year earlier. Entertainment operating income for the fourth quarter totaled $691 million, down 35% compared with last year.

The softer box office showing during the fourth quarter — which included superhero movie "The Fantastic Four: First Steps," comedy "The Roses" and millennial nostalgia film "Freakier Friday" — did not match the strong performance of the irreverent superhero flick "Deadpool & Wolverine" in the year-earlier period, as well as the tail end of the theatrical window for the animated juggernaut "Inside Out 2," each of which would go on to gross more than $1 billion globally.

For the full year, however, Disney's entertainment segment — which includes movies, TV, Disney+ and Hulu — posted revenue of $42.5 billion, up 3% compared with fiscal year 2024. Operating income totaled $4.7 billion, an increase of 19%. The company has now also surpassed $4 billion in worldwide box office revenue after the strong opening weekend for "Predator: Badlands," making Disney the second studio to reach the milestone this year, after Warner Bros.

Company Chief Executive Bob Iger touted the success of Disney's live-action "Lilo & Stitch" film, which has grossed more than $1 billion in global box office and drove 14.3 million views on Disney+ in its first five days on the platform. Sales of Stitch-related merchandise totaled more than $4 billion for the fiscal year, he said.

"The popularity of this global phenomenon underscores the franchise's enduring strength, and the effectiveness of our strategy to invest in popular stories and characters," Iger said during a Thursday call with analysts.

Though the company saw a 16% decline in revenue for its linear networks in the fourth quarter due to lower ad dollars and viewership, Disney did see an increase for its streaming services. The company reported fourth-quarter streaming revenue of $6.2 billion, an 8% jump compared with the previous year, and operating income of $352 million, up 39%.

Consumer-led calls to cancel Disney+ and Hulu in the wake of Disney's September suspension of late-night host Jimmy Kimmel did not appear to have a significant effect on the company's subscriber numbers. Disney reported that subscriber growth in the U.S. and Canada for Disney+ was up 3% to 59.3 million, compared to the fiscal third quarter. Hulu-only subscriptions increased 17% for the fourth quarter to 59.7 million.

Iger also hinted at AI's role in potentially reshaping Disney+ into an all-encompassing app that would be a "portal to all things Disney," including commerce, gaming, engagement opportunities for theme park goers or cruise ship guests and even content.

"The other thing that we're really excited about that AI is going to give us the ability to do is to provide users of Disney+ with a much more engaged experience, including the ability for them to create user generated content and to consume user generated content, mostly short form from others," Iger said.

Disney's fourth-quarter revenue totaled $22.5 billion, about flat compared with the previous year. That put the company's year-end revenue at $94.4 billion, up 3%.

Earnings, excluding certain items, for the fourth quarter totaled 73 cents per share, up from 25 cents a year earlier. For the full year, earnings per share was $6.85, up from $2.72. The company's income before taxes in the fourth quarter was $2 billion, up from $948 million last year; for the full year, it was up 59% to $12 billion.

The company is targeting $7 billion in share repurchases in the next fiscal year, which is double the $3.5 billion Disney bought back during fiscal year 2025. The board has declared a cash dividend of $1.50 per share, up 50% compared to the $1 per share paid out last year.

"We feel very good about the free cash flow growth going forward," Hugh Johnston, Disney's chief financial officer, said on the call.

But investors weren't impressed. Shares of Disney were down nearly 10% to $105.04 around 8:20 a.m. Pacific time.

Iger and Johnston also addressed the current contract negotiations between Disney and YouTube TV, which has resulted in a two-week blackout of ABC and ESPN on the service.

The two companies have been locked in a fight over the size of the distribution fees that Google, which owns YouTube TV, must pay Disney for the right to carry its channels.

It's not clear when the two sides will reach a deal.

"These discussions could go for a little while," Johnston said during the call.

Disney's experiences segment, which includes its theme parks, cruise line and Aulani resort and spa in Hawaii, was a bright spot for the fourth quarter. The company reported revenue of $8.8 billion, an increase of 6% from the previous year's fourth quarter, with operating income rising 13% to $1.9 billion.

Operating income for domestic parks and experiences for the quarter was up 9% to $920 million, which Disney attributed to growth at its cruise line. Disney also got a boost from its international parks and experiences segment, largely due to an increase in attendance and spending at its Disneyland Paris resort.

For the full fiscal year, Disney's experiences business reported revenue of $36.2 billion, a 6% bump, with operating income increasing 8% to nearly $10 billion.

Disney's sports business, which includes ESPN, reported quarterly revenue of nearly $4 billion, up 2%, with operating income decreasing 2% to $911 million. The company said the decline in operating income was due to higher marketing costs associated with the August launch of the new ESPN direct-to-consumer service and increases in programming and production costs.

The sports business closed out the year with revenue of $17.6 billion, roughly flat compared with the previous fiscal year, and a 20% jump in operating income to $2.9 billion.

(Los Angeles Times staff writer Meg James contributed to this report.)

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