A maker of movies, TV shows, streaming services, theme parks, and cruise lines, The Walt Disney Company runs beloved brands from ABC and ESPN to Disney+, Hulu, and Disney Cruise Line. Brothers Walt and Roy Disney founded the company in Hollywood in 1923, and legend has it that Walt originally wanted to name his breakout mouse character "Mortimer" — until his wife Lillian convinced him otherwise, and Mickey Mouse was born.
Disney Q3 FY26 net income fell 50% to $2.6B as a prior-year $3.3B Hulu tax benefit did not repeat and an $812M A+E impairment weighed on results.
fell by half, but the underlying business strengthened. rose 7% to $25.2B and climbed 21% to $5.6B, driven by a 20% increase in and a 64% rise in operating income. The headline earnings drop masks a quarter where every except grew profit.
Key takeaways
attributable to Disney fell 50% to $2.6 billion, primarily because the prior-year quarter included a $3.3 billion non-cash tax benefit from a change in Hulu's U.S. income tax classification that did not recur, and the current quarter included an $812 million on the company's investment in .
rose 20% to $3.0 billion, driven by higher parks and resorts , including contributions from new cruise ships, and increased guest spending.
Section summaries
Management's Discussion and Analysis
Disney Q3 FY2026 revenue rose 7% to $25.2B, but net income fell 50% to $2.6B due to a prior-year tax benefit and an A+E impairment.
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Total grew 7% to $25.2B, driven by a 10% increase in Experiences and 6% in Entertainment, while Sports rose 4%.
rose 64% to $1.7 billion, fueled by a 12% increase in subscription and affiliate fees, partly from the Fubo transaction, and higher profitability.
fell 17% to $858 million as higher programming costs from new rights and the NBA contract renewal outweighed growth of 4%.
Total rose 7% to $25.2 billion, with growth across all segments: up 10%, up 6%, and up 4%.
widened 2.7 percentage points to 22.0%, and rose 3.7 points sequentially from Q2 FY26, as growth and cost discipline flowed through to the .
What changed
The prior Q2 FY26 filing flagged whether could return to growth as the company laps expanded college football rights costs in the second half. In Q3, Sports operating income fell 17% to $858 million, indicating those cost pressures persisted and were compounded by the new NBA contract renewal.
The prior filing also flagged the trajectory of growth as the laps the Disney Treasure launch. Experiences operating income accelerated to 20% growth in Q3, up from 5% in Q2, suggesting new cruise ships and higher guest spending are more than offsetting the lap.
The $812 million non-cash was not flagged in the prior quarter's watch items and represents a new charge, following a smaller $147 million A+E impairment in Q2 FY26.
What to watch
Whether can sustain its 64% growth rate after the Fubo transaction's one-time subscription and affiliate fee lift normalizes.
The trajectory of as the company enters the first full year of the new NBA contract, which drove the 17% Q3 decline.
The pace of share repurchases against the increased target of at least $9 billion for fiscal 2026, with $2.0 billion completed in Q1 and the Q2-Q3 pace not yet disclosed.
The outcome of additional MVPD distribution contract renewals in the second half of fiscal 2026, following the YouTube TV and Comcast Xfinity blackouts, and the impact on affiliate .
attributable to Disney dropped 50% to $2.6B, primarily due to a $3.3B non-cash tax benefit in the prior year and a current $812M .
Experiences rose 20% to $3.0B on higher parks & resorts , including new cruise ships, and increased guest spending.
Entertainment surged 64% to $1.7B, fueled by a 12% jump in subscription and affiliate fees, partly from the Fubo transaction.
Sports fell 17% to $858M as higher programming costs from new rights and the NBA contract renewal outweighed growth.
The company expects fiscal 2026 of ~$9B, up from $8B, for theme park expansion, and targets at least $9B in share repurchases.
Quantitative and Qualitative Disclosures About Market Risk
See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Note 14 to the Condensed Consolidated Financial Statements and in Note 17 to Consolidated Financial Statements in Part II, Item 8 of the 2025 Annual Report on Form 10-K.
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See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Note 14 to the Condensed Consolidated Financial Statements and in Note 17 to Consolidated Financial Statements in Part II, Item 8 of the 2025 Annual Report on Form 10-K.
As disclosed in Note 12 to the Condensed Consolidated Financial Statements, the Company is engaged in certain legal matters, and the disclosure set forth in Note 12 to the Condensed Consolidated Financial Statements relating to certain legal matters is incorporated herein by ref…
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As disclosed in Note 12 to the Condensed Consolidated Financial Statements, the Company is engaged in certain legal matters, and the disclosure set forth in Note 12 to the Condensed Consolidated Financial Statements relating to certain legal matters is incorporated herein by reference.
Key risks include distribution blackouts, rising sports rights costs, IP expiration, and evolving AI and trade regulations.
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Carriage disputes have already led to blackouts, including NFL Network removal from Comcast Xfinity and a temporary blackout, with more renewals in fiscal 2026 that could further disrupt .
Sports and other programming rights costs continue to rise, while distributors demand smaller bundles and inclusion of DTC services, potentially reducing linear distribution .
Copyrights on early works like have expired, and further expirations are expected to negatively impact from those intellectual properties.
The company faces increasing IP infringement enabled by AI tools and an uncertain legal framework for protecting content, raising enforcement costs and leakage risks.
A securities class action and other litigation could result in substantial monetary damages, while new FCC scrutiny and shifting trade tariffs add regulatory and cost pressures.