Disney’s promised future of streaming has finally arrived with the demise of cable television

For Disneythe future is now.

The project took five years to develop, but in the second quarter, Disney almost turned a profit for the first time in its streaming units, losing just $18 million on the spread between Disney+, Hulu and ESPN+. That’s an improvement from a loss of $659 million a year ago.

Eliminating ESPN+, Disney+ and Hulu actually made money this quarter – $47 million. Last year, Disney+ and Hulu lost $587 million in the second quarter.

All the major legacy media companies are proclaiming that streaming will eventually overtake cable as the primary moneymaker. That’s why Disney, Most significant global, Warner Bros. Discovery AND ComcastAll NBCUniversal companies have built their own subscription streaming services.

It hasn’t happened yet, but this quarter finally suggests that moment is coming. It’s not just that Disney almost made money on streaming – it’s that the company’s conventional linear TV performance has been terrible.

For years, Disney held off on making ESPN available off-cable because of the sports network’s lucrativeness in the walled garden of conventional television. Those days are almost over too. Disney is launching a smaller package of linear cable channels with Warner Bros. Discovery i Fox in the fall, making ESPN available outside of conventional cable for the first time. Next year, Disney will launch its flagship streaming service, ESPN, which will allow consumers to subscribe to ESPN without cable.

Looking at Disney’s second quarter results, it’s clear why the company finally pulled the string on ESPN. While ESPN’s revenue rose 3% to $4.21 billion, operating income fell 9% to $799 million. Disney says dwindling cable subscribers and higher programming costs associated with the College Football Playoff contributed to the decline. The raise in advertising on ESPN offset the decline in cable subscribers.

Even more troubling was the decline in the company’s other linear networks, such as ABC, Disney Channel, FX, National Geographic and Disney Junior. Linear network revenues across the Disney portfolio, excluding ESPN, fell 8% to $2.77 billion. Operating income fell as much as 22% to $752 million.

Disney shares fell 5% in pre-market trading.

Simply put, conventional television is dying on the vine. It’s falling at the fastest rate consumers have seen.

Disney has been preparing for this moment for years. Disney reiterated that streaming will become profitable in the fourth quarter and “will be a significant future growth driver for the company as profitability continues to improve in fiscal year 2025,” the company said in its earnings release.

The most significant question for the company is whether investors will embrace this fresh reality. This will depend on Disney’s streaming execution in the coming years and likely CEO Bob Iger’s successor.

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

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