Q1 2025 The Walt Disney Co Earnings Call

February 5, 2025

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Speaker Change: I would now like to turn the conference over to Carlos Galvez, Executive Vice President Treasurer, and head of Investor Relations. Please go ahead Sir.

Speaker Change: Good morning, It's my pleasure to welcome everyone to the Walt Disney Company's first quarter 2025 earnings call.

Speaker Change: Our press release Form 10-Q, and management's posted prepared remarks were issued earlier. This morning and are available on our website at www Dot Disney Dot com forward slash investors.

Speaker Change: Today's call is being webcast and a replay and transcript will be made available on our website after the call.

Speaker Change: Before we begin please take note of our cautionary statement regarding forward looking statements on our Investor Relations website.

Speaker Change: Certain statements on this call, including those regarding our expectations beliefs plans financial estimates and prospects trends outlook and guidance and other statements that are not historical may be forward looking statements under the securities laws.

Speaker Change: We make these statements on the basis of our assumptions regarding the future at the time, we make them and do not undertake any obligation to provide updates.

Speaker Change: Forward looking statements are subject to risks and uncertainties.

Speaker Change: Actual results may differ materially from the results expressed or implied in light of a variety of factors.

Speaker Change: These factors include among others economic or industry conditions competition execution risks the market for advertising, our future financial performance and legal and regulatory developments.

Speaker Change: <unk> to our IR website, the press release issued today and the risks and uncertainties described in our Form 10-K Form 10-Q, and other filings with the SEC for more information about key risk factors.

Speaker Change: A reconciliation of certain non-GAAP measures referred to on this call to most comparable GAAP measures can be found on our IR website.

Bob Iger: Joining me. This morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer.

Bob Iger: Following introductory remarks from Bob we will be happy to take your questions. So with that I will now turn the call over to Bob.

Bob Iger: Good morning, before we turn to our results this quarter I wanted to take a moment to express our continued sympathies to all those affected by the devastating wildfires across southern California, including our own employees creative partners and so many others that we know and love.

Bob Iger: Our company's roots run deep in Los Angeles, and we feel a strong sense of obligation to support the community that has helped make this company what it is today.

Bob Iger: I am proud of the many ways our employees have stepped up to assist their neighbors in need and Disney remains committed to helping with recovery efforts, while our community rebuilds from this tragedy.

Bob Iger: Moving on to the quarter our results in Q1 demonstrate our creative and financial strengths and they reflect the success of our strategic initiatives that we set in motion over the past two years.

Bob Iger: Clearly one of the great highlights of the quarter was the performance of our film Studios, we have the top three movies of 2024 at the global box office and I want to thank and congratulate our creative teams on such an incredible year.

Bob Iger: Looking at the rest of the calendar year, we have a lot more to come with an exciting slate of theatrical releases tied to some of our most popular IP.

Bob Iger: On top of our studios outstanding performance, we saw growth in streaming profitability historic ratings at ESPN and the strong and enduring appeal of Disney's experiences business.

Bob Iger: Overall, we're very encouraged by our results this quarter and we'll be happy to take your questions.

Operator: are in a listen-only mode. To get assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Carlos Gomez, Executive Vice President, Treasurer, and Head of Investor Relations. Please go ahead, sir.

We have the top three movies of 2024 at the global box office and I want to thank and congratulate our creative teams on such an incredible year.

Bob Iger: Thank you Bob.

Bob Iger: Thanks, Bob as we transition to Q&A, we ask that you. Please try to limit yourself to one question in order to help us get to as many analysts as possible today.

Looking at the rest of the calendar year, we have a lot more to come with an exciting slate of theatrical releases tied to some of our most popular IP.

Speaker Change: And with that operator, we are ready to take the first question.

On top of our studios outstanding performance, we saw growth in streaming profitability historic ratings at ESPN and the strong and enduring appeal of Disney's experiences business.

Speaker Change: Thank you and as a reminder to join the question queue. Please press Star then one our first question today comes from Ben Swinburne with Morgan Stanley. Please go ahead.

Carlos Gomez: Good morning. It's my pleasure to welcome everyone to The Walt Disney Company's Q1 2025 earnings call. Our press release, Form 10-Q, and management's posted prepared remarks were issued earlier this morning and are available on our website at www.disney.com/investors. Today's call is being webcast, and a replay and transcript will be made available on our website after the call. Before we begin, please take note of our cautionary statement regarding forward-looking statements on our investor relations website. Certain statements on this call, including those regarding our expectations, beliefs, plans, financial estimates and prospects, trends, outlook, and guidance, and other statements that are not historical, may be forward-looking statements under the securities laws. We make these statements on the basis of our assumptions regarding the future at the time we make them and do not undertake any obligation to provide updates. Forward-looking statements are subject to risks and uncertainties.

Ben Swinburne: Thanks, Good morning.

Overall, we're very encouraged by our results this quarter and we will be happy to take your questions.

Ben Swinburne: You guys have a lot going on in terms of platform enhancements this year.

Speaker Change: Disney plus I am wondering is Adam builds out his team.

Bob: Thank you Bob.

Speaker Change: You work on password sharing bundling ESPN in what do you think will be the most impactful to driving that business and what's realistic for investors to sort of in terms of timeline to expect tangible results playing out and what we see in your reported numbers and then I thought it would at least ask you if you could.

Bob: Thanks, Bob as we transition to Q&A, we ask that you. Please try to limit yourself to one question in order to help us get to as many analysts as possible today.

Bob: And with that operator, we are ready to take the first question.

Bob: Thank you.

Bob: Reminder, to join the question queue. Please press Star then one our first question today comes from Ben Swinburne with Morgan Stanley. Please go ahead.

Speaker Change: Comment on the outlook for experiences and parks in particular around the opening of epic Theres, probably no. Other question I get more then.

Certain statements on this call, including those regarding our expectations, beliefs, plans, financial estimates and prospects, trends, outlook, and guidance, and other statements that are not historical, may be forward-looking statements under the securities laws. We make these statements on the basis of our assumptions regarding the future at the time we make them and do not undertake any obligation to provide updates. Forward-looking statements are subject to risks and uncertainties.

Thanks, Good morning.

Speaker Change: Your ability to deliver on your guidance on the domestic parks front for the year. So any update there would be greatly appreciated. Thank you so much.

Ben Swinburne: You guys have a lot going on in terms of platform enhancements. This year at Disney plus I'm wondering Adam builds out his team.

Bob Iger: Thanks for your question Ben regarding the timing of the different technological advances that Adam and his team are working on they are actually starting to rollout already.

Ben Swinburne: You work on password sharing bundling ESPN in what do you think will be the most impactful to driving that business and what's realistic for investors to just sort of in terms of timeline to expect kind of tangible results playing out and what we see in your reported numbers and then I thought it would at least ask you if you could.

Speaker Change: We will continue to move throughout the next 12 months, but we're not going to obviously stop at the end of the year.

Speaker Change: I wouldn't really call out any one of them in terms of one of them, having a greater impact than the others because it's a collection of them you mentioned paid sharing that's certainly one.

Carlos Gomez: Actual results may differ materially from the results expressed or implied in light of a variety of factors. These factors include, among others, economic or industry conditions, competition, execution risks, the market for advertising, our future financial performance, and legal and regulatory developments. Refer to our IR website, the press release issued today, and the risks and uncertainties described in our Form 10-K, Form 10-Q, and other filings with the SEC for more information about key risk factors. A reconciliation of certain non-GAAP measures referred to on this call to most comparable GAAP measures can be found on our IR website. Joining me this morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. Following introductory remarks from Bob, we will be happy to take your questions. So with that, I will now turn the call over to Bob.

Actual results may differ materially from the results expressed or implied in light of a variety of factors. These factors include, among others, economic or industry conditions, competition, execution risks, the market for advertising, our future financial performance, and legal and regulatory developments. Refer to our IR website, the press release issued today, and the risks and uncertainties described in our Form 10-K, Form 10-Q, and other filings with the SEC for more information about key risk factors.

Ben Swinburne: Comment on the outlook for experiences and parks in particular around the opening up of epic, There's probably no. Other question I get more then.

Using technology more and more for personalization and essentially upping our game from an algorithm perspective, getting less out of our control or curation and more basically into the.

Ben Swinburne: Your ability to deliver on your guidance on the domestic parks front for the year. So any update there would be greatly appreciated. Thank you so much.

Speaker Change: Thanks for your question Ben regarding the timing of the different technological advances that Adam and his team are working on they are actually starting to rollout already and will continue to grow throughout the next 12 months, but we're not going to obviously stop at the end of the year I wouldn't really call out any one of them.

Speaker Change: The business of serving the consumer what the consumer wants we've got some work to do internationally, particularly on.

Speaker Change: The edge here.

Speaker Change: Ed Tech is also something that we're working on a variety of different AI.

A reconciliation of certain non-GAAP measures referred to on this call to most comparable GAAP measures can be found on our IR website. Joining me this morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. Following introductory remarks from Bob, we will be happy to take your questions. So with that, I will now turn the call over to Bob.

Speaker Change: Initiatives going on.

Speaker Change: In terms of one of them, having a greater impact than the others because it's a collection of them you mentioned paid sharing that's certainly one.

And these were also developing flagship.

Speaker Change: Say that of all of them one of the things that we are very very mindful of is that home screen, our front screen or the first experience that consumers have has to be more dynamic hours was elegant looking but fairly static in nature. The more dynamic. It is the more people are drawn into it the more people use it and the more people don't basically close the app out.

Speaker Change: Using technology more and more for personalization and essentially upping our game from an algorithm perspective, getting less out of our control or curation and more basically into the.

Speaker Change: The business of serving the consumer what the consumer wants we've got some work to do internationally, particularly on.

Speaker Change: And go elsewhere.

Bob Iger: Good morning. Before we turn to our results this quarter, I want to take a moment to express our continued sympathies to all those affected by the devastating wildfires across Southern California, including our own employees, creative partners, and so many others that we know and love. Our company's roots run deep in Los Angeles, and we feel a strong sense of obligation to support the community that has helped make this company what it is today. I'm proud of the many ways our employees have stepped up to assist their neighbors in need, and Disney remains committed to helping with recovery efforts while our community rebuilds from this tragedy. Moving on to the quarter, our results in Q1 demonstrate our creative and financial strength, and they reflect the success of our strategic initiatives that we set in motion over the past two years.

Speaker Change: Is a big deal, but a lot going on we're still building his team out and I'd say that by the end of the year there'll be significant progress made but we've already have made some progress we've made some progress already.

Speaker Change: The edge here.

Speaker Change: Ed Tech is also something that we're working on a variety of different AI.

Speaker Change: Initiatives going on.

Speaker Change: And these were also developing flagship I'd say that of all of them. One of the things that we are very very mindful of is that home screen or front screen or the first experience that consumers have has to be more dynamic hours was elegant looking but fairly static in nature. The more dynamic. It is the more people are drawn into it the more.

Speaker Change: Yes, Ben and I'll handle the experiences question, obviously no change to the guide that we had previously provided.

Speaker Change: We had sort of experiences would be up 6% to eight.

Speaker Change: On the year.

Speaker Change: Our strong Q1.

I'm proud of the many ways our employees have stepped up to assist their neighbors in need, and Disney remains committed to helping with recovery efforts while our community rebuilds from this tragedy. Moving on to the quarter, our results in Q1 demonstrate our creative and financial strength, and they reflect the success of our strategic initiatives that we set in motion over the past two years.

Speaker Change: <unk> our level of confidence in the guide for sure.

Speaker Change: We'll use it and the more people don't basically close the App out and go elsewhere. That's that's a big deal, but a lot going on we're still building his team out and I'd say that by the end of the year there'll be significant progress made but we've already have made some progress we've made some progress already.

Speaker Change: It's obviously quite early but we certainly feel good about the fact that we were able to power through with stronger performance than our expectations were.

Speaker Change: For Q1.

Speaker Change: In terms of the balance of the year recall.

Speaker Change: The easier comps for the experiences business occur in the back half of the year, particularly in Q4. In addition to that we obviously have have lots going on in terms of.

Ben Swinburne: Yes, Ben and I'll handle the experiences question, obviously no change to the guide that we had previously provided.

Bob Iger: Clearly, one of the great highlights of the quarter was the performance of our film studios. We had the top three movies of 2024 at the global box office, and I want to thank and congratulate our creative teams on such an incredible year. Looking at the rest of the calendar year, we have a lot more to come with an exciting slate of theatrical releases tied to some of our most popular IP. On top of our studio's outstanding performance, we saw growth in streaming profitability, historic ratings at ESPN, and the strong and enduring appeal of Disney's experiences business. Overall, we're very encouraged by our results this quarter and will be happy to take your questions.

Clearly, one of the great highlights of the quarter was the performance of our film studios. We had the top three movies of 2024 at the global box office, and I want to thank and congratulate our creative teams on such an incredible year. Looking at the rest of the calendar year, we have a lot more to come with an exciting slate of theatrical releases tied to some of our most popular IP.

Ben Swinburne: We had sort of experiences would be up 6% to eight.

Speaker Change: Our ships coming or our ship coming on.

Ben Swinburne: On the year.

Speaker Change: As of this quarter, which will support the results from Q2 going forward.

Ben Swinburne: Strong Q1 increases.

Ben Swinburne: Increases our level of confidence in the guide for sure.

Speaker Change: And in addition to that.

Speaker Change: As we built our plans we did anticipate some small impact.

Ben Swinburne: It's obviously quite early but we certainly feel good about the fact that we were able to power through with stronger performance.

Speaker Change: We have effectively hedged in the guidance that we've given to you. So overall level of confidence in the experiences and the experience described is high.

Ben Swinburne: <unk> spend that our expectations were for Q1.

On top of our studio's outstanding performance, we saw growth in streaming profitability, historic ratings at ESPN, and the strong and enduring appeal of Disney's experiences business. Overall, we're very encouraged by our results this quarter and will be happy to take your questions.

Ben Swinburne: In terms of the balance of the year recall.

Ben Swinburne: The easier comps for the experiences business occur in the back half of the year, particularly in Q4.

Dan: Thank you thanks, Dan.

Speaker Change: Operator next question please.

Speaker Change: Yes, Sir our next question today comes from Robert Fishman with Moffett Nathanson. Please go ahead.

Ben Swinburne: In addition to that we obviously have have lots going on in terms of.

Speaker Change: Thank you Bob now that Directv and Comcast have launched their skinnier bundles and Hulu live <unk> planning their own do you expect these skinnier bundles at current pricing to change the trajectory of cord cutting and if not what else on the pricing our product side. The plan with food that you couldn't accomplish let's just Hulu.

Ben Swinburne: Our ships coming or our ship coming on.

Operator: Thank you, Bob.

Ben Swinburne: As of this quarter, which will support the results from Q2 going forward.

Carlos Gomez: Thanks, Bob. As we transition to Q&A, we ask that you please try to limit yourself to one question in order to help us get to as many analysts as possible today. With that, Operator, we are ready to take the first question.

Ben Swinburne: And in addition to that we as we built our plans we.

Ben Swinburne: We did anticipate some small impact.

Ben Swinburne: I think we have effectively hedged in the guidance that we've given to you. So overall level of confidence in the experiences and the experiences got as high.

Speaker Change: And then if I could just take a step back after the <unk> deal and shutting down venue can you discuss Disney's overall sports or broader streaming strategy with the potential for a consumer confusion from all the different options, including the upcoming yes, we have flagship launch. Thank you.

Operator: Thank you, sir. As a reminder to join the question queue, please press star then one. Our first question today comes from Ben Swinburne with Morgan Stanley. Please go ahead.

Speaker Change: Thank you thanks, Dan.

Speaker Change: Operator next question please.

Speaker Change: Yes, Sir our next question today comes from Robert Fishman with Moffat Nathanson. Please go ahead.

Ben Swinburne: Thanks. Good morning. You guys have a lot going on in terms of platform enhancements this year at Disney+. I'm wondering, as Adam builds out his team, you work on password sharing, bundling ESPN in. What do you think will be the most impactful to driving that business, and what's realistic for investors to sort of, in terms of timeline, to expect kind of tangible results playing out in what we see in your reported numbers? And then I thought I would at least ask Hugh if you could comment on the outlook for experiences and parks, in particular around the opening of Epic. There's probably no other question I get more than your ability to deliver on your guidance on the domestic parks front for the year. So any update there would be greatly appreciated. Thank you so much.

Speaker Change: Please go long Robert as it relates to ESPN is to make ESPN as accessible as possible.

Speaker Change: Thank you, Bob now that Directv and Comcast Avalanche, they're skinnier bundles and Hulu live <unk> planning their own do you expect these skinnier bundles at current pricing to change the trajectory of cord cutting and if not what else on the pricing of our products side do you plan with food that you couldn't accomplish with just two.

Speaker Change: And in as many ways as possible to the consumer some will want to consume it just through an app someone want to consume it as part of the more.

Speaker Change: Traditional expanded basic bundle some worldwide great into in the direction of Skinnier bundles, where sports bundles only I can't predict whether the emergence of these skinnier bundles is going to have a material impact on cord cutting or not except to say that we plan to take advantage of the emergence of these bundles because it is.

Speaker Change: Alive, and then if I could just take a step back after the <unk> deal and shutting down venue can you discuss Disney's overall sports or broader streaming strategy with a potential for a consumer confusion from all the different options, including the upcoming yes, we have flagship launch. Thank you.

And then I thought I would at least ask Hugh if you could comment on the outlook for experiences and parks, in particular around the opening of Epic. There's probably no other question I get more than your ability to deliver on your guidance on the domestic parks front for the year. So any update there would be greatly appreciated. Thank you so much.

Speaker Change: A great way to distribute ESPN and look what essentially happened is after the decision was made and we started to implement the launch of venue.

Speaker Change: Okay.

Speaker Change: Oh long Robert as it relates to ESPN is to make ESPN as accessible as possible.

Bob Iger: Thanks for your question, Ben. Regarding the timing of the different technological advances that Adam and his team are working on, they're actually starting to roll out already and will continue to throughout the next 12 months, but we're not going to obviously stop at the end of the year. I wouldn't really call out any one of them in terms of one of them having a greater impact than the others because it's a collection of them. You mentioned paid sharing. That's certainly one. Using technology more and more for personalization and essentially upping our game from an algorithm perspective, getting less out of our control or curation and more basically into the business of serving the consumer what the consumer wants. We've got some work to do internationally, particularly on the ad tier. Ad tech is also something that we're working on.

Speaker Change: And in as many ways as possible to the consumer some will want to consume it just through an app some will want to consume it as part of.

Speaker Change: The emergence of these skinnier bundles surfaced and venues basically looked redundant to us and so this was a great opportunity for us to make ESPN available with multiple skinny bundles, and then to actually merge the Hulu live and the Foo Foo BOE essentially channel business as one.

Speaker Change: The more traditional expanded basic bundle some would migrate into in the direction of skinnier bundles, where sports bundles only I can't predict whether the emergence of these skinnier bundles is going to have a material impact on cord cutting or not except to say that we plan to take advantage of the emergence of these bundles.

Speaker Change: Because frankly, while we like being in that business. It wasn't a core business to Hulu. This gives us the ability to actually enhance the Hulu live experience because the combination of the combined entity.

You mentioned paid sharing. That's certainly one. Using technology more and more for personalization and essentially upping our game from an algorithm perspective, getting less out of our control or curation and more basically into the business of serving the consumer what the consumer wants. We've got some work to do internationally, particularly on the ad tier. Ad tech is also something that we're working on.

Speaker Change: Because it is a great way to distribute ESPN look what essentially happened is after the decision was made and we started to implement the launch of venue.

Speaker Change: When it's approved we will spend more time put more resources into the user interface and essentially making the former Hulu live experience better for consumers.

Speaker Change: The emergence of these skinnier bundles surfaced and venues basically looked redundant to us and so this was a great opportunity for us to make ESPN available multiple skinny bundles, and then to actually merge the Hulu live and the Fugu Boe essentially channel businesses.

Speaker Change: In terms of our sports strategy I've touched on some of it and that is make ESPN available. However, the consumer wants it wherever the consumer wants it some will want to consume it as part of a linear channel, but we're obviously leaning into the development of what is now called flagship which is essentially ESPN with multiple multi.

Bob Iger: A variety of different AI initiatives going on. We're also developing ESPN Flagship. I'd say that of all of them, one of the things that we are very, very mindful of is that home screen or front screen or the first experience that consumers have has to be more dynamic. Ours was elegant looking but fairly static in nature. The more dynamic it is, the more people are drawn into it, the more people use it, and the more people don't basically close the app out and go elsewhere. That's a big deal. But a lot going on. We're still building his team out. I'd say that by the end of the year, there'll be significant progress made, but we've already made some progress. We've made some progress already.

A variety of different AI initiatives going on. We're also developing ESPN Flagship. I'd say that of all of them, one of the things that we are very, very mindful of is that home screen or front screen or the first experience that consumers have has to be more dynamic. Ours was elegant looking but fairly static in nature. The more dynamic it is, the more people are drawn into it, the more people use it, and the more people don't basically close the app out and go elsewhere. That's a big deal. But a lot going on. We're still building his team out. I'd say that by the end of the year, there'll be significant progress made, but we've already made some progress. We've made some progress already.

Speaker Change: Paul elements to it or multiple essentially enhancements and of course, the inclusion ultimately of of some form of bedding and fantasy.

Speaker Change: When it's approved we will spend more time put more resources into the user interface and essentially making the former Hulu live experience better for consumers.

Speaker Change: A high degree of customization and personalization and essentially a much bigger offering in terms of product programming than the linear channels. Currently offer the plan will be to launch it sometime towards the end.

Speaker Change: Fall of this year.

Speaker Change: And we're actually quite excited about it because first of all it gives us an opportunity to bundle it with Disney plus and Hulu and then we will get really smart and strategic about pricing there, but it gives consumers the option of basically just staying in the sports only experience or combining it with their other services and if they.

Operator: Yeah, Ben, and I'll handle the experiences question. Obviously, no change to the guide that we had previously provided. We had said experiences would be up six to eight. On the year, the strong Q1 increases our level of confidence in the guide, for sure. It's obviously quite early, but we certainly feel good about the fact that we were able to power through with stronger performance than our expectations were for Q1. In terms of the balance of the year, recall, the easier comps for the experiences business occur in the back half of the year, particularly in Q4. In addition to that, we obviously have lots going on in terms of our ships coming or our ship coming on as of this quarter, which will support the results from Q2 going forward. In addition to that, as we built our plans, we did anticipate some small impact.

Carlos Gomez: Yeah, Ben, and I'll handle the experiences question. Obviously, no change to the guide that we had previously provided. We had said experiences would be up six to eight. On the year, the strong Q1 increases our level of confidence in the guide, for sure. It's obviously quite early, but we certainly feel good about the fact that we were able to power through with stronger performance than our expectations were for Q1.

Speaker Change: Paul elements to it or multiple essentially enhancements and of course, the inclusion ultimately of of some form of bedding and fantasy.

Speaker Change: Happened to subscribe to Disney plus and Hulu then they can experience ESPN flagship in one app experience, which will be both convenient from a subscription perspective and also convenient from a user perspective, so we're bullish.

In terms of the balance of the year, recall, the easier comps for the experiences business occur in the back half of the year, particularly in Q4. In addition to that, we obviously have lots going on in terms of our ships coming or our ship coming on as of this quarter, which will support the results from Q2 going forward. In addition to that, as we built our plans, we did anticipate some small impact.I think we have it effectively hedged in the guides that we've given to you. Overall level of confidence in the experiences in the experiences guide is high.

Speaker Change: The other thing I want to mention about ESPN, because I know that others have gotten other streamers are getting into the sports game is we have the advantage of not only our menu of sports and sports programming that no. One else has but we're on 365 days a year 24 hours a day, so if you're a sports fan it's not about.

Speaker Change: Fall of this year.

Speaker Change: Or combining it with their other services and if they happen to subscribe that Disney plus and Hulu then they can experience ESPN flagship and a one app experience, which it will be both convenient from a subscription perspective and also convenient from a user perspective, so we're bullish.

Speaker Change: One day of.

Speaker Change: One boxing event or one day of football it's about sports every single day of the year and every hour of the day and that's a pretty compelling.

Operator: I think we have it effectively hedged in the guides that we've given to you. Overall level of confidence in the experiences in the experiences guide is high.

Speaker Change: Pretty compelling consumer proposition.

Speaker Change: Thanks, Robert Operator next question please.

Ben Swinburne: Thank you.

Speaker Change: Absolutely and our next question today comes from John Hodulik with UBS. Please go ahead.

Carlos Gomez: Thanks, Ben. Operator, next question, please.

Operator: Yes, sir. Our next question today comes from Robert Fishman with MoffettNathanson. Please go ahead.

John Hodulik: Great. Thank you and maybe some questions for Hugh can you update us on the cost cutting initiatives and how far along you are in.

Robert Fishman: Thank you. Bob, now that DirecTV and Comcast have launched their skinny bundles and Hulu Live, Fubo planning their own, do you expect these skinny bundles at current pricing to change the trajectory of cord cutting? And if not, what else on the pricing or product side do you plan with Fubo that you couldn't accomplish with just Hulu Live? And then if I could just take a step back, after the Fubo deal and shutting down Venu, can you discuss Disney's overall sports or broader streaming strategy with the potential for consumer confusion from all the different options, including the upcoming ESPN Flagship launch? Thank you.

Speaker Change: Along with that it looks like from the Q that you guys trimmed the content budget to 23 billion from 24 billion.

Speaker Change: One day of AR.

Speaker Change: One boxing event or one day of football it's about sports every single day of the year and every hour of the day and that's a pretty compelling.

John Hodulik: Just what's behind that and was that was that related to the to the fires in L. A or just.

John Hodulik: Some some changes to the overall budget and then lastly, I have to ask you a guidance for high single digit earnings growth.

Speaker Change: Pretty compelling consumer proposition.

Speaker Change: Thanks, Robert Operator next question please.

John Hodulik: For the year started out with earnings growth of over 40% in the first quarter. Here can you just talk a little bit about sort of the cadence of the earnings growth as we look out through the rest of the year. Thanks.

Speaker Change: Absolutely next question today comes from John Hodulik with UBS. Please go ahead.

Speaker Change: Great. Thank you and maybe some questions for Hugh.

Speaker Change: Update us on the cost cutting initiatives and how far along you are in.

John Hodulik: Sure.

Bob Iger: The goal all along, Robert, as it relates to ESPN, is to make ESPN as accessible as possible and in as many ways as possible to the consumer. Some will want to consume it just through an app. Some will want to consume it as part of the more traditional expanded basic bundle. Some will migrate in the direction of skinnier bundles or sports bundles only. I can't predict whether the emergence of these skinnier bundles is going to have a material impact on cord cutting or not, except to say that we plan to take advantage of the emergence of these bundles because it is a great way to distribute ESPN. And look, what essentially happened is after the decision was made and we started to implement the launch of Venu, the emergence of these skinnier bundles surfaced, and Venu basically looked redundant to us.

Speaker Change: That's quite a few questions, but I'll take a good whack at them.

Speaker Change: Along with that it looks like from the Q that you guys trimmed the content budget to 23 billion from 24 billion.

John Hodulik: First in terms of cost cutting.

John Hodulik: As a company we're focused constantly on identifying opportunities that where we're spending money, perhaps less efficiently and looking for opportunities to do it more efficiently.

Speaker Change: Just what's behind that and was that was that related to the to the fires in L. A or just.

Speaker Change: Some some changes to the overall budget and then lastly, I have to ask you a guidance for high single digit earnings growth for.

John Hodulik: Once a year thing that's not a once a month thing that's something that we do every day of the year, it's part of what a what a good management team does and we do think we're a good management team in that regard. So we're going to continue to identify opportunities to redeploy money.

Speaker Change: For the year started out with earnings growth of over 40% in the first quarter here can you just talk a little bit about <unk>.

Speaker Change: <unk> of the earnings growth as we look out through the rest of the year. Thanks.

John Hodulik: In order to make the company.

John Hodulik: Both higher growth and ultimately more profitable.

Speaker Change: Sure.

And look, what essentially happened is after the decision was made and we started to implement the launch of Venu, the emergence of these skinnier bundles surfaced, and Venu basically looked redundant to us.So this was a great opportunity for us to make ESPN available multiple skinny bundles and then to actually merge the Hulu Live and the Fubo essentially channel business as one because, frankly, while we like being in that business, it wasn't a core business to Hulu.

Speaker Change: That's quite a few questions, but I'll take a good whack at them.

John Hodulik: Regarding your question on the.

Speaker Change: First in terms of cost cutting.

John Hodulik: The guide overall obviously.

Speaker Change: As a company we're focused constantly on identifying opportunities that where we're spending money, perhaps less sufficiently and looking for opportunities to do it more efficiently that's not a once a year thing that's not a once a month thing that's something that we do every day of the year, it's part of what a what a good management team does and we do.

John Hodulik: The results were certainly in excess of expectations in the first quarter.

Bob Iger: So this was a great opportunity for us to make ESPN available multiple skinny bundles and then to actually merge the Hulu Live and the Fubo essentially channel business as one because, frankly, while we like being in that business, it wasn't a core business to Hulu. This gives us the ability to actually enhance the Hulu Live experience because the combined entity, when it's approved, will spend more time, put more resources into the user interface, and essentially making the former Hulu Live experience better for consumers. In terms of our sports strategy, I've touched on some of it, and that is make ESPN available however the consumer wants it, wherever the consumer wants it. Some will want to consume it as part of a linear channel.

John Hodulik: It certainly gives us confidence.

John Hodulik: An even higher level of covenants. Then then we probably even had before as we get into the balance of the year at the same time, given the rapidly evolving macro environment.

Speaker Change: I think we're a good management team in that regard so we're going to continue to identify opportunities to redeploy money.

John Hodulik: We think it would be premature at this point to change the guidance.

This gives us the ability to actually enhance the Hulu Live experience because the combined entity, when it's approved, will spend more time, put more resources into the user interface, and essentially making the former Hulu Live experience better for consumers.

Speaker Change: In order to make the company.

Speaker Change: Both higher growth and ultimately more profitable.

John Hodulik: That said to the degree that the business momentum in the business performance justifies. It we're certainly not a management team that's afraid of over delivering if in fact.

Speaker Change: Regarding your question on the guide overall obviously.

John Hodulik: That is where we're the business takes us so generally speaking feel feel better about the about the balance of the euro when we started out the year feeling very very positive way about it.

Speaker Change: The results were certainly in excess of expectations in the first quarter.

In terms of our sports strategy, I've touched on some of it, and that is make ESPN available however the consumer wants it, wherever the consumer wants it. Some will want to consume it as part of a linear channel.But we're obviously leaning into the development of what is now called flagship, which is essentially ESPN with multiple, multiple elements to it or multiple, essentially, enhancements. And of course, the inclusion ultimately of some form of betting, fantasy, and a high degree of customization and personalization, and essentially a much bigger offering in terms of product programming than the linear channels currently offer.

Speaker Change: It certainly gives us confidence.

Speaker Change: An even higher level of covenants. Then then we probably even had before as we get into the balance of the year at the same time, given the rapidly evolving macro environment.

John Hodulik: Thank you okay. Thanks.

John Hodulik: Thanks, John Operator next question please.

Bob Iger: But we're obviously leaning into the development of what is now called flagship, which is essentially ESPN with multiple, multiple elements to it or multiple, essentially, enhancements. And of course, the inclusion ultimately of some form of betting, fantasy, and a high degree of customization and personalization, and essentially a much bigger offering in terms of product programming than the linear channels currently offer. The plan will be to launch it sometime toward the end of the fall of this year. And we're actually quite excited about it because, first of all, it gives us an opportunity to bundle it with Disney+ and Hulu, and we will get really smart and strategic about pricing there. But it gives consumers the option of basically just staying in a sports-only experience or combining it with their other services.

Speaker Change: Absolutely. Our next question today comes from Jessica Reif Ehrlich with Bank of America. Please go ahead.

Speaker Change: Thank you and I guess two things one.

Speaker Change: We think it would be premature at this point to change the guidance that said to the degree that the business momentum in the business performance justifies. It we're certainly not a management team that's afraid of over delivering if in fact.

Speaker Change: On the NDA can you talk about how you view the path to profitability.

Speaker Change: And the new contract given the weaker season to date ratings, obviously the step up next season.

Speaker Change: And then on DTC.

Speaker Change: That is where we're the business takes us so generally speaking feel feel better about the about the balance of the euro when we started out the year feeling very very positive way about it.

Speaker Change: Maybe you could drill down a little bit on how you're thinking about.

Speaker Change: Subscribed which drivers.

Bob Iger: Bob You mentioned Catherine Sharron clampdown.

The plan will be to launch it sometime toward the end of the fall of this year. And we're actually quite excited about it because, first of all, it gives us an opportunity to bundle it with Disney+ and Hulu, and we will get really smart and strategic about pricing there. But it gives consumers the option of basically just staying in a sports-only experience or combining it with their other services.

Speaker Change: Do you think about the camera or the potential subscriber impact.

Speaker Change: Thank you.

Speaker Change: John Operator next question please.

Speaker Change: So you have some great films coming onto the platform later this year.

Speaker Change: Absolutely. Our next question today comes from Jessica Reif Ehrlich with Bank of America. Please go ahead.

Speaker Change: And then how important is new.

Speaker Change: Overall product offering.

Speaker Change: Thank you and I guess two things one.

Speaker Change: Okay.

Speaker Change: And the NBA.

Speaker Change: On the NDA can you just talk about how you view the path to profitability.

Speaker Change: Talk about profitability for any one of our licensed sports packages.

The new contract given the weaker season to date rating, obviously the step up next season.

Speaker Change: We obviously believe.

Bob Iger: And if they happen to subscribe to Disney+ and Hulu, then they can experience ESPN Flagship in a one-app experience, which will be both convenient from a subscription perspective and also convenient from a user perspective. So we're bullish. The other thing I want to mention about ESPN, because I know that others, other streamers, are getting into the sports game, is we have the advantage of not only a menu of sports and sports programming that no one else has, but we're on 365 days a year, 24 hours a day. So if you're a sports fan, it's not about one day of one boxing event or one day of football. It's about sports every single day of the year and every hour of the day. And that's a pretty compelling consumer proposition.

And if they happen to subscribe to Disney+ and Hulu, then they can experience ESPN Flagship in a one-app experience, which will be both convenient from a subscription perspective and also convenient from a user perspective. So we're bullish.

Speaker Change: And the NBA long term, it's a great sport, we think it's a growth sport, we don't really look at ratings year to year that carefully first of all it's not even really haven't even seen half a season, but.

Speaker Change: And then on DTC, and maybe you could drill down a little bit on how you're thinking about.

Speaker Change: Subscriber drivers.

Speaker Change: Bob you mentioned password sharing clamped down.

Speaker Change: We're not.

Speaker Change: Do you think about the Tam or the potential subscriber impact.

Speaker Change: Distracted by it any sense, what's happening ratings wise the NBA. This season at all we're happy to have it for all 11 more years, including the final 10 of those years and it will be it is and will continue to be a marquee part of espn's offering.

The other thing I want to mention about ESPN, because I know that others, other streamers, are getting into the sports game, is we have the advantage of not only a menu of sports and sports programming that no one else has, but we're on 365 days a year, 24 hours a day. So if you're a sports fan, it's not about one day of one boxing event or one day of football. It's about sports every single day of the year and every hour of the day. And that's a pretty compelling consumer proposition.

Speaker Change: We see some great films coming onto the platform later this year.

Speaker Change: And then how important is new to the overall product offering.

Speaker Change: Okay.

Speaker Change: And the NBA and we don't talk about profitability for any one of our licensed sports packages.

Speaker Change: In terms of subscribers.

Speaker Change: We believe that in order for us to grow subscribers is really a combination of things we have to continue to make great product films and TV series, we clearly have demonstrated over the last couple of years the ability to do that and we are confident that we will deliver on a consistent basis high quality films and <unk>.

Speaker Change: We obviously believe.

Speaker Change: And the NBA long term, it's a great sport, we think it's a grow sport, we don't really look at ratings year to year that carefully first of all it's not even really haven't even seen half a season, but.

Carlos Gomez: Thanks, Robert. Operator, next question, please.

Speaker Change: We're not.

Speaker Change: Distracted by it any sense, what's happening ratings wise the NBA. This season at all we're happy to have it for 11 more years, including the final 10 of those years and it will be it is and will continue to be a marquee part of espn's offering.

Speaker Change: Provision over the long run second you need really strong technology and this is where we have as we have said very publicly we had a lot of work to do and while we've made progress already in some ways. We're just getting started the only way to succeed in global streaming both from a subscription perspective, and a profitability perspective.

Operator: Absolutely. And our next question today comes from John Hodulik with UBS. Please go ahead.

John Hodulik: Great. Thank you. And maybe some questions for Hugh. Hugh, can you update us on the cord cutting initiatives and how far along you are? And along with that, it looks like from the queue that you guys trimmed the content budget to $23 billion from $24 billion, just what's behind that? And was that related to the fires in LA or just some changes to the overall budget? And then lastly, I have to ask your guidance for high single-digit earnings growth for the year started out with earnings growth of over 40% in the first quarter here. Can you just talk a little bit about sort of the cadence of earnings growth as we look out through the rest of the year? Thanks.

Speaker Change: In terms of subscribers.

Speaker Change: Is that a great combination of high quality product with volume and technology.

Speaker Change: And we feel if you look at all the competitors that are in that space, we're very well positioned to both grow subs and grow profits over the over the long run and actually over the next few years, where we've already demonstrated the ability to make this a much more economically attractive.

Speaker Change: Provision over the long run.

Speaker Change: And you need really strong technology and this is where we have as we have said very publicly we had a lot of work to do and while we've made progress already in some ways. We're just getting started the only way to succeed in global streaming both from a subscription perspective, and a profitability perspective is a great combination.

Speaker Change: And with the technology that we've got in place combined with the success of our content.

Operator: Sure, happy. That's quite a few questions, but I'll take a good whack at them. First, in terms of cost cutting, as a company, we're focused constantly on identifying opportunities where we're spending money perhaps less efficiently and looking for opportunities to do it more efficiently. That's not a once-a-year thing. That's not a once-a-month thing. That's something that we do every day of the year. It's part of what a good management team does, and we do think we're a good management team in that regard. So we're going to continue to identify opportunities to redeploy money in order to make the company both higher growth and ultimately more profitable. Regarding your question on the guide overall, obviously, the results were certainly in excess of expectations in Q1.

Bob Iger: Sure, happy. That's quite a few questions, but I'll take a good whack at them. First, in terms of cost cutting, as a company, we're focused constantly on identifying opportunities where we're spending money perhaps less efficiently and looking for opportunities to do it more efficiently. That's not a once-a-year thing. That's not a once-a-month thing.

Speaker Change: We are bullish about our ability to grow subs too.

Speaker Change: Jessica the other thing I would add to Bob's comments or.

Speaker Change: A high quality product with volume and technology.

Speaker Change: We gave you guidance in terms of the ESPN for next year, we knew all of the aspects of the NBA contract. When we made that deal and there is nothing that is changing in our mind in that regard and one last thing you asked about news, we like the opportunity to make room for.

And we feel if you look at all.

Speaker Change: All the competitors that are in that space, we're very well positioned to both grow subs and grow profits over the over the long run and actually over the next few years, where we've already demonstrated the ability to make this a much more economically attractive business and with.

That's something that we do every day of the year. It's part of what a good management team does, and we do think we're a good management team in that regard. So we're going to continue to identify opportunities to redeploy money in order to make the company both higher growth and ultimately more profitable. Regarding your question on the guide overall, obviously, the results were certainly in excess of expectations in Q1.

Our news of output both the ABC news output in the output of our local stations as part of the App experience.

Speaker Change: The technology that we've got in place combined with the success of our content, we actually are bullish about our ability to grow subs too.

Speaker Change: <unk>.

Speaker Change: Improved technology, we are now offering live streams on the Disney plus Hulu App and newsworthy does occupy one of those streams and it will continue to be a.

Speaker Change: Jessica the other thing I would add to Bob's comments or.

Speaker Change: We gave you guidance in terms of the of ESPN for next year, we knew all of the aspects of the NBA contract. When we made that deal and there is nothing that is changing in our mind in that regard and one last thing you asked about news, we like the opportunity to make room for.

Speaker Change: Feature of our overall Disney plus and Hulu offering and it's also something that differentiates us from some of the others in the spa.

Operator: It certainly gives us confidence, an even higher level of confidence than we probably even had before as we get into the balance of the year. At the same time, given the rapidly evolving macro environment, we think it would be premature at this point to change the guidance. That said, to the degree that the business momentum and the business performance justifies it, we're certainly not a management team that's afraid of over-delivering if, in fact, that is where the business takes us. So generally speaking, feel better about the balance of the year. And we started out the year feeling very, very positively about it.

It certainly gives us confidence, an even higher level of confidence than we probably even had before as we get into the balance of the year. At the same time, given the rapidly evolving macro environment, we think it would be premature at this point to change the guidance. That said, to the degree that the business momentum and the business performance justifies it, we're certainly not a management team that's afraid of over-delivering if, in fact, that is where the business takes us. So generally speaking, feel better about the balance of the year. And we started out the year feeling very, very positively about it.

Speaker Change: Base.

Speaker Change: Thanks, Jeff.

Speaker Change: Okay.

Speaker Change: Operator next question please.

Speaker Change: Absolutely. Our next question today comes from Michael <unk> with Goldman Sachs. Please go ahead.

Speaker Change: Our news of output both the ABC news output in the output of our local stations as part of the App experience.

Michael: Hi, Good morning, Thank you for the question.

Speaker Change: Just wanted to follow up on your comments Bob about.

Speaker Change: <unk>.

Speaker Change: Improved technology, we're now offering live streams.

Speaker Change: Streaming and news could you talk a little bit about your decision to add the Sportscenter daily show to Disney plus instead of ESPN flagship and.

Speaker Change: On the Disney plus Hulu App.

Speaker Change: Newsweek does occupy one of those streams and it will continue to be a.

Speaker Change: With streams NFC plus.

Speaker Change: Feature of our overall, Disney plus and Hulu offering and it's also something that differentiates us from some of the others.

Speaker Change: The investments in live content, what have you found to be the benefit of live as it relates to gross adds and churn and streaming and.

John Hodulik: Thank you, Hugh.

Carlos Gomez: Thanks, John. Operator, next question, please.

Speaker Change: Base.

Jeff: Thanks, Jeff.

Operator: Absolutely. Our next question today comes from Jessica Reif Ehrlich with Bank of America. Please go ahead.

Speaker Change: Okay.

Speaker Change: Operator next question please.

Speaker Change: Could you expand a little bit about.

Speaker Change: The competitive advantage that Disney has in producing and distributed live relative to some other streaming services. Thank you.

Speaker Change: Absolutely. Our next question today comes from Michael <unk> with Goldman Sachs. Please go ahead.

Jessica Reif Ehrlich: Thank you. I guess two things. One, on the NBA, can you talk about how you view the path to profitability in the new contract, given the weaker season-to-date ratings and obviously the step-up next season? And then on DTC, maybe we could drill down a little bit on how you're thinking about subscriber drivers. Bob, you mentioned password sharing crackdown. How do you think about the TAM or the potential subscriber impact? Obviously, some great films coming onto the platform later this year. And then how important is news to the overall product offer?

Michael: Hi, Good morning. Thank you for the question I just wanted to follow up on your comments Bob about.

Speaker Change: Well I think we've all seen the benefit of live just look at Espn's ratings as a for instance, or talked to anyone in the advertising business.

Speaker Change: Streaming and news could you talk a little bit about your decision to add the sports Center Daily show to Disney plus instead of ESPN flagship then.

Speaker Change: It is extremely attractive and we have the benefit as I said earlier of having live programming everyday of the week every day of the year or every week of the year.

Michael: With streams NFC plus.

Michael: The investments in live content, what have you found to be the benefit of live as it relates to gross adds and churn and streaming in.

Speaker Change: And so I.

Think that.

As.

Speaker Change: We provide our consumers with a one app experience live will be a major component of basically.

Speaker Change: Could you expand a little bit about the competitive advantage that Disney has in producing and distributed live relative to some other streaming services. Thank you.

Speaker Change: The growth the growth in that business.

Speaker Change: Contribute to the growth in that business for us what we did with ESPN and the Sports Center show that you mentioned as we put us in ESPN tile as we call it or our presence on the home screen of Disney plus.

Bob Iger: On the NBA, we don't talk about profitability for any one of our licensed sports packages. We obviously believe in the NBA long-term. It's a great sport. We think it's a growth sport. We don't really look at ratings year to year that carefully. First of all, we haven't even seen half a season, but we're not distracted by, in any sense, what's happening ratings-wise in the NBA this season at all. We're happy to have it for now 11 more years, including the finals 10 of those years. And it is and will continue to be a marquee part of ESPN's offering. In terms of subscribers, we believe that in order for us to grow subscribers, it's really a combination of things. We have to continue to make great products, films, and television series. We clearly have demonstrated over the last couple of years the ability to do that.

Speaker Change: Well I think we've all seen the benefit of live just look at Espn's ratings as a for instance, or talked to anyone in the advertising business.

Speaker Change: Is extremely attractive and we have the benefit as I said earlier of having live programming everyday of the week every day of the year or every week of the year.

Speaker Change: That was in part designed to increase engagement.

Speaker Change: For Disney plus Hulu subscribers gives them something to see on a daily basis, and obviously as we've talked today engage growing engagement is critical particularly to lowering churn. It also gives us the ability to use it as an introductory offer sort of an introductory ESPN digital offer and ultimately.

Speaker Change: And so I.

Speaker Change: I think that.

Speaker Change: As we provide our consumers with a one app experience.

Speaker Change: <unk> will be a major component of basically.

Speaker Change: Our growth the growth in that business.

And it is and will continue to be a marquee part of ESPN's offering. In terms of subscribers, we believe that in order for us to grow subscribers, it's really a combination of things. We have to continue to make great products, films, and television series. We clearly have demonstrated over the last couple of years the ability to do that.

Speaker Change: Contribute to the growth in that business for us what we did with ESPN and the Sports Center show that you mentioned is we put us in ESPN tile as we call. It our presence on the home screen of Disney plus.

Speaker Change: <unk> flagship has launched people who use the ESPN tile will have an opportunity to subscribe to flagship right from that tile and if they do subscribe to it then it becomes a completely integrated app experience with Disney plus and Hulu.

Speaker Change: That was in part designed to increase engagement.

Speaker Change: So it's there to improve but to do two things the benefit Disney plus Hulu and its also there to ultimately benefit ESPN flagship.

Bob Iger: We are confident that we will deliver on a consistent basis, high-quality films and television over the long run. Second, you need really strong technology. This is where we have, as we have said very publicly, we had a lot of work to do. While we've made progress already, in some ways, we're just getting started. The only way you succeed in global streaming, both from a subscription perspective and a profitability perspective, is with a great combination of high-quality product with volume and technology. We feel if you look at all the competitors that are in that space, we're very well positioned to both grow subs and grow profits over the long run and actually over the next few years. We've already demonstrated the ability to make this a much more economically attractive business.

We are confident that we will deliver on a consistent basis, high-quality films and television over the long run. Second, you need really strong technology. This is where we have, as we have said very publicly, we had a lot of work to do. While we've made progress already, in some ways, we're just getting started. The only way you succeed in global streaming, both from a subscription perspective and a profitability perspective, is with a great combination of high-quality product with volume and technology.

Bob Iger: Thank you Bob.

Thanks, Michael Operator next question please.

Speaker Change: Sir our next question comes from David Karnofsky with Jpmorgan. Please go ahead.

Bob Iger: Alright, thank you.

David Karnofsky: With experiences wanted to see if you could provide any color on the Disney Treasurer launch how the early returns look relative to expectations in the read throughs for the launches later this calendar year and then just sticking with parks, maybe you could discuss the roll out of Lightning lien Premier, which I think you recently expanded access for what type of take rates or are you observing on the product.

We feel if you look at all the competitors that are in that space, we're very well positioned to both grow subs and grow profits over the long run and actually over the next few years. We've already demonstrated the ability to make this a much more economically attractive business.With the technology that we've got in place, combined with the success of our content, we actually are bullish about our ability to grow subs too.

Speaker Change: So it's there to improve but to do two things to benefit Disney plus Hulu and its also there to ultimately benefit ESPN flagship.

Bob Iger: Alex.

Bob Iger: How is that impacting other spending buckets or overall experience.

Speaker Change: Thank you Bob.

Speaker Change: Yes, good morning.

Speaker Change: Thanks, Michael Operator next question please.

Bob Iger: Disney Treasurer is off to a spectacular start.

Speaker Change: Sorry, our next question comes from David Karnofsky JP Morgan. Please go ahead.

Speaker Change: Certainly.

Speaker Change: In terms of selling out there.

Bob Iger: With the technology that we've got in place, combined with the success of our content, we actually are bullish about our ability to grow subs too.

Speaker Change: Rooms, we have done terrifically, well the feedback and guest experience.

David Karnofsky: Alright, thank you.

David Karnofsky: With experiences wanted to see if you could provide any color on the Disney Treasurer launch how the early returns look relative to expectations in the read throughs for launches later this calendar year and then just sticking with parks, maybe you can discuss the roll out of Lightning lien Premier, which I think you recently expanded access for what type of take rates or are you observing on the product.

Speaker Change: A high percentage of people, who are writing an excellent very much in line with the rest of our ships.

Operator: Jessica, the only thing I would add to Bob's comments are we gave you guidance in terms of ESPN for next year. We knew all of the aspects of the NBA contract when we made that deal. There is nothing that is changing in our mind in that regard.

Carlos Gomez: Jessica, the only thing I would add to Bob's comments are we gave you guidance in terms of ESPN for next year. We knew all of the aspects of the NBA contract when we made that deal. There is nothing that is changing in our mind in that regard.

Speaker Change: And this is just sort of in the initial cruises so.

Speaker Change: I feel terrific about that as we've said before our expectation is for this shift to be profitable in the first quarter and in the first quarter. It's in the water.

David Karnofsky: <unk>.

David Karnofsky: How is that impacting other spending buckets or the overall experience.

Speaker Change: And frankly that is very much our expectation from here going forward. So.

Bob Iger: And one last thing. You asked about news. We like the opportunity to make room for our news output, both the ABC News output and the output of our local stations as part of the app experience. With improved technology, we're now offering live streams on the Disney+ Hulu app. And news does occupy one of those streams. And it will continue to be a feature of our overall Disney+ and Hulu offering. And it's also something that differentiates us from some of the others in the space.

Speaker Change: Feel great about that one lightning lane.

Speaker Change: Yeah good morning.

Speaker Change: Disney Treasurer is off to a spectacular start.

Speaker Change: We're launching that product, but remember it is a premium product.

Speaker Change: Certainly.

Speaker Change: Terms of selling out there.

Speaker Change: It is a product that we are learning how to use so we are marketing it very gently initially.

Speaker Change: Rooms, we have done terrifically, well the feedback and guest experience.

Speaker Change: A high percentage of people are writing an excellent very much in line with the rest of our ships.

Speaker Change: It's very much in line with our expectations, but we are moving slowly with that product in order to make it a great experience both for the purchasers of Lightning Lane and for the rest of our guests in the park. So feel great about it it's going to build over time, but it's certainly very much early days.

Speaker Change: And this is just sort of in the initial cruises so.

Speaker Change: I feel terrific about that as we've said before our expectation is for this shift to be profitable in the first quarter and in the first quarter. It's in the water.

Speaker Change: And frankly that is very much our expectation from here going forward. So.

Carlos Gomez: Thanks, Jessica.

David Karnofsky: Thanks, David.

John Hodulik: Thank you.

Jessica Reif Ehrlich: Thank you.

Carlos Gomez: Operator, next question, please.

Speaker Change: Operator next question please.

Speaker Change: Feel great about that one lightning lane.

Operator: Absolutely. Our next question today comes from Michael Ng with Goldman Sachs. Please go ahead.

Speaker Change: Absolutely and then our next question today comes from Michael Morris at Guggenheim. Please go ahead.

Speaker Change: We're launching that product, but remember it is a premium product.

Michael Ng: Hi, good morning. Thank you for the question. I just wanted to follow up on your comments, Bob, about streaming and news. Could you talk a little bit about your decision to add the SportsCenter Daily Show to Disney+ instead of ESPN Flagship? And with streaming and ESPN+, the investments in live content, what have you found to be the benefit of live as it relates to gross ads, churn, and streaming? And could you expand a little bit about the competitive advantage that Disney has in producing and distributing live relative to some other streaming services? Thank you.

Mike Ng: Hi, good morning. Thank you for the question. I just wanted to follow up on your comments, Bob, about streaming and news. Could you talk a little bit about your decision to add the SportsCenter Daily Show to Disney+ instead of ESPN Flagship? And with streaming and ESPN+, the investments in live content, what have you found to be the benefit of live as it relates to gross ads, churn, and streaming? And could you expand a little bit about the competitive advantage that Disney has in producing and distributing live relative to some other streaming services? Thank you.

Michael Morris: Thank you and good morning, two questions about your outlook.

Speaker Change: It is a product that we are learning how to use so we are marketing it very gently initially.

Michael Morris: First it experiences Hugh.

Michael Morris: On the fourth quarter call you mentioned that bookings.

Michael Morris: Bookings in the back half of the year were positive at that point in time.

Michael Morris: Wondering if you can give us an update there are they still positive do you have any more visibility.

Michael Morris: How has that trended.

Michael Morris: And then my second question is on direct to consumer.

Michael Morris: A really strong first quarter I think you grew about $400 million year over year on operating profit and your guide implies about $100 million a quarter for the next three quarters. So can you talk a little bit about what goes into that outlook, what the puts and takes or maybe an investment that would have that growth.

David Karnofsky: Thanks, David.

Speaker Change: Operator next question please.

Speaker Change: Absolutely and our next question today comes from Michael Morris of Guggenheim. Please go ahead.

Michael Morris: Thank you and good morning, two questions about your outlook.

Bob Iger: Well, I think we've all seen the benefit of live. Just look at ESPN's ratings, for instance, or talk to anyone in the advertising business. Live is extremely attractive. We have the benefit, as I said earlier, of having live programming every day of the week, every day of the year, or every week of the year. So I think that as we provide our consumers with a one-app experience, live will be a major component of basically the growth in that business. It'll contribute to the growth in that business for us. What we did with ESPN and the SportsCenter show that you mentioned is we put an ESPN tile, as we call it, or presence on the home screen of Disney+. That was in part designed to increase engagement for Disney+ Hulu subscribers, gives them something to see on a daily basis.

Speaker Change: First it experiences Hugh.

Michael Morris: On the fourth quarter call you mentioned that bookings.

Michael Morris: Lower for the balance of the year. Thank you.

Michael Morris: Bookings in the back half of the year were positive at that point in time.

Michael Morris: Yes happy to cover to cover both of those.

Michael Morris: Wondering if you can give us an update there are they still positive do you have any more visibility.

Michael Morris: Hitting on on DTC first.

Michael Morris: As I mentioned.

Michael Morris: Obviously, an evolving environment.

Michael Morris: How has that trended.

Michael Morris: And then my second question is on direct to consumer.

Michael Morris: Our expectations are for the business to do terrifically well.

Michael Morris: A really strong first quarter I think you grew about $400 million year over year on operating profit and your guide only implies about $100 million a quarter for the next three quarters. So can you talk a little bit about what goes into that outlook, what the puts and takes or maybe an investment that would have that growth.

Michael Morris: We made $300 million in the quarter for the full year, our expectation is to be a little over $1 billion. So we obviously still have some work to do but we're out of the blocks very very quickly.

What we did with ESPN and the SportsCenter show that you mentioned is we put an ESPN tile, as we call it, or presence on the home screen of Disney+. That was in part designed to increase engagement for Disney+ Hulu subscribers, gives them something to see on a daily basis.

Michael Morris: As I mentioned earlier in this call, we're certainly not afraid to over deliver.

If the business.

Speaker Change: Lower for the balance of the year. Thank you.

Michael Morris: Momentum gives us that but thats.

Speaker Change: Yeah happy to cover to cover both of those.

Michael Morris: Something to be seen it's premature to be thinking about raising guidance in my opinion. After after just one one quarter results.

Speaker Change: Hitting on on DTC first.

Speaker Change: As I mentioned.

Speaker Change: Obviously, an evolving environment.

Speaker Change: The second question was.

Bob Iger: And obviously, as we've talked today, growing engagement is critical, particularly to lowering churn. It also gives us the ability to use it as an introductory offer, sort of an introductory ESPN digital offer. And ultimately, when Flagship is launched, people who use the ESPN tile will have an opportunity to subscribe to Flagship right from that tile. And if they do subscribe to it, then it becomes a completely integrated app experience with Disney+ and Hulu. So it's there to improve, but to do two things: to benefit Disney+ Hulu, and it's also there to ultimately benefit ESPN Flagship.

And obviously, as we've talked today, growing engagement is critical, particularly to lowering churn. It also gives us the ability to use it as an introductory offer, sort of an introductory ESPN digital offer. And ultimately, when Flagship is launched, people who use the ESPN tile will have an opportunity to subscribe to Flagship right from that tile. And if they do subscribe to it, then it becomes a completely integrated app experience with Disney+ and Hulu. So it's there to improve, but to do two things: to benefit Disney+ Hulu, and it's also there to ultimately benefit ESPN Flagship.

Speaker Change: Our expectations are for the business to do terrifically well.

Michael Morris: Oh in terms of.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: We made $300 million in the quarter for the full year, our expectation is to be a little over $1 billion. So we obviously still have some work to do but we're out of the blocks very very quickly.

Speaker Change: So I'm sorry.

Speaker Change: You should have written it down.

Speaker Change: Basically we are further into the curve, but the messaging is exactly the same as I gave you last quarter.

Speaker Change: As I mentioned earlier in this call, we're certainly not afraid to over deliver if if the business.

Speaker Change: <unk> are up in the summer right now so we're certainly feeling positive and obviously, we have more of the men given that we're 90 days later so.

Speaker Change: Momentum gives us that but thats.

Speaker Change: Something to be seen it's premature to be thinking about raising guidance in my opinion. After after just one one quarter results.

Speaker Change: The outlook is good in that regard, but as always.

Speaker Change: We're going to take a view at this point that it's premature to be to be changing guide in that regard, but off to a great off to a great start and experiences.

Speaker Change: Second question was.

Speaker Change: Oh in terms of.

John Hodulik: Thank you, Bob.

Mike Ng: Thank you, Bob.

Speaker Change: Okay.

Speaker Change: Great. Thank you for the answers.

Carlos Gomez: Thanks, Michael. Operator, next question, please.

Speaker Change: Oh the <unk>.

Speaker Change: So I'm sorry.

Speaker Change: Operator next question please.

Speaker Change: <unk> written that down.

Operator: Sir, our next question comes from David Karnovsky with JPMorgan. Please go ahead.

Bryan Kraft: Our next question comes from Bryan Kraft Deutsche Bank. Please go ahead.

Speaker Change: Basically we are further into the curve, but the messaging is exactly the same as I gave you last quarter.

John Hodulik: Hi, thank you. With experiences, wanted to see if you could provide any color on the Disney Treasure launch, how the early returns look relative to expectations, and the read-throughs for the launches later this calendar year. Then just sticking with parks, maybe you could discuss the rollout of Lightning Lane Premier, which I think you recently expanded access for. What type of take rates are you observing on the product, and how is that impacting other spending buckets or your overall experience? Thanks.

David Karnovsky: Hi, thank you. With experiences, wanted to see if you could provide any color on the Disney Treasure launch, how the early returns look relative to expectations, and the read-throughs for the launches later this calendar year. Then just sticking with parks, maybe you could discuss the rollout of Lightning Lane Premier, which I think you recently expanded access for. What type of take rates are you observing on the product, and how is that impacting other spending buckets or your overall experience? Thanks.

Bryan Kraft: Hi, good morning.

Bryan Kraft: So I had one on on sports and then just a follow up so so first on sports Youre, obviously going to see a step up in rights costs for the MBA next year, but you have guided to low single digit or high growth in fiscal 'twenty six on top of 13% growth. This year. So I just wanted to ask if we should be thinking about some offset in other sports rights coming out of the business.

Speaker Change: Bookings are up in the summer right now so we're certainly feeling positive and obviously, we have more of the men given that we're 90 days later so.

Speaker Change: Certainly the outlook is good in that regard.

Speaker Change: As always.

Speaker Change: We're going to take a view at this point that it's premature to be to be changing guide in that regard, but off to a great off to a great start and experiences.

Bryan Kraft: To offset the MBA increase or if the fiscal 'twenty six growth is more a function of the oi growth from flagship or a big improvement in pay TV sub declines because of smaller priced.

Speaker Change: Great. Thank you for the answers.

Operator: Yeah, good morning. Disney Treasure is off to a spectacular start. Certainly, in terms of selling out the rooms, we've done terrifically well. The feedback and guest experience, the high percentage of people are rating it excellent, very much in line with the rest of our ships. And this is just sort of in the initial cruises. So feel terrific about that. As we've said before, our expectation is for this ship to be profitable in the first quarter, and the first quarter, it's in the water. And frankly, that is very much our expectation from here going forward. So feel great about that one. Lightning Lane, we're launching that product, but remember, it is a premium product. It is a product that we are learning how to use. So we are marketing it very gently initially.

Bob Iger: Yeah, good morning. Disney Treasure is off to a spectacular start. Certainly, in terms of selling out the rooms, we've done terrifically well. The feedback and guest experience, the high percentage of people are rating it excellent, very much in line with the rest of our ships. And this is just sort of in the initial cruises. So feel terrific about that. As we've said before, our expectation is for this ship to be profitable in the first quarter, and the first quarter, it's in the water.

Speaker Change: Operator next question please.

Operator: Our next question from Bryan Kraft Deutsche Bank. Please go ahead.

Bryan Kraft: Excuse me lower priced small sports and news packages. So just trying to get underneath of the drivers of that strength and then secondly.

Bryan Kraft: Hi, good morning.

Bryan Kraft: I had one on on sports and then just a follow up so so first on sports, you're obviously going to see a step up in rights costs for the MBA next year, but you have guided to low single digit Oi growth in fiscal 'twenty six on top of 13% growth. This year. So I just wanted to ask if we should be thinking about some offset in other sports rights coming out of the business.

Bryan Kraft: On Disney plus if you could talk about the outlook for Disney plus subscriber growth. This year, I think youre guiding to essentially flat subs through the end of two Q.

Speaker Change: What are you expecting in the second half of the year Directionally and what are some of the key factors that are shaping the outlook for the rest of the year. Thank you.

And frankly, that is very much our expectation from here going forward. So feel great about that one. Lightning Lane, we're launching that product, but remember, it is a premium product. It is a product that we are learning how to use. So we are marketing it very gently initially.

The offset the MBA increase or if the fiscal 'twenty six growth is more a function of the oi growth from flagship.

Speaker Change: Yes, so in terms of ESPN and the NBA. Obviously, there are a lot of variables that go into it.

Bryan Kraft: Or a big improvement in pay TV sub declines because of smaller priced.

Speaker Change: Espn's P&L, including the advertising market for live sports, which is obviously very very strong.

Bryan Kraft: Lower priced small sports and news packages.

Speaker Change: So just trying to get underneath of the drivers of that strength and then secondly, just on Disney plus if you could talk about the outlook for Disney plus subscriber growth. This year I think you're guiding to essentially flat subs through the end of two Q.

Speaker Change: It's also in terms of aggregate cost management, not just write call rights costs for the entire business and Jimmy in the team do a phenomenal job managing their costs and that's a tailwind and then in addition to that we're going to look at everything else. That's out there and we'll make decisions that are reflective of the discipline that I think this team is.

Operator: It's very much in line with our expectations, but we are moving slowly with that product in order to make it a great experience both for the purchasers of Lightning Lane and for the rest of our guests in the park. So feel great about it. It's going to build over time, but it's certainly very much early days.

It's very much in line with our expectations, but we are moving slowly with that product in order to make it a great experience both for the purchasers of Lightning Lane and for the rest of our guests in the park. So feel great about it. It's going to build over time, but it's certainly very much early days.

Speaker Change: What are you expecting in the second half of the year Directionally in and what are some of the key factors that are shaping our outlook for the rest of the year. Thank you.

Speaker Change: Joan in terms of.

Speaker Change: What we're looking at in rates going forward. So.

Carlos Gomez: Thanks, David. Operator, next question, please.

Speaker Change: Yeah. So in terms of ESPN and the NBA. Obviously, there are a lot of variables that go into it.

Speaker Change: I'll leave it at that but as I said earlier in the call. We mentioned low single digits next year, we're still very much committed to that based on the aggregate of all of all of those inputs in terms of outlook for DTC subscribers.

Operator: Absolutely. Our next question today comes from Michael Morris at Guggenheim. Please go ahead.

Speaker Change: Espn's P&L, including the advertising market for live sports, which is obviously very very strong.

Michael Ng: Thank you. Good morning. Two questions about your outlook. First, it experienced, Hugh, on the fourth quarter call, you mentioned that bookings in the back half of the year were positive at that point in time. I'm wondering if you can give us an update there. Are they still positive? Do you have any more visibility? How's that trended? And then my second question is on direct-to-consumer. You had a really strong first quarter. I think you grew about $400 million year over year on operating profit. And your guide only implies about $100 million a quarter for the next three quarters. So can you talk a little bit about what goes into that outlook, what the puts and takes are maybe on investment that would have that growth slower for the balance of the year? Thank you.

Michael Morris: Thank you. Good morning. Two questions about your outlook. First, it experienced, Hugh, on the fourth quarter call, you mentioned that bookings in the back half of the year were positive at that point in time. I'm wondering if you can give us an update there. Are they still positive? Do you have any more visibility? How's that trended? And then my second question is on direct-to-consumer.

Speaker Change: Also in terms of aggregate cost management, not just write call rights costs for the entire business and Jimmy in the team do a phenomenal job managing their costs and that's a tailwind and then in addition to that we're going to look at everything else. That's out there and we'll make decisions that are reflective of the discipline that I think this team has shown.

Speaker Change: Our expectation is to grow them for the year, so given given where we're basically sort of slightly up in the first quarter.

Speaker Change: It will be similar in the second quarter, our expectation is particularly as paid sharing starts to take hold and as we add more of the movie slate that we produced in the back half of 'twenty four into the streaming service and 25, we think that content will drive sub growth as well and I'll add I'll add to what you said.

Speaker Change: In terms of.

You had a really strong first quarter. I think you grew about $400 million year over year on operating profit. And your guide only implies about $100 million a quarter for the next three quarters. So can you talk a little bit about what goes into that outlook, what the puts and takes are maybe on investment that would have that growth slower for the balance of the year? Thank you.

Speaker Change: What we're looking at in rates going forward. So.

Speaker Change: I'll leave it at that but as I said earlier in the call. We mentioned low single digits next year, we're still very much committed to that based on the aggregate of all of <unk>.

Speaker Change: We actually are very pleased with where we are sub wise for Disney plus and Hulu as you know we took prices up significantly fairly recently and expected the churn would be significantly greater and it turned out we delivered numbers that were better than we had expected. So the combination of Disney plus and Hulu actually we grew <unk>.

Speaker Change: All of those inputs in terms of outlook for DTC subscribers, our expectation is to grow them for the year. So given given where we're basically sort of slightly up in the first quarter.

Bob Iger: Yeah, happy to cover both of those. Hitting on DTC first, as I mentioned, it's obviously an evolving environment. Our expectations are for the business to do terrifically well. We made $300 million in the quarter. For the full year, our expectation is to be a little over $1 billion. So we obviously still have some work to do, but we're out of the blocks very, very quickly. As I mentioned earlier in this call, we're certainly not afraid to over-deliver if the business momentum gives us that. But that's something to be seen. It's premature to be thinking about raising guidance, in my opinion, after just one quarter of results. The second question was, oh, in terms of.

Speaker Change: <unk> will be similar in the second quarter, our expectation is particularly as paid sharing starts to take hold and as we add more of the movie slate that we produced in the back half of 'twenty four into the streaming service and 25, we think that content will drive sub growth as well and I'll add I'll add to what you said.

Speaker Change: Subs modestly in the quarter now while we did that we also are implementing as we talked earlier these technological advances or enhancements that will enable us to lower churn and continue to grow subs and we also have a great product pipeline coming so we're bullish about our ability to turn streaming not just into the profitable business.

Speaker Change: We actually are very pleased with where we are sub wise for Disney plus and Hulu as you know we took prices up.

Speaker Change: That it is today, but into a growth business for the company due to the combination of all of these things and that includes the ability to successfully bundle both for the consumer and for our shareholder Disney plus Hulu and ultimately ESPN.

Speaker Change: Significantly fairly recently and expected the churn would be significantly greater and it turned out we delivered numbers that were better than we had expected. So the combination of Disney plus and Hulu actually we grew subs modestly in the quarter now while we did that we also are implementing as we talked earlier these technological advances.

Speaker Change: Thanks, Brian Thank you very much.

Speaker Change: Later, we have time for one last question.

Speaker Change: Thank you and our final question today comes from come online could touch one with Barclays. Please go ahead.

Speaker Change: Our enhancements that will enable us to lower churn and continue to grow subs and we also have a great product pipeline coming so we're bullish about our ability to turn streaming not just into the profitable business than it is today, but into a growth business for the company due to the combination of all of these things and that includes the ability of this.

John Hodulik: Bookings.

Michael Morris: Bookings.

Speaker Change: Thank you.

Bob Iger: Oh, the bookings. I'm sorry. I should have written that down. Basically, we are further into the curve, but the messaging is exactly the same as I gave you last quarter. Bookings are up in the summer right now, so certainly feeling positive. And obviously, we have more of them given that we're 90 days later. So certainly, the outlook is good in that regard. But as always, we're going to take a view at this point that it's premature to be changing guidance in that regard, but off to a great start in experiences.

Speaker Change: Maybe on ESPN flagship Bob.

Just in terms of the vision that you have for the product and the objectives Windex luminous.

Speaker Change: Is this to basically.

Speaker Change: Further drove the sports business relative to where it is today or is it more to preserve existing profitability and preserve the ecosystem as it is today.

Speaker Change: Successfully bundle both for the consumer and for our shareholder Disney plus Hulu and ultimately ESPN.

Speaker Change: Great to get your thoughts on that.

Speaker Change: Thanks, Brian you very much.

Speaker Change: And then maybe another one on just the industry wide consolidation efforts that you have.

Speaker Change: Operator, we have time for one last question.

Speaker Change: See.

Speaker Change: Thank you and our final question today comes from come online could touch one with Barclays. Please go ahead.

Speaker Change: If there is an effort to rollout cable networks across the industry.

Speaker Change: Would there be any interest from your end potentially to participate in that with some of your smaller networks. Thank you.

Michael Ng: Great. Thank you for the answers.

Michael Morris: Great. Thank you for the answers.

Speaker Change: Thank you.

Carlos Gomez: Operator, next question, please.

Speaker Change: Maybe on ESPN flagship Bob just in terms of the vision that you have for the product and the objectives Windex luminous.

Operator: Sir, our next question comes from Brian Kraft at Deutsche Bank. Please go ahead.

Let me just make a quick comment about the linear networks, we actually are at a point where.

Michael Ng: Hi, good morning. So I had one on sports and then just a follow-up. So first, on sports, you're obviously going to see a step up in rights costs for the NBA next year, but you've guided to low single-digit OI growth in fiscal 2026 on top of 13% growth this year. So I just wanted to ask if we should be thinking about some offset and other sports rights coming out of the business to offset the NBA increase, or if the fiscal 2026 growth is more a function of OI growth from Flagship or a big improvement in pay-TV sub declines because of smaller-priced, excuse me, lower-priced small sports and news packages. So just trying to get underneath of the drivers of that strength.

Bryan Kraft [Lead Equity Research Analyst: Hi, good morning. So I had one on sports and then just a follow-up. So first, on sports, you're obviously going to see a step up in rights costs for the NBA next year, but you've guided to low single-digit OI growth in fiscal 2026 on top of 13% growth this year. So I just wanted to ask if we should be thinking about some offset and other sports rights coming out of the business to offset the NBA increase, or if the fiscal 2026 growth is more a function of OI growth from Flagship or a big improvement in pay-TV sub declines because of smaller-priced, excuse me, lower-priced small sports and news packages. So just trying to get underneath of the drivers of that strength.

Speaker Change: Is this to basically.

Speaker Change: Further drove the sports business relative to where it is today.

Speaker Change: The linear networks at our company are not a burden at all Theyre actually an asset.

Speaker Change: Is it more to preserve existing profitability in Brazil ecosystem as a density would be great to get your thoughts on that.

Speaker Change: We are programming them and we are funding them at levels that actually give us the ability to enhance our overall TV business that obviously includes and leans into streaming which let's face. It is really the future of the TV business. So while I won't rule out the possibility some of the <unk>.

Speaker Change: And then maybe another one on just the industry wide consolidation efforts that you're seeing.

Speaker Change: If there is an effort to rollout cable networks across the industry.

Speaker Change: Okay.

Speaker Change: Would there be any interest from your end potentially to participate in that with some of your smaller networks. Thank you.

Speaker Change: <unk> networks in some form or another being configured differently in terms of how we bring them to market.

Speaker Change: Well, let me just make a quick comment about the linear networks.

Speaker Change: Maybe even ownership, but we're not right now we actually feel good about the hand that we have and the manner in which were match.

Speaker Change: We actually are at a point where the.

Michael Ng: And then secondly, just on Disney+, if you could talk about the outlook for Disney+ subscriber growth this year, I think you're guiding to essentially flat subs through the end of Q2. What are you expecting in the second half of the year directionally, and what are some of the key factors that are shaping the outlook for the rest of the year? Thank you.

And then secondly, just on Disney+, if you could talk about the outlook for Disney+ subscriber growth this year, I think you're guiding to essentially flat subs through the end of Q2. What are you expecting in the second half of the year directionally, and what are some of the key factors that are shaping the outlook for the rest of the year? Thank you.

Speaker Change: The linear networks at our company are not a burden at all they're actually an asset.

Speaker Change: Managing both the linear and the streaming businesses across the board at Disney.

Speaker Change: We are programming them and we are funding them at levels that actually give us the ability to enhance our overall TV business that obviously includes it leans into streaming which let's face. It is really the future of the TV business. So while I won't rule out the possibility some of the <unk>.

Speaker Change: Regarding flagship.

Speaker Change: It's pretty clear that.

Speaker Change: Yung.

Speaker Change: Viewers I guess you can call them are young consumers are leaning more and more into streaming experiences both fixed televisions on malls and mobile devices and the more ESPN can be present for a new generation of consumers with a product that serves them really well the better off espn's businesses. So flagship is <unk>.

Bob Iger: Yeah. So in terms of ESPN and the NBA, obviously, there are a lot of variables that go into ESPN's P&L, including the advertising market for live sports, which is obviously very, very strong. It's also in terms of aggregate cost management, not just rights costs for the entire business. And Jimmy and the team do a phenomenal job managing their costs, and that's a tailwind. And then in addition to that, we're going to look at everything else that's out there, and we'll make decisions that are reflective of the discipline that I think this team has shown in terms of what we're looking at in rights going forward. So I'll leave it at that. But as I said earlier in the call, we mentioned low single digits next year. We're still very much committed to that based on the aggregate of all of those inputs.

Speaker Change: All in networks in some form or another being configured differently in terms of how we bring them to market.

Speaker Change: Maybe even ownership, but we're not right now we actually feel good about the hand that we have and the manner in which we're managing.

Speaker Change: Really designed to preserve our business is designed to grow our business in a market, that's evolving or changing right before our eyes.

Speaker Change: Managing both the linear and the streaming businesses across the board at Disney.

Speaker Change: Extremely extremely excited by what's coming in and bullish about it because we think it's not only a good business proposition, but it's a sports fans dream.

And then in addition to that, we're going to look at everything else that's out there, and we'll make decisions that are reflective of the discipline that I think this team has shown in terms of what we're looking at in rights going forward. So I'll leave it at that. But as I said earlier in the call, we mentioned low single digits next year. We're still very much committed to that based on the aggregate of all of those inputs.

Speaker Change: Regarding flagship.

Speaker Change: It's pretty clear that yeah.

Speaker Change: Young.

Speaker Change: Viewers I guess you'd call them are young consumers are leaning more and more into streaming experiences both fixed televisions on malls and mobile devices.

Speaker Change: Thank you.

Speaker Change: Thanks, <unk> and thanks, everyone for your questions. This morning, we want to thank you for joining us and wish everyone. A good rest of the day.

Speaker Change: And the more ESPN can be present for a new generation of consumers with a product that serves them really well the better off espn's businesses. So flagship is not really designed to preserve a business is designed to grow our business in a market, that's evolving or changing right before our eyes. So we're extremely extremely.

Speaker Change: Okay.

Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Bob Iger: In terms of outlook for DTC subscribers, our expectation is to grow them for the year. So given we're basically sort of slightly up in the first quarter, we'll be similar in the second quarter. Our expectation is, particularly as paid sharing starts to take hold and as we add more of the movie slate that we produced in the back half of 2024 into the streaming service in 2025, we think that content will drive sub growth as well. And I'll add to what you said. We actually are very pleased with where we are sub-wise for Disney+ and Hulu. As you know, we took prices up significantly fairly recently and expected the churn would be significantly greater. And it turned out we delivered numbers that were better than we had expected. So the combination of Disney+ and Hulu, actually, we grew subs modestly in the quarter.

In terms of outlook for DTC subscribers, our expectation is to grow them for the year. So given we're basically sort of slightly up in the first quarter, we'll be similar in the second quarter. Our expectation is, particularly as paid sharing starts to take hold and as we add more of the movie slate that we produced in the back half of 2024 into the streaming service in 2025, we think that content will drive sub growth as well.

Speaker Change: Greenlee excited by what's coming in and bullish about it because we think it's not only a good business proposition, but it's a sports fans dream.

Speaker Change: Thank you.

Speaker Change: Thanks, <unk> and thanks, everyone for your questions. This morning, we want to thank you for joining us and wish everyone. A good rest of the day.

Carlos Gomez: And I'll add to what you said. We actually are very pleased with where we are sub-wise for Disney+ and Hulu.As you know, we took prices up significantly fairly recently and expected the churn would be significantly greater. And it turned out we delivered numbers that were better than we had expected. So the combination of Disney+ and Hulu, actually, we grew subs modestly in the quarter.

Speaker Change: Yeah.

Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Speaker Change: Okay.

Speaker Change: Goodbye.

Speaker Change: [music].

Bob Iger: Now, while we did that, we also are implementing, as we talked earlier, these technological advances or enhancements that will enable us to lower churn and continue to grow subs. And we also have a great product pipeline coming. So we're bullish about our ability to turn streaming not just into the profitable business that it is today, but into a growth business for the company due to the combination of all these things. And that includes the ability to successfully bundle both for the consumer and for our shareholder, Disney+, Hulu, and ultimately ESPN.

Now, while we did that, we also are implementing, as we talked earlier, these technological advances or enhancements that will enable us to lower churn and continue to grow subs. And we also have a great product pipeline coming. So we're bullish about our ability to turn streaming not just into the profitable business that it is today, but into a growth business for the company due to the combination of all these things. And that includes the ability to successfully bundle both for the consumer and for our shareholder, Disney+, Hulu, and ultimately ESPN.

Carlos Gomez: Thanks, Brian.

John Hodulik: Thank you very much.

Bryan Kraft [Lead Equity Research Analyst: Thank you very much.

Carlos Gomez: Operator, we have time for one last question.

Operator: Thank you. Our final question today comes from Kannan Venkateshwar with Barclays. Please go ahead.

Kannan Venkateshwar: Thank you. Maybe on ESPN Flagship, Bob, just in terms of the vision that you have for the product and the objectives with that service, is this to basically further grow the sports business relative to where it is today, or is it more to preserve existing profitability and preserve the ecosystem as it is today? It would be great to get your thoughts on that. And then maybe another one on just the industry-wide consolidation efforts that we are seeing. If there is an effort to roll up cable networks across the industry, would there be any interest from your end potentially to participate in that with some of your smaller networks? Thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].

Bob Iger: Let me just make a quick comment about the linear networks. We actually are at a point where the linear networks at our company are not a burden at all. They're actually an asset. We are programming them, and we are funding them at levels that actually give us the ability to enhance our overall television business. That obviously includes and leans into streaming, which, let's face it, is really the future of the television business. So while I won't rule out the possibility of some of the smaller networks in some form or another being configured differently in terms of how we bring them to market, maybe even ownership. But we're not right now. We actually feel good about the hand that we have and the manner in which we're managing both the linear and the streaming businesses across the board at Disney.

We actually feel good about the hand that we have and the manner in which we're managing both the linear and the streaming businesses across the board at Disney.Regarding Flagship, it's pretty clear that young viewers, I guess you'd call them, or young consumers are leaning more and more into streaming experiences, both fixed televisions on walls and mobile devices.

Bob Iger: Regarding Flagship, it's pretty clear that young viewers, I guess you'd call them, or young consumers are leaning more and more into streaming experiences, both fixed televisions on walls and mobile devices. The more ESPN can be present for a new generation of consumers with a product that serves them really well, the better off ESPN's business is. Flagship is not really designed to preserve a business. It's designed to grow a business in a market that's evolving or changing right before our eyes. We're extremely, extremely excited by what's coming and bullish about it because we think it's not only a good business proposition, but it's a sports fan's dream.

Speaker Change: Okay.

Speaker Change: [music].

The more ESPN can be present for a new generation of consumers with a product that serves them really well, the better off ESPN's business is. Flagship is not really designed to preserve a business. It's designed to grow a business in a market that's evolving or changing right before our eyes. We're extremely, extremely excited by what's coming and bullish about it because we think it's not only a good business proposition, but it's a sports fan's dream.

Speaker Change: Okay.

Speaker Change: [music].

Kannan Venkateshwar: Thank you.

Carlos Gomez: Thanks, Kannan. And thanks, everyone, for your questions this morning. We want to thank you for joining us and wish everyone a good rest of the day.

Operator: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Q1 2025 The Walt Disney Co Earnings Call

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