Q2 2025 The Walt Disney Co Earnings Call
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Speaker Change: Good day, and welcome to the Walt Disney Company's second quarter 25 financial results conference call. All participants will be in the surrounding mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press start and want on your telephone keypad. To withdraw your question, please press start and to. To withdraw your question, please press start and to. To withdraw your question, please press start and to.
Please note today's event is being recorded.
Speaker Change: I would now like to turn the conference over to Carlos Gomez, Executive Vice President, Professor, and Head of Investor Relations. Please go ahead, sir.
Carlos Gomez: Good morning. It's my pleasure to welcome everyone to the Walt Disney Company's second quarter, 2025 earnings call. Our press release, Form 10Q, and Management's posted prepared remarks were issued earlier this morning and are available on our website at www.Disney.com forward slash investors.
Carlos Gomez: 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.
Carlos Gomez: 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.
Carlos Gomez: We make these statements on the basis of our assumptions regarding the future at the time we make them and do not undertake any obligations to provide updates.
Carlos Gomez: Forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from the results expressed or implied in light of a variety of factors.
Carlos Gomez: 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.
Carlos Gomez: Refer to our IR website, the press release issue today, and the risks and uncertainties describing our form 10K, form 10Q and other filings with the SEC for more information about key risk factors.
Carlos Gomez: A reconciliation of certain non-GAAP measures referred to on this call to the most comparable GAAP measures can be found on our IR website.
Speaker Change: Joining me this morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Executive Vice President, and Chief Financial Officer,
Hugh Johnston: Following introductory remarks from Bob, we will be happy to take your questions. So with that, I will not turn the call over to Bob.
Hugh Johnston: In the 102-year history of the Walt Disney Company, there have been many defining moments and countless achievements.
One such moment was the opening of Disneyland in 1955.
Hugh Johnston: World. Now, 70 years later, having entertained four billion guests across six Disney theme park destinations around the world, we are celebrating another great moment in our story history. [inaudible]
Hugh Johnston: I am joining you from the United Arab Emirates, where we just announced an agreement to bring a Disney theme park to Abu Dhabi.
Disney Land Abu Dhabi will be authentically Disney and distinctly Emirati.
Hugh Johnston: It will serve as an oasis of extraordinary Disney entertainment for millions and millions of people in this crossroads of the world, connecting travelers from the Middle East and Africa, India, Asia, Europe and beyond. [inaudible]
Hugh Johnston: It will combine contemporary architecture and cutting-edge technology with a timeless magic of Disney to offer guest deeply immersive experiences in unique and modern ways.
Hugh Johnston: As part of our new strategic partnership with the Moral Group of Abu Dhabi, Disney will oversee design, license our IP and provide operational expertise, while Moral will provide the capital, construction resources, and operational oversight.
Hugh Johnston: Our Imagineering team is already hard at work designing this large and very special destination that will become a source of joy and inspiration for generations to come.
Hugh Johnston: This is my third visit to Abu Dhabi in the last nine months, and each time I gain more appreciation and respect for the UAE government, the government of Abu Dhabi for our partners at morale and for the people and the culture of Abu Dhabi.
Hugh Johnston: As we prepare to embark on this exciting new addition to our experiences portfolio we already have more expansion projects underway domestically and around the world that at any time in our history.
Hugh Johnston: That includes investing more than $30 billion in our theme parks in Florida and California to enhance our offerings, create jobs, and support the US economy.
Hugh Johnston: Our focus must always be on building for tomorrow, as much as it is on managing for today.
Hugh Johnston: That eye to the future and driving growth is central to the important work we've done advancing our four strategic priorities and looking at our second quarter results we're making excellent progress.
Hugh Johnston: We had a very strong Q2 with adjusted EPS up 20% from the prior year, rounding out a solid first half of fiscal 2025.
Hugh Johnston: Our experiences segment delivered strong results this quarter driven by the outstanding performance from our domestic businesses.
Hugh Johnston: Investments in this segment have delivered impressive returns on invested capital, with returns from our experiences, businesses at all time highs.
Hugh Johnston: Experiences is obviously a critical business for Disney, and also an important growth platform.
Hugh Johnston: Despite questions around any macroeconomic uncertainty or the impact of competition, I'm encouraged by the strength and resilience of our business, as evidenced in these earnings and in the second half bookings at Walt Disney World.
Hugh Johnston: Our entertainment business, including movies, television series, news and sports, continues to generate strong growth.
Hugh Johnston: Our feature films continue to enjoy success at the Global Box Office.
Hugh Johnston: Thunderbolts from Marvel Studios opened this past week and it was currently the number one movie in the world and the best-reviewed Marvel film in the last few years.
Hugh Johnston: We are also excited about our upcoming theatrical slate for the remainder of the calendar year, including the live-action Lilo and Stitch.
Hugh Johnston: Pixar's Elio, Marvel's The Fantastic Four for Steps, Freakier Friday, Soutopia 2 from Walt Disney
Hugh Johnston: We're also quite pleased with the performance of our general entertainment and news programming.
Hugh Johnston: Finally, Sports viewership trends continue to be healthy. ESPN's Q2 Primetime audience, among the key 18-49 demographic, was up 32%, making it ESPN's most watched Q2 in Primetime ever.
Hugh Johnston: Driven by ESPN's fantastic programming, including NFL and college football, the NCAA Women's Basketball Tournament, and other exciting events. All of which is giving us optimism as we head into the upfront next week.
Hugh Johnston: Overall, our expansive portfolio of high quality content and programming is enabling us to continue to grow revenue and profitability in our streaming business.
Hugh Johnston: And as we move forward, our improvements in the product will continue to enhance the user experience, increase engagement and reduce churn thereby enabling us to grow the strategic business at an accelerated rate over time
Hugh Johnston: This has been an excellent first half of the fiscal year with strong results powered by our disciplined and focused growth strategy. We remain confident about the direction of the company and optimistic about our outlook for the rest of the fiscal year. And with that, Hugh and I would be happy to take your questions.
Speaker Change: 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 through as many analysts as possible today. And with that, operator, we are ready for the first question.
Speaker Change: Thank you, sir. And as a reminder, if you'd like to ask a question, please press start in one on your telephone keypad. Today's first question comes from Ben Swinburne with Morgan Stanley . Please go ahead.
Ben Swinburne: Good morning, or good evening, I guess, if you're overseas. Bob, I want to pick up on the streaming commentary. You just were talking about, you know, the last year plus you guys have been...
Speaker Change: You're bringing a flagship in from a bundling perspective. I'm just wondering if you're seeing benefits to this.
Speaker Change: broader content strategy within the Disney Plus app, whether you look, this is obviously a domestic comment, but you look at engagement, sign-ups, etc.
that you think can really drive the business. [inaudible]
Speaker Change: in place off of the, you know, the new 25 higher EPS base, just wanted to make sure we had that correct. Thanks so much.
Speaker Change: Thanks Ben, to answer your questions specifically, the presence of Hulu embedded in Disney, basically from a user experience perspective and the addition of sports content is definitely having an impact, definitely having a positive impact. Thank you very much.
Speaker Change: Not only is engagement up, but churn is down, and significantly. And as we look ahead, it's obviously our desire, and in fact we're optimistic about being able to execute against it, to turn the string of business into a true growth business.
Speaker Change: And as we see it, there are three ways to do it. [inaudible]
Speaker Change: One is what we've just talked about, which is to continue to put Disney+. [inaudible]
Speaker Change: You'll see more of that in the months ahead. In addition, we plan when we launch ESPN direct to consumer to be really smart about bundling that. And for those that bundle, the experience will be fully integrated. That will be another big step.
So, when you consider the Disney brands...
Speaker Change: that are part of Disney Plus, the general entertainment that's part of who and the volume, and then the live sports that will be part of the experience. In a way, there's nothing like it in the streaming world. It's unrivaled in terms of quality, in terms of volume, just in terms of variety. [inaudible]
Speaker Change: We're very excited about it. Two other pillars of growth for that business will be technology. We're also hard to work in improving our basically the tech side of that business.
Speaker Change: Taking a lot of steps already, including page sharing, which we're just kicking in with Hulu, that's also starting to work.
Speaker Change: A lot more in terms of personalization and customization, a lot on the edtech side and a much more coming I was just taking through a road map.
Speaker Change: To the Platforms will be significant, and of course the third pillar of growth. [inaudible]
Speaker Change: will be investment in content, particularly outside the United States, where we know that we need to invest more in local content, and we've already started that process.
Speaker Change: It takes time, and you know, we don't really end up booking those costs until the show's air, but we're already starting to develop more aggressively in markets in very, very targeted markets outside the United States. [inaudible]
Hugh Johnston: Right, and Abe and this is you. Obviously, the guide that we announced for this year, which was 530, we've now taken to 575, the long-term guide remains intact, but we announced before no change to that.
Thanks Ben, Operator, next question please.
Speaker Change: Yes sir, our next question comes from Steven Cahall with Wells Fargo, please go ahead.
Stephen Cahill: Yeah, first just congratulations on Abu Dhabi, I was wondering if you could speak a little more on how you settle the specifically on this location and this partner. I mean, Yass Island is really exciting already with the track and Ferrari world and the Emirid has a lot in infrastructure, but there are a lot of choices in the region. So maybe you could just think about, you know, what audience you're going after and how this particular location is best suited for those purposes. And, and then just a. [inaudible]
Speaker Change: Second question on parks. I think domestic park margins were up 110 basis points in the quarter. I think you said that crews is is margin accretive. I was just wondering if you could help us think through the margin improvement you saw at domestic. Was that mostly due to crews mix? We're underlying domestic park margins up as well. Just, you know, thinking about that as we forecast this longer term. Thank you.
Hugh Johnston: Yeah, hi, this is Hugh. So in terms of the margins on the park's business, that's a combination of all of the businesses. So we have certainly seen margin accretion in the parks and experiences side as well, not just the impact of crews.
Speaker Change: and then on the Abu Dhabi question, which is a good question, Steven.
Hugh Johnston: Because we did study the region very carefully, and we know that we had many opportunities. [inaudible]
Hugh Johnston: in a location as a huge endorsement of that location speaks volumes in terms of the ability of that location to sustain a Disney theme park. I should start really with an overview of the Middle East. It was very obvious to us that there were many people that it basically hundreds of millions in the world, their income qualified. I would like to thank you for your time. Thank you very much. Thank you very much. Thank you very much.
Hugh Johnston: Where a trip to one of our six locations was pretty lengthy and nature and expensive. [inaudible]
Hugh Johnston: and so we felt the best way obviously to reach those people is to basically bring our product to them. Interestingly enough is an aside when we...
Hugh Johnston: decided to build a cruise ship and put it in Singapore which will not launch until the end of the year. We put it on sale just a few months ago and the first quarter sold out in a matter of days.
Hugh Johnston: the places we already operate. Then when you look at Auburn Davi and the UAE, I mentioned these statistics earlier today.
We talk about it being a crossroads of the world.
500 million income qualified people live within four hours.
Hugh Johnston: 120 million people will come to Dubai and Abu Dhabi this year alone. [inaudible]
Hugh Johnston: We'll visit Abu Dhabi by 2030. That says a lot. [inaudible]
Hugh Johnston: Then, as we started to really dig deeper into Abu Dhabi specifically and engage with our partners, obviously Kapil was not an issue [inaudible]
Hugh Johnston: But in addition to that they've demonstrated a number of things. [inaudible]
Hugh Johnston: That Were Really Important to Us One, A Real Appreciation of Quality and Innovation, An Appreciation of the Arts and Creativity, and A Huge Commitment to Tech New Technology.
Hugh Johnston: and we were impressed with all of that. We also looked at what they've already built between the Louvre.
They've already built the Guggenheim which is going up.
Hugh Johnston: And incredible other experiences, the architecture here as well. And everywhere we look, we basically were convinced that. [inaudible]
Hugh Johnston: This was a perfect place for us, and then in morale, our partners, [inaudible]
We immediately bonded with them in many respects.
Hugh Johnston: Both the same language and basically we both have a real appreciation of our history and our legacy, but moving forward and being forward thinking and innovating is also part of our [inaudible]
Hugh Johnston: Basically our DNA. And so it was very, very clear to us that of all of the places that we could choose from, they didn't seem to be any place that was better than this.
Hugh Johnston: and one of the reasons why I came together so quickly is because of how convinced we became, particularly after engaging with our partners, that this was the right choice.
Thanks, Steve. Operator, next question please.
Speaker Change: Thank you. And our next question today comes from Robert Fishman with Muffet, Nathanson. Let's go ahead.
Speaker Change: Thank you. Bob, the studio has clearly delivered many hits over the past year, I'm wondering.
Speaker Change: If you could just share a little bit more about your excitement for the upcoming theatrical slate and how that will generate the additional long-term value for Disney and the multiplier effect that you talked about in your prepared comments.
Speaker Change: and on a related note with the Thunderbolts opening, what is your confidence that Marvel can still be a significant driver to that Disney flywheel with its renewed focus on theatrical and putting out less scripted series on Disney+. Thank you for watching.
Speaker Change: Thanks Robert. I have a lot of confidence that are upcoming slate. Let me just list some of the films that are coming out. We have Lilo and Stitch coming out.
I've seen the movie a few times.
Speaker Change: I can endorse it wholeheartedly, I have a lot of confidence there, Pixar, LAO, in June , then we have fantastic four in...
Speaker Change: July , and then Tron, Zootopia, and Avatar to finish out the calendar year. That's quite a lineup. And then next year Avengers...
Mandalorian,
Speaker Change: Toy Story and Milano Live Action. So we have a slate in the next year and a half that not only have a lot of confidence in but the strongest any slate that I've seen in the long times as well in 2019 I think was our best year. [inaudible]
Speaker Change: It's as strong as anything I've seen since then, so great confidence and look I've talked about Marvel a lot.
We all know that in our Seal 2, [inaudible]
and others.
Quality, and frankly, we've all admitted to ourselves that...
Speaker Change: We lost a little focus by making too much and by bringing Marvel by consolidating a bit and having Marvel focus much more on their films. We believe it will result in better quality. And I think the first and best example is Thunderbolts. But feel very good about that. Thank you.
Thanks, Robert. Operator, next question, please. [inaudible]
Speaker Change: Absolutely, and on the next question, do I have some Jessica Reef air look with B of A securities? Please go ahead. Thank you. I may be switching gears to advertising. Bob, you mentioned in your prepared remarks.
Speaker Change: that you're optimistic regarding the upfront. So, can you give us like some comments on what you're seeing in the market. You know, the move to programmatic is that having an impact on your share of market sports.
Speaker Change: And then I think the advertising was lower in Disney+, so maybe you could give us a call around what's going on. And then just to follow up on Abu Dhabi, since you're not putting capital in, is there any ownership or is this simply a royalty? Thanks.
The Way, The Way,
Speaker Change: I'll start on the Abu Dhabi question and now you pick up your question on advertising.
Speaker Change: It is all their capital, and we will get a royalty. So there is an ownership. We own our IP and license it to them is essentially the arrangement. We're responsible for design and development. [inaudible]
And we will be involved.
Speaker Change: significantly and oversight of their operations, basically to ensure that the Disney experience, going meaning the Disney theme park experience,
Is up to the level
Speaker Change: We offer in the other six locations that we operate. By the way, we're not concerned about that at all. They've already demonstrated...
This is essentially a license arrangement.
Speaker Change: But with considerable involvement of us so although they will operate it we will have employees embedded in the organization with them to help them operate a Disney theme park basically the quality level that everybody's used to. The Way, The Way, The Way, The Way,
Speaker Change: Yeah, hey, Jessica and it's you, just to follow up on the advertising question.
Speaker Change: Extremely Well, and you see that in the ESPN numbers where...
Speaker Change: Advertising for the Quarter was up over 20%. In addition to that, we continue as we go into the upfront season to see robust demand for advertising. So I know there's lots of concern from a consumer perspective and what that might mean for advertisers.
The One Place That Obviously Is
Speaker Change: continues to be a bit more challenged is on the DTC side, not driven by demand, but driven by supply as we have new entrance into that marketplace.
Speaker Change: But that said, there's still strong demand, therefore, for Disney advertising as well. Overall, you may recall back at the beginning of the year, we indicated. [inaudible]
Speaker Change: that our advertising growth would be up consistent with what we saw last year, which was 3%, we now expect it to be in excess of what we indicated back at the beginning of the year. So overall the advertisers are certainly demanding what we can offer.
Thanks, Jessica. Operator, next question, please.
Speaker Change: Absolutely. And our next question today comes from David Karnovsky with Jackie Morgan. Please go ahead.
Speaker Change: Like betting and fantasy. How do you think about wanting to keep subscribers and that ecosystem versus giving them the option of consuming their flagship subscription through Disney+. Thanks.
First of all, to the last point.
If you are a subscriber of Linear ESPN.
Speaker Change: You will automatically get what we know we've been referring to as ESPN flagship. By the way, we'll not be called that. And next week Jimmy Petaro plans to reveal not only the name, but he'll also talk about our pricing strategy. [inaudible]
But the plan would be to basically be somewhat agnostic. [inaudible]
Speaker Change: from a subscriber perspective so that we can still do our best to preserve the multi-channel ecosystem, but at the same time obviously want to grow our DTC business.
Speaker Change: The difference is that the ESPN Linear Service will, if that's all it's consumer chooses to watch.
Speaker Change: Will not have the bells and whistles in those additional features that the DTC service will have. But again, we're giving it the consumer the option of consuming both.
Speaker Change: From a critical mass perspective, we have obviously an unrivaled portfolio of life and sports on ESPN and an unrivaled portfolio of studio programming and shoulder programming. [inaudible]
Speaker Change: The bulk of which will be on the linear service and of course on flagship, quote unquote flagship. At some point I've got to stop using that word.
Speaker Change: That said, what we've already been doing and what we'll continue to do is give consumers of Disney Plus and Hulu a taste of live sports on that service so that we have an opportunity to upsell them on the Disney DTC service, which obviously is a priority of ours.
Speaker Change: and again, that service will have many more features than the linear service will have. The Way, The Way, The Way,
Speaker Change: So, I know, and this, when we launch, will be much simpler perhaps than I'm even describing.
Speaker Change: We're going to limit the number of skews, we're going to make it very very clear what is what. [inaudible]
Speaker Change: Meaning, what you get when you just watch linear, what you get when you sign up to Disney TTC. And I think the most important thing is that if you are a subscriber of Disney+, and who, and ESPN, DTC, I should have said ESPN, not Disney, if you're a subscriber all three, you'll have a seamless-
Speaker Change: Experience there, they'll be completely ultimately integrated or embedded into the service and that's that I think is a real plus from a consumer experience perspective. [inaudible]
Thanks, David. Operator, next question, please.
Speaker Change: Thank you, and our next question today comes from Michael Morris at Guggenheim. See you
Speaker Change: also the growth rate, the implied growth rate in the back half of the year is for double digit operating income growth.
Speaker Change: As you look into fiscal 26, is there a reason that that double digit growth isn't something that can continue? I know you've spoken to high single digits in the past in 26. So wondering if there's any upside there and then just finally on international. I don't know.
Speaker Change: You noted some softness in demand in China and the question is, is that getting worse and how much of a headwind may that be going forward? Thank you.
Hugh Johnston: Okay, hey, Michael, Hugh here. That's, I think that was three questions, but I'll, I'll do my best to remember them all and answer them.
Speaker Change: In terms of the first piece, the outlook, the outlook is actually still quite strong for the experiences business.
And that's with about...
Speaker Change: What we would say is about 80% in and then for the fourth quarter, bookings are up 7%, that's probably somewhere between 50% and 60% in at this point. So, certainly looking very optimistic and that was part of what factored into our change in the guidance going forward. Thank you very much.
Bye.
Speaker Change: In terms of your question on international, it's not getting any worse. And again, just to reiterate what Josh mentioned on the CNBC. Attendance is actually still quite good. It's just per cap spending isn't quite as high. Because the Chinese consumer, as we know is a bit challenged. So from that perspective, certainly feel good about the fact that we still have the engagement consumers are tightening.
and their streaming.
Speaker Change: In terms of expectations for first 25, the only thing I would say is we guided to 68, given the numbers that we're seeing, we're probably going to be at the higher end of that for the experience of business for this year.
Speaker Change: And then for 26 and beyond, I'm not going to comment on that at this point. We'll do guidance on 26 when we get to 26. So I'm not going to provide any further color on that until we get to that point. Other than what I had mentioned earlier, which is the guidance on in terms of growth rates remains intact. I'm not going to comment on that at this point. I'm not going to comment on that at this point.
Thanks Mike, operator, next question please.
Speaker Change: Absolutely, our next question today comes from Michael Eng, with Goldman Sachs. Let's go ahead.
Michael Ng: First, just with Disney Treasurer hitting the second full quarter, or the second quarter of operations.
I was wondering if you could talk about...
Michael Ng: Key learnings from, you know, the cruise launch so far and anything there that...
The upcoming launch of Disney Adventure.
and Disney Destiny.
And just as a parks follow up.
Michael Ng: I was just wondering if you could talk a little bit about the international visitation to domestic parks and if you're seeing any changes there. Thank you very much.
Speaker Change: I'll take the cruise ship, you take the, you take the rest on the cruise ship side. Alright.
As we've expanded, we've embedded in our ships.
Speaker Change: Even more Disney intellectual property and at a higher quality level and the ratings for the treasure are just sky high. People just love that ship.
Speaker Change: And for good reason, and obviously, the shifts that are coming will take full advantage of everything that the treasure has taken advantage of, and then some. [inaudible]
Speaker Change: Way. And so we feel great about that business. It has been a great way for us to bring the Disney experience to more consumers around the world. As noted earlier on the call, the experience we've had in putting the ship that will sail as Singapore on sale as a, for instance.
Speaker Change: We've been located in the past that that number is not gotten back to pre-COVID levels but it is still in the double digits.
Speaker Change: We've seen a bit of an impact, but it's literally like, in terms of the mix, one to one and a half percent, and what I would expect going forward is something similar to that. The good news is we're clearly more than making up for it with domestic attendance, so attend to the parks has been terrific. [inaudible]
Thanks, Michael. Operator, next question please.
Speaker Change: Thank you, and our next question to the Council of Kannan Venkateshwar, with Barclays. Please go ahead.
Speaker Change: Thank you. Maybe you've got to bob on the park side with the Abu Dhabi Parks announcement and you also have a lockdown plan in place for the for the segment as a whole.
Speaker Change: Are there other opportunities in other locations around the world? Let me know you have a presence in St.Pore, you now have a presence in Abu Dhabi, so is there more opportunity for you to expand that footprint further as you look out your younger town?
The sounds awesome, that would be great.
Ben Swinburne: And then here on the streaming side, when we think about operating leverage going forward, is that largely a function of revenue growth or is there also cost opportunity as you align these platforms and you know as Bob mentioned, there might be fewer skews going forward and so does that also provide some kind of a cost opportunity where we see margins and collect thanks.
Ben Swinburne: And I thank you for your question. We just announced AlphaW, and now you're asking for more already.
Thank you, with this as our seventh location.
Ben Swinburne: Now we feel that once it opens, it gives us the ability to be far more effective at reaching basically the world's population than we've been before.
Ben Swinburne: and while I'm not going to rule out the possibility of another location.
There's nothing that's really being planned near term.
Ben Swinburne: to actually build another park in what would be an aflocation. However, I want to remind you that when we talked about a year ago about turbocharging that business with investment in capital because the return on investor capital has been so stellar, we are continuing on that trajectory.
Ben Swinburne: and to remind everyone that tied to the kind of deal that we made in Abu Dhabi, we're planning to invest approximately 30 billion dollars to expand Florida and California, which obviously is a vote of confidence in those locations, but in addition those will be highly accreted from a job perspective.
Ben Swinburne: as well. And we're also investing to expand in every other location that we operate. So obviously a voice belief in the business itself with Abu Dhabi, as I said, and with the addition of the cruise ships.
Ben Swinburne: We're making ourselves very accessible to hundreds of millions of more people than we were in the past.
Ben Swinburne: and so we're going to focus on this right now and the other investments that we're making. And as I said, I'm not really at the possibility of another location but it's not exactly something that's a priority right now for us. [inaudible]
Speaker Change: Yeah, and Hakenon. I'll handle the streaming question. While your point is exactly right, with a business that is going to have the growth that we have expectations for in the streaming business. [inaudible]
Speaker Change: There will clearly be leverage that just comes out of the revenue growth itself.
Speaker Change: But in addition to that, we absolutely have opportunities to reduce costs, so the answer is both.
We can certainly do it on the GNA side.
Speaker Change: And especially as we start to add more to the product, both in terms of the technology side of the product where we will be investing.
and in terms of the content that's delivered, whether it's...
Speaker Change: bringing ESPN on, and the additional content that we've been bringing into bundling.
Speaker Change: Way. And over time, we would expect to get leverage out of the marketing line as well. So put those two together, yeah, I do expect some flow from top to bottom. We will use some of that to invest back into business, perhaps in some international content, but I would also expect some of those cost reductions to go straight to the bottom line as well to give us accelerated margin growth.
Thanks, Kannan, Operator. We have time for one last question.
Speaker Change: Thank you, and our final question today will come from Peter Sapino with full free search. Please go ahead.
Peter Cepino: Hi, good morning, and thank you. Question back on experience as you mentioned 30 billion of-
Peter Cepino: Expansion Capital for Florida and California, and I wondered if that is...
for defining expansion in terms of...
Peter Cepino: Attendance. Is that a capital that will enable more people to visit the park? And more broadly, how do you think about your incremental return on capital on expansions and your experiences segment? Thanks.
Peter Cepino: You know, the guest experience is obviously paramount to us. It's very very critical.
Peter Cepino: And with that in mind, we actually, when a governor or we actually limit the number of people that we let in because we don't want to decrease the guest experience.
Peter Cepino: So, as we look to expand, not only do we look to take advantage of the property that we have and the intellectual property that we have, but we look to add capacity so that we can let more people in without in any way impacting negatively the guest experience.
And that's true really every place that we operate.
Peter Cepino: It's really important to us, and we're blessed with the fact that we have more available land. [inaudible]
Peter Cepino: And we certainly have a lot of intellectual property to be mined and we've made announcements.
Peter Cepino: That are pretty specific about what we're building, a villain's land, and a car's land in Florida as a, for instance, Pandora in California, the Coco in California, I could go on and on. . . .
Peter Cepino: and in terms of the Return on Invested Capital, we've actually hit record levels in terms of Return on Invested Capital in the business.
Speaker Change: And actually, what I returned to Disney back in 2022 and talked to Josh Demaro, who runs the segment about this. And he showed me what the returns on Invested Capital had been in the then recent past with more like pre-COVID.
Speaker Change: Way. It was extremely impressive and we looked at, we determined how we allocate our capital as a company. Obviously, we want to allocate it in direction where the returns are stellar and this is one way that we do that. So, I think that says it all really. Thank you very much.
Speaker Change: Thanks Peter and thanks everyone for your questions today. We want to thank you for joining us and wish everyone a good rest of the day.
Thank you, this includes the itself of the show. [inaudible]
The Way, The Way,
Hold all of your fairs!
The Way
The Way,
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Thanks for watching!