The Walt Disney Company — 2024 Q2

Great. Steve, happy to weigh in on both of those. First, in terms of attendance, what we're basically communicating is relative to the post-COVID highs, things are tending to normalize. The Parks business did 10% growth in the quarter. And obviously, that's an extremely high revenue number. That said, we still see in the bookings that we look ahead towards indicate healthy growth in the business.

Thanks, Ben. First on ESPN. I think you have to start in terms of projecting the next 12 to 18 months and also considering where it might go from an OI perspective, as it transitions more to a digital business. You have to look at today and the ratings success of ESPN's phenomenal menu of sports product or the ratings success of live sports in general across the business.

I will also have 2 different topics. First, on I guess, advertising, direct-to-consumer. Can you give us your thoughts going into the upfront, particularly with the integration of the Trade Desk and Google's TV 360? How does that impact advertising? And any comment you can give us on pivot sharing, like when will you implement it in multitude of borrowers or sharers?

Sure. I'll take that. Thanks for the question, Jessica. I think that was 2 questions, parts A through E if I captured it correctly. In terms of advertising, generally speaking, the advertising market is pretty healthy right now as we head into the upfront. Certainly, live and sports are playing out very well. And in addition to that, we feel good about the offering we have, particularly in terms of the premium offerings that we have, both in sports as well as with the Disney+ offering.

And then last on your question around the timing on ESPN+ subscriptions. That's normal seasonality. That's one of the challenges when you look at things from 1 quarter to the next, the seasonality tends to get ignored, but the end of college football season, we do typically see a decline. So nothing out of the ordinary there.

I'll start on the sports question. We have selective rights -- international rights for sports of the sports properties that we've licensed largely for the United States. We also have an array of sports rights in Latin America, many of them came with the acquisition of 20th Century Fox. We're being selective about adding international rights right now where possible, where the opportunity exists, we're doing so. But we're not investing heavily at this point in growing international rights, except again, where we can buy them along with the rights that we're licensing for the United States.

And then, Robert, to answer your question about studio profitability, as I look back, studio profitability has got some cyclicality to it. And we certainly feel very good about the upcoming slate. That business should get back to profitability, and we certainly feel good about it being a healthy, profitable business over time. Beyond that, I don't want to get into quarterly guidance on a subcomponent of one of our segments. So it's just getting a little bit too low into the details.

Okay. I'll take the first one. Regarding the investment in the parks, you know the financials of that business well. It's a 25-plus margin business and has been for an extended period of time, has terrifically high guest satisfaction scores, which create layers of advantage, would suggest we should be able to sustain high margins and high returns on investment. With the business with that profile, you invest in it. We know there are lots of opportunities to continue to grow attendance, both domestically and internationally.

Regarding succession, Kannan, as we've said before, the Board is heavily engaged in the process and has appointed a succession planning committee that is meeting on a regular basis to not just discuss, but also to manage the process, I'm confident that they will choose the right person at the right time. And that to the extent that I can, we'll participate in the smooth transition.

John, I'm happy to talk about engagement a little bit on the platform. As I mentioned earlier, the things that we believe drive engagement and still represents significant incremental opportunity for us is number one, programming, having terrific programming is obviously the leading factor. And with what we've been introducing recently, whether it's Shogun, whether it's The Bear over the next couple of years on the TV side. And obviously, the terrific movie slate that's right in front of us.

And John, your second question was about our strategy for ESPN+ once we launch flagship? Was that the question?

The plan is if you buy ESPN flagship, then you'll get all the ESPN+ programming in it. If you do not want that, then you can buy ESPN+ on its own. In addition, if you -- our current plan is that with the tile that we're putting on, the combined Disney+ Hulu app, the ESPN tile, you'll be able -- if you're an ESPN+ subscriber, you'll be able to get ESPN+ through that tile.

We're going to balance sequels with originals, particularly in animation. We had gone through a period where our original films in animation, both Disney and Pixar were dominating. We're now swinging back a bit to lean on sequels. And so we've talked, as you know, about Toy Story and obviously, Inside Out this summer. I just think that right now, given the competition and the overall movie marketplace that actually, there's a lot of value in sequels, obviously, because they're known, and it takes less in terms of marketing.

Yes. I'll take the first question on this. Look, it's very early days, obviously, in terms of the Charter deal. During the quarter, it was only in place for a couple of months. That said, we're happy with it so far. We obviously have gotten added subscribers. And in addition to that, cannibalization has not been very high. And overall, the engagement has been good. So as for it being a template for the future, I don't think I would go to that level. Each of these deals in many ways has to be architected to the specific needs of the partner as well as our needs.

We are already doing some licensing with Netflix, and we're looking selectively at other possibilities. I don't want to declare that it's a direction will go more aggressively or not, but we certainly are taking a look at it and being expansive in our thinking about it. We had previously thought that exclusivity, meaning our own product and our own platforms had huge value. It does -- definitely does have some value.

Okay. Thanks for the questions, and I want to thank everyone for joining us today. Note that a reconciliation of non-GAAP measures that were referred to on this call to the most comparable GAAP measures can be found on our Investor Relations website. Let me also remind you that certain statements on this call, including financial estimates or statements about our plans, guidance or expectations and drivers, including future revenues, profitability, DTC subscribers free cash flow, adjusted EPS and capital allocation and other statements that are not historical in nature may constitute as forward-looking statements under the securities laws.