Walt Disney Co (DIS)

• Disney's streaming business is experiencing strong growth, with a total of 174 million Disney+ core and Hulu subscriptions, and more than 120 million core Disney+ subscribers built in five years - . The introduction of an ESPN tile on Disney+ on December 4 aims to drive further engagement and strengthen their streaming offering - - .
• The company is confident in achieving double-digit margins in its direct-to-consumer segment by fiscal 2026 - . This will be driven by subscriber growth, price increases aligned with value, improved engagement and reduced churn through personalization and anti-password sharing initiatives in over 130 countries, and increased ad monetization - .
• Disney's Parks and Experiences segment continues to be the gold standard, with plans for significant expansions, including the launch of the Disney Treasure next week, growing Disney Cruise Line's fleet to six ships with seven additional ships currently in development - . The company is seeing a strengthening consumer in domestic parks and expects international softness to be temporary - .

• Consumer softness in international parks, particularly in Shanghai, may impact growth in the international parks segment. -
• Competitors are expanding local content more aggressively, which could lead to less engagement for Disney in local markets due to limited investment in local language content. -
• The company's growth strategy is tilted towards pricing increases rather than subscriber growth, which may risk subscriber churn as incremental subscriber additions become challenging. -

1. DTC Margin Outlook
   Q: Can you share confidence in achieving strong double-digit margins in DTC by fiscal '26?
   A: We are confident in reaching strong double-digit margins in direct-to-consumer by fiscal '26 due to significant improvements in our streaming products and continued investments in parks, cruise ships, and consumer products. - These investments are multiyear, and we've modeled this growth carefully. - While it's early to discuss ARPU for the ESPN flagship, we expect it to contribute positively in '26 and plan to recoup initial investments relatively quickly. -

2. Advertising Growth Outlook
   Q: What's the outlook on consolidated advertising growth in coming years?
   A: We expect advertising growth to be at or stronger than the 3% seen in 2024 as we enter 2025. - Our proprietary ad tech stack enhances our ability to deliver effective ads, particularly in streaming, giving us a competitive advantage. - The combination of linear and streaming offerings provides leverage, offering advertisers a broader reach. - Linear remains strong due to live content and a differentiated audience. -

3. Streaming Growth Drivers
   Q: Is streaming growth driven more by subscribers or pricing in 2025?
   A: Streaming growth will come from both subscriber additions and pricing, slightly tilted towards pricing. - We'll monitor the market and adjust accordingly but currently expect a balance of both. - Moving consumers to our advertiser-supported tier is also key, with 60% of new U.S. subscribers choosing AVOD, comprising 37% of total U.S. subs and 30% globally. -

4. Content Spending Plans
   Q: How will content spending grow in '25 and beyond?
   A: We have a strong content pipeline and plan selective international investments in EMEA and APAC markets. - We've slowed investments until our technology improvements reduce churn, increasing content ROI. - These investments won't be enormous, and most content has global applications, reducing the need for extensive local spending. -

5. ESPN Flagship Launch
   Q: What will the ESPN flagship product offer to fans?
   A: The ESPN flagship will be an enhanced experience with live sports, studio shows, commentary, and features like fully integrated betting. - Applying technology allows for an AI-driven personalized SportsCenter and tailored sports experiences. - Live sports remain highly attractive to advertisers, and our advanced ad tech will amplify value in an app-based world. -

6. Managing Linear Decline
   Q: How are you managing the linear network's decline?
   A: We anticipate linear networks to continue declining but have a natural hedge with roughly 175 million streaming consumers. - Whether consumers stay linear or shift to streaming, we're well-positioned to monetize them. - Our distribution deals, like the unique agreement with DIRECTV, are bespoke and crafted per partner situation. -

7. India Divestiture Impact
   Q: What's the impact of divesting assets in India?
   A: We're excited about the deal with Reliance, retaining a high 30% ownership stake. - Reliance will manage the business, and we have included the anticipated closing in our guidance. - For detailed financial implications, investors can refer to our Investor Relations team. -

8. Epic Universe Competition
   Q: How will Universal's Epic Universe affect Disney's parks?
   A: We've modeled the Epic Universe launch into our experiences outlook and expect positive bookings next summer. - Historically, new attractions at other parks have been beneficial to us. - This is reflected in the guidance we've provided. -

9. Parks Performance Outlook
   Q: Is domestic park softness behind you, and what about international growth?
   A: We feel the domestic consumer is strengthening, and we expect gradual improvement going forward. - Internationally, softness was due to the Olympics in Paris affecting attendance and temporary consumer softness in Shanghai, which we expect to rebound. -

10. Guidance Approach
    Q: How should we view your approach to guidance?
    A: Our guidance reflects significant investments in DTC and experiences. - Providing a multiyear outlook is appropriate due to these multiyear investments. - We have confidence in delivering on our guidance and believe it's important to set investor expectations accordingly. -

Annual guidance for FY 2025:

• Adjusted EPS Growth: High single-digit growth in FY 2025 - (no prior guidance)
• Experiences Operating Income (OI): 6 to 8% growth for the year - (no prior guidance)
• Streaming Business: Significant growth expected with ESPN tile on Disney+ and ESPN's direct-to-consumer offering - (no prior guidance)
• Parks and Cruise Ships: Investments expected to contribute to growth with expansions and new ships - (no prior guidance)
• Subscriber Growth and Pricing: Growth from a balance of subscriber growth and pricing, slightly tilted towards pricing - (no prior guidance)
• Content Pipeline: Promising content slate for 2025 expected to drive growth - (no prior guidance)
• India Divestiture: Anticipated closure of the deal with Reliance - (no prior guidance)

No overlapping metrics were found between the Q3 2024 and Q4 2024 issued periods, so none were raised, lowered, or kept the same.