Walt Disney Co Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jessica Reif Erlich - BofA Securities, Inc. - Analyst : Thank you. I'm going to try to squeeze in two: one on theme parks and one on NBA. So first on theme parks, there's really a lot of moving pieces here. Can you provide color on global park demand and where you expect this protracted weakness? Maybe include the benefit from cruise ships since you have three ships coming on over the next, I guess, 18 months or so. And with the stated fiscal Q4 mid-single-digit decline and the expectation that this will last for several quarters, is that the right level to think about OI as we think about fiscal '25? And on the NBA, with the rights now complete, you'll likely have several hundred million dollar step-up when the new contract begins in fiscal '26. Are there incremental monetization drivers, including maybe WNBA growth that can make the new contract profitable in the early years? Thank you.

Question: Ben Swinburne - Morgan Stanley & Co. LLC - Analyst : Thank you. Good morning. Maybe for Bob, I wanted to ask you about sort of the outlook for Disney+, both in the context of where the product is going, but also how this becomes a significant earnings contributor to the company as you look ahead. When we look at the product, it's really broadening. You've got -- obviously brought in Hulu. Now you're adding news, a lot of sports, ESPN coming in. You've added the international NBA rights to the product overseas. What's the vision here? And in your mind, does it support both continued subscriber growth and pricing power? I think there's probably some concern out there that the recent price increases might face some consumer pushback. So I'd love to get your thoughts on that big topic. And then I just wanted to clarify, Hugh, when you say flattish revenue Q4, are you talking about at the Experiences segment level? Or is that just the domestic parks comment? I just wanted to clarify. Thank you.

Question: Robert Fishman - MoffettNathanson LLC - Analyst : Thank you. Bob, as you think about the future of content spending for Disney, especially after the NBA deal and all the content that you're just talking about now, what is the right balance of investment between sports, scripted TV and movies going forward? And then for Hugh, can you just update us on free cash flow expectations this year with one quarter to go? And how to think about the parks impact and the content spending on free cash flow in '25? Thank you.

Question: Steven Cahall - Wells Fargo Securities, LLC - Analyst : Thanks. So Hugh, you've talked about DTC getting to double-digit margins with the big price increases and the paid sharing efforts coming. I was wondering if you could just update us on your thinking. Would love to get some timing around double-digit margins if that's something you're comfortable with at this point, but any context would be helpful. And then just on parks. As we think about cruise ship preopening costs in there, what's implied in the fourth quarter? And as we think about cruise preopening costs in fiscal '25, what do those look like? I think you'll sail the Treasure, but you've still got the Adventure and the Destiny. I think the Singapore dock is a little heavier on cost, so I would just love to understand that component. Thank you.

Question: David Karnovsky - JPMorgan - Analyst : Hi, thank you. On sports, Bob, I wanted to see if you could update on strategic partner conversations for ESPN. Is this still a priority? And if so, can you refresh on what you're looking for in terms of marketing or content? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 12:30PM, DIS.N - Q3 2024 Walt Disney Co Earnings Call And then for Hugh, in the exact commentary, there's multiple references to tightly managing costs. So I wanted to see if you could expand on this. Where are you realizing savings now? How much opportunity is left? Thanks.

Question: John Hodulik - UBS Equities LLC - Analyst : Great. Maybe first on the parks. Any further details in terms of the softening and the flat revenues that you expect for 4Q and looking out into '25? I mean, do you expect attendance to continue to soften or potentially turn negative? And just any commentary on what you're seeing or expectations are on the per cap side. And then secondly, Venu launches this fall. Just any expectations in terms of what it could do to trends in the linear business for you guys. Thanks.

Question: Michael Morris - Guggenheim Securities, LLC - Analyst : Thank you. Good morning, guys. I wanted to ask you on ARPU at domestic Disney+. It did slip a little bit in the quarter and you cited the impact of subscriber mix shift. Are you saying that that's a function of bundling in terms of mix shift? Or is it mix shift to the ad-supported tier? And if so, can you talk a little bit about what you're seeing in the CTV environment, how you're performing there? And just one follow-up on the Experiences segment. We generally think of parks vacations as being booked pretty well in advance, so it was a little bit surprising to hear about demand moderation within the quarter. So can you help us a little bit with how much visibility you feel like you have, and if it does vary by quarter, if there's maybe less advanced bookings in certain quarters versus others? Thank you.

Question: Bryan Kraft - Deutsche Bank Securities Inc. - Analyst : Hi, good morning. I had two if I could. Just first on advertising. You highlighted the strong results from the upfront this year, which is very encouraging. But I wanted to ask what you're seeing more immediately in terms of advertising demand today given some of the macro pressures that have recently come to light. Are advertisers becoming more cautious? Are you seeing that more in the real-time ad sales part of the business? And then just on the content sales and licensing part of the business. The press release mentioned increased sales of TV content in content sales/licensing and other as a driver of BOI performance this quarter, along with the box office, of course. Is there anything to read into this? Is it the beginning of a trend toward increasing content licensing to third parties? Or it's just a timing benefit or a one-off? Thank you.

Question: Kannan Venkateshwar - Barclays Capital Inc - Analyst : Thank you. So maybe on theme parks, I mean, there's a few growth elements, I guess, over the next few years in terms of cruise ships and broadly other CapEx investments that you're making in the park. Maybe if you could just step back and talk about what kind of growth impact do you expect maybe over the next two or three years. And if that can offset -- to what extent that can offset some of the weakness you're seeing in the parks, that would be useful. And then one other segment which probably goes out of your numbers next year is India. And that's been a loss-making business. So to the extent you can talk about the potential earnings contribution once India is deconsolidated, that would be much appreciated. Thank you.