Walt Disney Co Q4 2024 Earnings Call Transcript

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

Question: Ben Swinburne - Morgan Stanley & Co. LLC - Analyst : Good morning and thank you for all the detailed disclosure in the documents this morning and for filing the K along with earnings. Appreciate it. Bob, I feel like the ESPN flagship launch is in many ways the last big strategic pivot of your content assets to streaming after you've already accomplished that on the entertainment side. I know it was interesting you guys were guiding to sports OI growth in '26, which will be the first year of that product. You also have the NBA costs to absorb. You talked a little bit about it in the prepared release this morning, but can you give us a sense for what you think that product is going to do for sports fans, for ESPN fans and how it moves the ball forward, sorry for the bad pun, in terms of customer experience and ultimately drives that segment as you look out beyond '25? Because obviously, the linear challenges are well known on the ESPN side. And I don't know if I could just get Hugh to give us some color on the acceleration in Experiences OI he's expecting in '25 from what we're seeing right now. That would be certainly helpful. Thanks a lot.

Question: Jessica Reif Erlich - BofA Securities, Inc. - Analyst : Thank you. Can you provide an outlook on consolidated advertising growth in coming years? You have so many tools in your tool chest like ad tech capabilities, as you mentioned, Bob. But on one hand, you have the linear challenge. And on the complete opposite end, you have the growth of entertainment and sports and streaming. And then secondly, could you give us some color on CapEx next year because it looks like free cash flow will be modestly down?

Question: Robert Fishman - MoffettNathanson LLC - Analyst : Great. Thank you. Bob, since hiring Adam Smith from YouTube, anything you can share about his priorities and how that can impact the future of Disney+ or the other streaming products? And then, Hugh, can you maybe just share your confidence in achieving the strong double-digit margins beyond 10% in DTC in fiscal '26? And because that guidance doesn't include Hulu Live, maybe just help us think about the future of that product, please. Thank you.

Question: Steven Cahall - Wells Fargo Securities, LLC - Analyst : Thank you. So a multiyear guide is really impressive, and it's helpful since there are so many moving pieces of the segment. Over the last five years or so, I think Disney investor experience with guidance has at times been mixed under prior management. So just wondering how we should think about the ideological approach here to guidance as it relates to some of the conservatism that you've baked in. And in broad terms, is the acceleration in EPS growth from fiscal '25 to fiscal '26, is that basically just comping the flagship launches and the hurricanes and that sort of thing? And then just on flagship, just how do we think about maybe what the year one launch costs are? What the ARPU of that product could be? And when do you think you might be able to get to breakeven on that product? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2024 / 1:30PM, DIS.N - Q4 2024 Walt Disney Co Earnings Call

Question: John Hodulik - UBS Equities LLC - Analyst : Great. Thanks. Two, if I could. First of all, Bob, it looks like Comcast is going to move ahead with a spinoff of the cable networks. And I know you guys have looked at something similar in the past, maybe on the linear entertainment side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2024 / 1:30PM, DIS.N - Q4 2024 Walt Disney Co Earnings Call Is that something that you guys could revisit either as part of the more industry move? And then maybe more broadly, does the change in the administration, does that change your view on opportunities with regard to M&A? And then secondly, maybe for Hugh, I know you guys get this question every quarter but just give us an update on your view on the impact that the launch of the Epic Universe is going to have. It looks like that's going to hit early summer, just as you're expecting an acceleration in the Parks business, just how you expect that to impact the mid-year and that acceleration in Experiences. Thanks.

Question: Michael Morris - Guggenheim Securities, LLC - Analyst : Thank you. Good morning, guys. A couple of questions. First, with respect to content production, you've been focused on quality over quantity -- have you been -- as you've been strengthening the core of the business. How are you thinking about growth in spend into that pipeline going forward, both in '25 and maybe just the pace of content growth beyond that? And then secondly, appreciate the listing of the new projects that you have on the Experiences side. You have a number of footprint expansions, especially in the US. So when you think about the longer-term return on these investments, how much of that is driven by really expanding capacity and accommodating more guests maybe versus driving the pricing power at the Parks because you have this great new attraction? Thank you.

Question: David Karnovsky - JPMorgan - Analyst : Hey, thank you for the question and forward commentary. One area that understandably received less focus in the outlook was linear network. Interested to understand better how you built the multiyear forecast, how you thought about managing that business over the next several years. And then just relatedly, the first call post the DirecTV agreement. Can you speak to any important impact to Disney, how we should think of that deal structure as a template going forward versus some other deals you've done in the recent past like Charter? Thanks.

Question: Laurent Yoon - Bernstein Institutional Services LLC - Analyst : Thank you for taking the question. It's great to see continuing momentum in streaming and the margin expansion story is certainly very promising. Building on your comments around the building blocks of that growth, could you provide some color on how much of that growth is subscriber growth versus pricing in the foreseeable future and of course, 2025 -- fiscal year 2025, in particular? And on a related question, local language content seems paramount to a very important to increase engagement in local market. And we see your competitors expanding local content perhaps more than what we see on Disney platforms. So do you have plans to be more aggressive in international expansion with more locally tailored content? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2024 / 1:30PM, DIS.N - Q4 2024 Walt Disney Co Earnings Call

Question: Tim Nollen - Macquarie Capital - Analyst : Hi. Thanks very much. Could you please address the topic of divestitures in India? I think you mentioned in the guidance a few lines that incorporate those. I just wonder if there's anything more to add to adjustments we should make for the sale of the assets in India. And then relatedly, what are the -- what is the business going to look like for you in India? I think you're going to retain a stake with Reliance. Just talk a little bit about your presence in India post the divestiture or the partial sale, please.

Question: Bryan Kraft - Deutsche Bank Securities Inc. - Analyst : Thank you. Good morning. I wanted to ask just one on Parks and one on Disney+. So on Parks, is the softness in domestic behind you at this point? It seems like performance there was better than you expected when you reported back in August. And on the international side, it seems like there was some new softness that showed up in 4Q in the international parks. So in light of that, I just wanted to ask how we should think about international growth going forward? And then my question on Disney+ really has to do with the sub growth in the quarter, which was strong in international Core subs. Was there anything chunky in the quarter like a wholesale relationship coming online? Or is this seasonality? I know there was a similar jump in 4Q '23, or was it some other factor? Thank you.