Walt Disney Co at UBS Global Media & Communications Conference Transcript

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

Question: John Hodulik - UBS Equities LLC - Analyst : So to start us off and set the table for the rest of the conversation, can you talk a little bit about the changes you've made at the company thus far, what changes you feel you still have to make and the financial position of Disney as we sit here looking out into 2025?

Question: John Hodulik - UBS Equities LLC - Analyst : Got it. And are there any sort of major sort of tentpole things that you're still hoping to drive through as we look out into '25?

Question: John Hodulik - UBS Equities LLC - Analyst : That's great. And that's a great framework. Why don't we start with Experiences? And maybe sort of touch on cruises first. Obviously, it's not a huge piece of your business, but it's actually growing very rapidly, right? With the launch of the Treasure, you now have six ships with seven more in development. How should we think of the cruise business as a driver of that segment?

Question: John Hodulik - UBS Equities LLC - Analyst : And how should we think of the -- you don't have to give us a number, but how should we think of the margins of that business, especially compared to, say, domestic parks? It's meaningfully better, correct?

Question: John Hodulik - UBS Equities LLC - Analyst : Okay. You mentioned the big investment cycle going on at the company, especially at the parks, which includes the largest ever expansion of Magic Kingdom, new Monsters Inc. planned at Hollywood Studios, Indiana Jones and Encanto and Animal Kingdom and many, many more. Can you give us the sort of broad outlines as to the financial impact that the upgrades and expansions will have in the parks business?

Question: John Hodulik - UBS Equities LLC - Analyst : Yes. So you mentioned pricing. Is that something -- is that a comment more domestic or international as well? And is it sort of -- I think you guys have, in the past, you've talked about raising some prices on some peripheral areas, but not really the base sort of low end?

Question: John Hodulik - UBS Equities LLC - Analyst : That makes sense. And then the international parks. Are the international parks all the way -- how do you think of the growth? Is that sort of sliver of the Experiences segment? And are they all the way back from COVID at this point?

Question: John Hodulik - UBS Equities LLC - Analyst : You're able to get on all the rides with no lines?

Question: John Hodulik - UBS Equities LLC - Analyst : Yes. So lastly, on parks, as you said, you gave guides for the 6% to 8% operating income growth this year. We've got a lot of pushback, especially given maybe a bit of a softer consumer and then new competition from the Epic Universe in Orlando. So how should we think of that 6% to 8% growth and the impact that the Epic might -- may have?

Question: John Hodulik - UBS Equities LLC - Analyst : The attendance side?

Question: John Hodulik - UBS Equities LLC - Analyst : Got it. Makes sense. Okay. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 6:30PM, DIS.N - Walt Disney Co at UBS Global Media & Communications Conference

Question: John Hodulik - UBS Equities LLC - Analyst : That would incorporate Epic Universe as well, right? People start.

Question: John Hodulik - UBS Equities LLC - Analyst : Makes sense. Okay. Maybe shifting to D2C. As you pointed out, you've seen major improvements in profitability and are now targeting 10%-plus margins in fiscal 26, again actually the biggest driver of growth in EBIT in '26. Can you step back and sort of point to what the big drivers of that?

Question: John Hodulik - UBS Equities LLC - Analyst : In terms of -- just a quick follow-up on the password sharing. Is that something we should see gain momentum, the benefit as we move through 2025?

Question: John Hodulik - UBS Equities LLC - Analyst : Okay. Great. Bigger picture, we can see your D2C business is converging. And Bob has talked about Disney+ is ultimately being the home of all things Disney. Can you help frame the long-term product division for Disney+?

Question: John Hodulik - UBS Equities LLC - Analyst : That makes sense. The -- so ESPN, you're talking about sports being on the platform, and the ESPN tile now is on the Disney+ home screen. Probably too early to talk about what you've seen so far. But what do you hope to sort of drive?

Question: John Hodulik - UBS Equities LLC - Analyst : And lastly, before we move up, you see -- news, I think is a new category. I don't believe it's on there now.

Question: John Hodulik - UBS Equities LLC - Analyst : Okay. Sounds good. Maybe turning to linear real quick. As you manage through the changing linear landscape, how do you think about the structure of affiliate renewals going forward and the other levers you have to manage the business?

Question: John Hodulik - UBS Equities LLC - Analyst : Turning to sports, and you talked about the flagship launch and all the capabilities there. How should we think about expenses associated with the flagship launch? For instance, I would imagine that there's likely to be some big promotional push once you launch next year?

Question: John Hodulik - UBS Equities LLC - Analyst : And do you foresee the launch of flagship and the sale of that product helping to lower the churn at Disney+ and Hulu?

Question: John Hodulik - UBS Equities LLC - Analyst : It's back to your one objective or issue.

Question: John Hodulik - UBS Equities LLC - Analyst : Makes sense. Your guidance, there was some surprise on the guide for sports growth in EBIT, operating income in '26. I think for '25, you have it sort of the organic is sort of down 10%. Then you have a nice growth in '26 despite the fact that you have NBA, potentially UFC. Maybe talk about sort of your sports portfolio and sort of how you see that evolving over time. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 6:30PM, DIS.N - Walt Disney Co at UBS Global Media & Communications Conference And do you need to bulk up for a different (technical difficulty)? Do you need more assets as we go to the launch of.

Question: John Hodulik - UBS Equities LLC - Analyst : Hey last on sports is venue. We talked about it with Steve at Fox. Is it -- how important would you say to the overall sports distribution strategy or your distribution of your sports rights? And if it doesn't sort of move forward given the -- does that change your approach at all or.

Question: John Hodulik - UBS Equities LLC - Analyst : I agree. Actually, one last question. ESPN+ versus the ESPN flagship product, is that -- I think I remember reading that had folded in from -- is that from day one? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 6:30PM, DIS.N - Walt Disney Co at UBS Global Media & Communications Conference

Question: John Hodulik - UBS Equities LLC - Analyst : Okay. Two more topics. Turning to content. As you pointed out, the studios had a string of recent successes, and it looks like the creative output is back on track. What should we attribute this sort of pretty dramatic, I would say, improvement in the output and the sort of resonance that you're seeing behind your content over the last a year, a year, and a half ?

Question: John Hodulik - UBS Equities LLC - Analyst : Again, when you provided your guidance, you sort of laid out a content spend of about $26 billion, which is up only slightly compared to the fiscal 24 numbers. And I think within that, you obviously you have some sports rights inflation, so.

Question: John Hodulik - UBS Equities LLC - Analyst : Was it $26 billion? I might have a typo here.

Question: John Hodulik - UBS Equities LLC - Analyst : So clarification on the content spend, and then is that the right number? And how should we think of that -- maybe just the entertainment spend piece going forward.

Question: John Hodulik - UBS Equities LLC - Analyst : And from an international standpoint, you're talking about local content in the D2C business that can help drive the subscriber growth outside.

Question: John Hodulik - UBS Equities LLC - Analyst : Okay. Wrapping up. Obviously, a lot of moving parts at Disney that we've addressed here today and a number of big projects that you have moving forward. How would you describe the visibility into the financial growth that you've laid out at the stage in the process?

Question: John Hodulik - UBS Equities LLC - Analyst : Sounds good. It's a great way to wrap up. Thank you.