Walt Disney Company (The)

Ladies and gentlemen, thank you for standing by, and welcome to the Walt Disney Company's fiscal full year and fourth quarter 2019 financial results conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Lowell Singer, Senior Vice President of Investor Relations. Thank you. Please go ahead, sir.

Good afternoon, and welcome to the Walt Disney Company's fourth quarter 2019 earnings call. Our press release was issued about 25 minutes ago and is available on our website at www.disney.com forward slash investors. Today's call is also being webcast, and a transcript will be available on our website. Joining me for today's call are Bob Iger, Disney's Chairman and Chief Executive Officer, and Christine McCarthy, Senior Executive Vice President and Chief Financial Officer. Following comments from Bob and Christine, we'll be happy to take your questions. So with that, I'll turn the call over to Bob to get started. Thanks, Will, and good afternoon, everyone.

We're now just days away from launching Disney+, the culmination of four years of planning, organizational transformation, and a lot of hard work. And we're excited to be on the verge of this new era We're also pleased to have delivered a solid quarter, which Christine will discuss shortly. Before she does, I wanted to share a few thoughts about our DTC business to give you a sense of the confidence we have in our strategy and to provide a few updates. As you know, we began this process with the acquisition of Bantech, which gave us the means to implement our DTC strategy, putting us into the market quickly and ensuring we had the technology to deliver a quality experience. Our first effort was ESPN+, which was an immediate hit with sports fans when it launched last year and continues to deliver steady growth. I'm pleased to announce that as of today, ESPN+, has over 3.5 million paid subscribers who are drawn to its unique and growing mix of original content, like the legendary NFL primetime with Chris Berman, now exclusively on ESPN+, and exclusive live events, including UFC, college sports, domestic and international soccer, and top-ranked boxing. The UFC 244 pay-per-view event last Saturday delivered one of ESPN Plus' largest live audiences to date. Viewing patterns show ESPN Plus appeals to a broad array of sports fans, those who want more of everything, as well as fans who are highly passionate about a specific sport, conference, or team. We believe we have numerous interesting opportunities to expand ESPN Plus's live and original program offerings and to steadily grow subscribers. As I said, our acquisition of 21st Century Fox was largely driven by the value it brought to our overall DTC strategy, adding a number of critical elements, including control of Hulu, which opens numerous growth opportunities domestically and internationally. We also gained a large library of quality film and television content, along with additional filmmaking capabilities and the industry's best TV production studios, great talent, great brands, and franchises, like Nat Geo and FX, along with The Simpsons and Avatar. This collection of IP and talent will contribute significantly to Disney Plus and Hulu, and with that in mind, beginning in March, Hulu will become the official streaming home for FX networks. As I've mentioned on previous calls, FX is a producer of high-quality, award-winning content and will become a key content driver for Hulu. Since 2014, FX has earned 277 Emmy nominations and won 57 Emmys. The awards FX have garnered come from programming that is recognized for its quality and its boldness. And the Hulu and FX teams have been collaborating to develop an exciting strategy to bring the full breadth of FX content and production capabilities to Hulu subscribers with the introduction of FX on Hulu. FX on Hulu will include all seasons of more than 40 FX series and will offer episodes of current and new FX series immediately after they air on the linear network. Additionally, FX will produce original series exclusively for FX on Hulu, starting with four new series in 2020. Debs from Alex Garland, Mrs. America starring Cate Blanchett, A Teacher starring Cate Mara, and The Old Man starring Jeff Bridges and John Lithgow. This is a great way to expand the FX brand and an important step for Hulu, as it adds original content to compete more aggressively with new and legacy DTC platforms. The FX presence on Hulu, combined with original production from our ABC and Fox television studios and our Fox movie studios, including Searchlight, will greatly enhance Hulu's consumer proposition. Turning to Disney+, in preparation for the U.S. launch, we tested the technology in the Netherlands. giving consumers free access to a curated collection of library content. And we've been very pleased with the results, including the technical soundness and reliability of the platform. The user feedback has been extremely positive, with praise for the elegance and ease of the interface and the quality of the overall experience. The ability to download the content has also been a big hit, and the brand-centric navigation has generated an elegance and an ease of use that was well-received by users. The viewing patterns in the Netherlands test were also encouraging. Even without access to our full library or any original content, the service connected with users across all four quadrants, male and female, adults and kids, driven by the breadth of our content and the affinity people of all ages have for it. Disney Plus launches in the U.S., Canada, and the Netherlands next Tuesday, with Australia and New Zealand coming online November 19th. And today, I'm pleased to announce On March 31st, Disney Plus will launch in markets across Western Europe, including the UK, France, Germany, Italy, Spain, and a number of other countries in the region. At launch, Disney Plus users will have immediate access to more than 500 movies, including all of our beloved vault titles, and more than 7,500 episodes of library television content, including 30 seasons of The Simpsons. By year five, this growing collection will include more than 620 movies and more than 10,000 television episodes, along with countless shorts and features. And as planned, when we first conceived this service, all creative engines across our company, including the teams at Disney, Pixar, Marvel, Lucasfilm, National Geographic, Disney Channel, and Walt Disney Television Studios, are focused on creating compelling original content for Disney+. At launch, we'll offer 10 original movies, specials, and series exclusive to the platform, including The Mandalorian. The first live-action Star Wars series is unlike anything audiences have seen before on any platform, and it's a strong indication of the quality and the storytelling that will define Disney+. We recently screened a significant portion of the first episode of The Mandalorian for press, and the extremely positive reaction is driving tremendous buzz around this extraordinary series ahead of its debut on Disney+. Within a year of launch, the amount of original content on Disney will increase to more than 45 series, specials, and movies, and will expand to more than 60 original projects per year by year five. In addition to creating a phenomenal product, we're supporting the launch of Disney+, with an unprecedented marketing campaign drawing on every existing connection the Walt Disney Company has with consumers. It's an historic effort to raise awareness and drive demand, one that reflects our all-in commitment to the strategic initiative and our determination to launch big and scale fast. We're also very pleased with the consumer enthusiasm we're seeing, as well as the interest from partners like Verizon, which is now offering a free year of Disney Plus to many of its customers. Consumers can directly subscribe to the service for $6.99 a month or $69.99 a year at DisneyPlus.com. And starting November 12th, they can access the service through a growing variety of partners and platforms, including Apple, Google, Microsoft, Sony, and Roku. And today, we're pleased to announce additional distribution partnerships with Amazon Fire, Samsung, and LG. Disney Plus will also be available in a bundle with ESPN Plus and ad-supported Hulu for $12.99 a month. We spent the last couple of years completely transforming the Walt Disney Company, making strategic acquisitions and organizational changes to focus the resources and immense creativity across the entire company on delivering an extraordinary DTC experience unlike anything else in the market. With the launch of Disney+, we're making a huge statement about the future of media and entertainment and our continued ability to thrive in this new era. I'd like to take this opportunity to publicly acknowledge and sincerely thank the technical and creative teams, along with countless others across our company, who invested their tremendous talent and a lot of time and effort in creating an exceptional DTC experience that is worthy of the Disney name. I talk a lot about the inevitability of change, our ability to both drive it and adapt to it. It's part of Disney's DNA, and it helps keep us relevant to each new generation while also creating new opportunities for growth. It's exciting and exhilarating, and on the eve of launching one of our most ambitious initiatives to date, I'm more confident than ever in our strategy and in our ability to execute it effectively to deliver compelling value to our consumers and shareholders. We're going to turn the call over to Christine to talk about our performance in the quarter, and then we'll take your questions. Christine?