Walt Disney Company (The)

Ladies and gentlemen, thank you for standing by, and welcome to the Walt Disney Company's first quarter 2021 financial results conference call. At this time, all participant lines are in listen-only mode, so if you require operator assistance, please press star, then zero. After the presentation, there will be a question and answer session. To ask a question during the session, you will need to press star, then one. Please be advised that today's conference may be recorded. I'd now like to hand the conference over to your host today, Lowell Singer. Senior Vice President of Investor Relations. Please go ahead.

Good afternoon and welcome to the Walt Disney Company's first quarter 2021 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 also be posted to our website. We realize most of you are still joining us today from your homes, and we are once again hosting today's call remotely. So joining me from their homes are Bob Chapek, Disney's 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 some of your questions. So with that, let me turn the call over to Bob to get started.

Thanks, Lowell, and hello, everyone. I hope you're all doing well and staying safe. Unfortunately, as you know, the COVID pandemic continues to present significant hurdles for businesses and communities across the U.S. and globally. And most important, it has taken a tragic toll on way too many lives. Fortunately, there have been some encouraging developments, particularly with the availability of a vaccine. And we're pleased to be doing our part by providing space at Disneyland for one of Southern California's major vaccine distribution sites. To date, more than 100,000 doses have been administered at our location. It's hard to believe nearly a year has passed since the start of the pandemic, which continues to negatively impact the operations of our company. For the first quarter, adjusted EPS in the quarter was 32 cents a share, compared to $1.53 a share last year. Christine will talk more in depth. about our results for the quarter. During this difficult time, we have made significant changes while finding new and innovative ways to conduct our businesses. But at the same time, we have charted a course for an even more deliberate and aggressive DTC push for Disney+, ESPN+, Hulu, and Star. I'm really proud of how well our team has performed in the face of a multitude of ongoing challenges, both creatively and across our parks and experiences and legacy and DTC distribution platforms. We've been especially pleased with the success of our direct-to-consumer business, and our recent strategic reorganization has enabled us to accelerate the company's pivot towards a DTC-first business model and further grow our streaming services. Disney Plus has exceeded even our highest expectations in just over a year since its launch, with 94.9 million subscribers as of the end of the first fiscal quarter. ESPN Plus and Hulu have also performed well, with 12.1 million and 39.4 million subscriptions, respectively. And on February 23rd, we will be launching our new international general entertainment offering, Star, across Europe, Canada, Australia, New Zealand, and Singapore. Star will offer thousands of hours of movies and television from the company's multiple studios, including content from our acquisition of 21st Century Fox, along with Star-branded exclusive originals and local programming tailored to specific markets. Star will be integrated into Disney Plus as a distinct sixth-brand tile and will offer easy-to-use parental controls to manage access to the content available on Star. We're less than two weeks away from launch, and we're seeing tremendous excitement amongst consumers. As you saw during our investor day presentation, we've got an amazing robust pipeline of original content in development and production for our full portfolio of streaming services. We have some of the best creative teams in the business, and that's reflected in the tremendous appeal of our unparalleled programming. In just the last two months, Disney Plus has delivered a string of hit programs, including Marvel's incredibly original WandaVision, season two of The Mandalorian, which ended with the surprise reveal that fan favorite Boba Fett will have his own Disney Plus series starting this December, and Pixar's artistic triumph Soul, which debuted on the service and in theaters on Christmas Day to great acclaim and has since taken in nearly $100 million at the global box office. The wealth of IP from our unrivaled collection of brands and franchises provides us with an incredible breadth and depth of storylines and characters to mine for Disney Plus and our other streaming services. We have the ability to interconnect these storylines and characters in unprecedented ways, as we saw with The Mandalorian and WandaVision tying into the broader Star Wars and Marvel franchises. we're excited to continue exploring the endless possibilities that this unique ecosystem provides. The fan response was overwhelming when we announced last week that Ryan Coogler, who's hard at work on Black Panther 2, will be developing a Black Panther-inspired series based in the kingdom of Wakanda for Disney+. We're also thrilled to be expanding the scope and reach of ESPN's The Undefeated by creating a destination on Hulu devoted to black entertainment and culture, another example of our continuing commitment and investment in diversity and inclusion. And we can't wait for the award-winning and critically acclaimed film, Nomadland, to be released in theaters and on Hulu on February 19th. And on March 5th, Disney Animation Studios' Raya and the Last Dragon, an artistically beautiful film celebrating female empowerment, will arrive in theaters and on Disney Plus via Premier Access. As we've said, our goal is to increasingly put the consumer in charge and let them decide when and how they want to enjoy our one-of-a-kind entertainment offerings. Turning to other parts of the company, we've made a number of changes in how we manage and operate our theme parks and consumer products businesses in light of the disruptions caused by the pandemic. And we believe these and other adjustments we'll continue to make will best position us to operate more effectively now and in a post-COVID environment. Where we have been able to reopen our theme parks with limited capacity, guests have consistently demonstrated a willingness and a desire to visit, which we believe is a testament to the fact that they feel confident in the health and safety protocols we've put in place. Average daily attendance at Walt Disney World grew significantly from Q4 into Q1, helped in part by the increased capacity we've been able to achieve as a result of our successful protocols. It's clear that people want to reconnect with loved ones and spend time together doing things they enjoy. And given the demand we're seeing now, we're confident it will only grow once the pandemic is behind us. Even under difficult circumstances, we've been able to continue expanding our parks. At Walt Disney World Resort, we're hard at work on two brand new attractions at Epcot, Remy's Ratatouille Adventure and the highly anticipated Marvel-themed roller coaster, Guardians of the Galaxy Cosmic Rewind. Work is also well underway on the all-new spectacular nighttime show, Harmonious. This is all part of a much larger reimagining of Epcot to make it more Disney-like. more family-friendly, more timeless, and more magical. And I am especially excited about the progress that's been made on the new Star Wars Galactic Star Cruiser Hotel at Walt Disney World. People are going to be blown away by the experience. It is truly unlike anything we've done before. At Disneyland Resort, the exciting new Marvel-themed land, Avengers Campus, is currently scheduled to open later this year at Disney California Adventure. And crews are hard at work on the highly anticipated, state-of-the-art attraction, Mickey and Minnie's Runaway Railway, coming to Disneyland in 2023. We're also moving forward on a number of new projects at our international parks. At Shanghai Disneyland, work continues on the first ever Zootopia-themed land, This fully immersive area will seamlessly blend Disney storytelling with advanced technologies, creating a one-of-a-kind experience for our guests. Throughout this challenging period, we've consistently demonstrated our ability to deliver world-class programming on all of our platforms, digital and linear. On ABC, we continue to have the number one returning drama in the key demo of adults 18 to 49 with Grey's Anatomy, as well as the top new drama of the fall, Big Sky. Both Grey's and Big Sky also hold the top broadcast drama spots on Hulu. Also of note, ESPN's first ever NFL wildcard megacast featured six networks, including ABC, ESPN Plus, and ESPN Deportes. It was the most extensive multi-channel offering to date for an NFL playoff game. And the following day, the team at ESTN pulled off an equally impressive feat with a megacast of the college football playoff national championship game with 14 different presentations on multiple platforms. During an extraordinarily difficult year, our amazing local and national ABC News teams have been doing an absolutely outstanding job. And Good Morning America and World News Tonight with David Muir continue to hold the top spots as the number one morning show and evening newscast. While these remain challenging times, we are more confident than ever that we will emerge from this crisis in a strong position. We're proud of all that we've accomplished, especially as it relates to our top priority, our DTC business. And we believe that the strategic actions we're taking to transform our company will enable us to enhance the consumer and guest experience grow and expand our businesses, and increase shareholder value. With that, I'll now turn it over to Christine.