Walt Disney Company (The)

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

Good afternoon, and it's my pleasure to welcome everyone to the Walt Disney Company's third 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 we will post a transcript of this call to our website. Joining me remotely today 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, of course, will 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. Today, I'd like to start off by talking about our company's priorities for the future. As has been the case for Disney's nearly 100-year history, it all begins with great storytelling, which is the foundation of our special connection to audiences and guests. And our foremost priority will continue to be to tell the world's most original and enduring stories brought to life by the world's most talented creators. As home to some of the most beloved franchises, we will maximize the synergy of our unique ecosystem to further deepen consumers connection to our characters and stories. And we will use the power of our far reaching platforms and emerging technologies to better anticipate what our consumers want and deliver them a more seamless and more personalized entertainment experience. We are executing against these priorities and the results clearly speak for themselves. Looking across the company over the past quarter, we are pleased with the trajectory we are on as we continue to grow our businesses despite the challenges presented by the ongoing, ever-changing COVID-19 pandemic. We ended the third fiscal quarter in a strong position with adjusted EPS up tenfold to 80 cents compared to $0.08 last year. At our parks, experiences, and products business, we're encouraged by some of the positive trends we're seeing and new developments we have been hard at work on, including the brand new Avengers Campus at Disney California Adventure, where guests can team up with their favorite superheroes in thrilling ways. At our international parks, Shanghai is celebrating its fifth anniversary this year with great fanfare, and we welcome the first guest to our reimagined Marvel-themed hotel in Disneyland Paris. Meanwhile, work continues on a wide array of new experiences, including the one-of-a-kind Star Wars-themed Galactic Star Cruiser at Walt Disney World. And as part of a multi-year transformation of Epcot, we'll soon introduce our extraordinary new nighttime spectacular, Harmonious. Last month, we completed our first cruise since the start of the pandemic with the Disney Magic, which is currently sailing short-term staycations for UK residents. And the Disney Dream set sail on its first US-based cruise this week. Future bookings for all of our ships remain strong, with bookings in the third quarter in particular having benefited from the announcement of our fall 2022 itineraries, and the successful marketing launch of our fifth ship, the Disney Wish, which will set sail in summer of 2022. As our parks business continues its recovery and we see demand grow, we are now putting into action some of the amazing guest-centric services that we have been developing over the last few years. These include Magic Key, our recently announced new annual past membership program at Disneyland, It provides great value and a variety of options for our guests and will be available starting on August 25th. The reaction to the news from fans has been extremely positive. Additionally, we've made significant investments in sophisticated technology and tools, creating a revolutionary new multi-tiered service we're calling Disney Genie that will enable our guests to more easily and efficiently navigate everything our parks have to offer. We're very, very excited about this new service and we'll be providing additional details soon. The goal of Disney Genie, which will appear in a user-friendly app, is to create a better, more personalized and customized experience for guests, putting them in control and providing even greater flexibility and choice. They'll be able to spend less time waiting in line and figuring out what attractions or dining options are available and more time having fun. On the direct-to-consumer side, we are extremely pleased with the continuing success of our portfolio of streaming services. Disney+, ESPN+, and Hulu have performed incredibly well, with 116 million, 14.9 million, and 42.8 million subscribers, respectively, for a total of nearly 174 million subscriptions. Numerous breakout hits from our beloved brands, including Pixar's Luca and Marvel's Loki and the Falcon and the Winter Soldier, have contributed to strong engagement and new subscriber growth in core Disney Plus markets. And we have continued to launch Disney Plus in new markets around the world, including Disney Plus Hotstar in Malaysia and Thailand in Q3. Disney Plus is also currently available online in a limited capacity in Japan and will expand to the full market in late October, followed by additional APAC markets including South Korea, Taiwan, and Hong Kong in mid-November. The launch of Disney Plus in Eastern Europe has moved from late 2021 to summer of 2022, primarily to allow for an expanded footprint that will include parts of the Middle East and South Africa. Additionally, we're excited about the launch of Star Plus throughout Latin America later this month. As we've said, our direct-to-consumer business is the company's top priority, and among our unique advantages in promoting and growing our DTC service are our powerhouse brands and the vast array of direct-consumer touchpoints we have across our businesses, from our media networks to our theme parks to our consumer products. This synergy enables us to raise consumer awareness and further increase engagement with our streaming services. And the power of this synergy will be on full display on November 12th when we celebrate Disney Plus Day with an unprecedented company-wide cross-promotional campaign. Our robust pipeline of content continues to fuel growth, and we have an incredible lineup of new programming for Disney Plus. On Thanksgiving Day, we are thrilled to be premiering the first of Peter Jackson's highly anticipated six-episode Beatles documentary, Get Back. We also have exciting new series from Marvel, Star Wars, and National Geographic coming later this year, including Marvel's Hawkeye, starring Jeremy Renner and Haley Steinfeld, the Mandalorian spinoff, The Book of Boba Fett, and National Geographic's Welcome to Earth, with Will Smith. With respect to our current approach to distributing our feature-length films, last year, in light of the prolonged and unpredictable nature of the pandemic, we needed to find alternative ways to bring our movies to consumers while theaters were closed. And once they began to reopen, there was still widespread reluctance to return. Therefore, we adopted a three-pronged strategy for releasing our films that consisted of theatrical releases, directed Disney+, and a hybrid of theatrical plus premiere access, as we did with Cruella, Jungle Cruise, and Marvel's Black Widow, the top performing film at the domestic box office since the start of the pandemic. Both Bob Iger and I, along with the leaders of our creative and distribution teams, determined this was the right strategy because it would enable us to reach the broadest possible audiences. And just to reiterate, distribution decisions are made on a film-by-film basis based on global marketplace conditions and consumer behavior. We will continue to utilize all available options going forward, learn from insights gained with each release, and innovate accordingly while always doing what we believe is in the best interest of the film and the best interest of our constituents. We have an incredible slate of upcoming theatrical films, starting with Free Guy, which premieres tomorrow, followed by Marvel's newest action adventure, Shang-Chi and the Legend of the Ten Rings, on September 3rd. The highly anticipated live-action musical West Side Story from Steven Spielberg is set for December, as is The King's Man, a prequel in the popular King's Men series. We have Disney Animation Studios' Encanto, an incredibly heartwarming story set in a magical town in Colombia, and featuring music by the incomparable Lin-Manuel Miranda. Our Marvel slate includes four feature films in fiscal 2022, the all-new Eternals, alongside sequels to Doctor Strange, Thor, and Black Panther. A brand-new Indiana Jones adventure starring Harrison Ford is due in the summer, as is the origin story of another intrepid explorer in Lightyear, a spinoff of the beloved Toy Story franchise. It's a widely appealing slate with something for everybody. Our goal is always to provide guests and consumers with unparalleled entertainment, whether they're visiting one of our parks or watching one of our films in a theater or on our streaming platforms. And as we continue our recovery, we believe we are taking the right steps to further this goal while growing our businesses and increasing shareholder value. Personally, I am as optimistic as ever about the future of our company. We have a robust and growing portfolio of DTC services powered by the world's best storytellers and greatest brands and franchises, and a parks business which extends those stories and creates a place where magic comes to life in a more guest-friendly way than ever. With that, I'll turn it over to Christine, and she'll talk in greater detail about the quarter and the way ahead.