Walt Disney Company (The)

During the quarter, we released Pixar's Hoppers to critical success, a strong reminder of Pixar's track record of creating meaningful, original IP that resonates with audiences all around the world. We are thrilled with last weekend's opening of The Devil Wears Prada 2, and as we look ahead, we're excited about our upcoming film slate, including The Mandalorian and Grogu, Toy Story 5, the live-action Moana, and Avengers Doomsday. When you look at our upcoming slate of franchise films, each has the potential to resonate with our fans well beyond its initial release, moving across platforms, experiences and products in a way that deepens engagement and extends reach over time. At Disney Experiences, we continue to demonstrate strength in the core business and make progress against our growth initiatives with strong revenue growth of 7% and segment operating income growth of 5% in the quarter. Both revenue and segment operating income were ahead of our prior expectations and represent second quarter records. Over the past few quarters, the team has successfully navigated known attendance headwinds. We are now starting to lap these headwinds and expect attendance trends at our domestic parks to improve in Q3 when compared to the results we reported for Q2 today. Since our last call, Disney Cruise Line launched the Disney Adventure, our first ship homeported in Asia. And at Disneyland Paris, we opened World of Frozen as part of the reimagined Disney Adventure World. These are meaningful milestones that extend the reach of our brands to new markets and new fans around the world. The strong demand that we're seeing for these attractions reinforces our confidence in the long-term opportunity across our portfolio of experiential assets, parks, cruise line, and immersive experiences alike. We remain mindful of the near-term variability, but are also well-positioned to benefit from sustained consumer demand for live entertainment at a scale unique to Disney. Speaking of the power of live, ESPN continues to build toward a stronger direct-to-consumer future. Enhancements to the ESPN app, including MultiView, Verts, and SportsCenter4U, are making the offering increasingly compelling for fans. As we manage this business in transition, we remain focused on serving sports fans in a way that fully captures the value of ESPN and live sports within Disney's broader direct-to-consumer offering. Looking at the first half of the fiscal year and our expectations for the second half, we're executing with focus, delivering against our stated commitments, and investing in areas that we believe will drive long-term value. As we look ahead, my strategic priorities as CEO build directly on that foundation. Let me summarize my long-term perspective briefly here. First, creative excellence, it'll remain at the center of everything that we do. Disney's greatest competitive advantage, it's always been the quality of our storytelling and the enduring connection our brands have with audiences all around the world. Second, we have a real opportunity to deepen our direct relationship with our fans by creating a more connected Disney experience across streaming, sports, games, and experiences, with Disney Plus playing an increasingly central role. Third, technology can be a powerful accelerant for Disney, improving the consumer experience across our business lines, driving operational efficiency, and unlocking new possibilities for creativity, growth, and returns. To wrap up, our immediate priority is disciplined execution, but I'm equally energized about the opportunities ahead. Disney has iconic brands, extraordinary creative talent, powerful platforms, and unmatched experiences. Our job is to execute with rigor, to invest with confidence, and connect those strengths in ways that create lasting value for consumers and shareholders alike. With that, I'll turn it back over to Ben to begin our Q&A.

Thanks, Josh. We will now turn to questions from the analyst community. So our first question is from Sean Diffley from Morgan Stanley. This is for you, Josh, on strategic priorities. What are your three biggest priorities going forward? What are the biggest synergies between the businesses today and any examples of how Disney can leverage learnings across its businesses?

Okay, great. Well, thanks, Sean. I guess first and foremost, what I'm focused on is executing on the priorities that we've already communicated to the market. And I think this group knows these. In fact, I just hit them in my prepared remarks. First, we're focused on creating best-in-class content. We're doing really well there. Second, we're strengthening our streaming businesses and driving top line growth and profitability as well. Third, we're continuing to take advantage of the growing power of live sports and build ESPN's direct-to-consumer business. And then, of course, we're turbocharging Disney experiences all across the globe. While we're focused on executing these priorities, we're also starting to lay the groundwork for the next phase of growth. And you're going to hear more about this over time, but maybe today I'll just share some high-level thoughts on that. First, we're going to continue to build and fully leverage all of our IP. Of course, this starts with great storytelling, but the opportunity is going to be much broader than that. We'll invest in both existing franchises and new IP. So that means building on brands like Toy Story, while also at the same time creating new stories that connect with generations of fans across the globe. And the key here is fully harnessing that IP across the whole company. That's in film and in streaming, across our experiences and products and in games so that each of our successes, it compounds in value over time. Then second, I think we have a real opportunity to deepen our direct relationships with our fans. And we can do this by creating a much more connected Disney experience. And we'll do that across streaming and sports and games and experiences. And we'll put Disney Plus right at the middle, playing an increasingly central role. And then third... Technology. I think it can be a real powerful accelerant for Disney. I think it can improve the consumer experience across our businesses. It'll certainly drive operational efficiency for us and then unlock brand new possibilities for creativity, for growth and returns. And then when you step back and you put all that together, our next phase of growth, it'll be centered on creative excellence. It'll be a more connected fan experience. And we'll use technology as an accelerant. But I just want to be clear, as I said, in the immediate term, I'm staying focused on delivering against the priorities that we currently have in motion. But thanks for the question.