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Walt Disney Co (The) (DIS)

Participants
Lowell Singer Senior Vice President, Investor Relations
Bob Iger Chairman
Bob Chapek Chief Executive Officer
Christine McCarthy Senior Executive Vice President and Chief Financial Officer
Ben Swinburne Morgan Stanley
Alexia Quadrani JPMorgan
Doug Mitchelson Credit Suisse
Jessica Reif Ehrlich Bank of America Securities
Michael Nathanson MoffettNathanson
Steven Cahall Wells Fargo
Jason Bazinet Citi
John Hodulik UBS
John Janedis Wolfe Research
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Walt Disney Company’s Fiscal 2020 Second Quarter Financial Results Conference Call. [Operator Instructions] 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.

Lowell Singer

to Disney welcome XXXX second and call. earnings afternoon The Company’s Walt quarter Good

homes. was today XX We realized call you issued is release available and and press Our about we also will are from our webcast the joining be at are all a being home transcript available our minutes of website www.disney.com/investors. you also that Today’s website. your most is on and us webcast hope on and ago staying

given Safer are And County’s hosting today’s we Angeles Home order, Los at call remotely.

homes me from Christine Bob joining President Bob So Chairman; Executive Chapek, Senior Chief their and and are Officer; Iger, Officer. Financial Executive Disney’s Chief Vice Disney’s McCarthy,

from and Bob Chapek Bob be Christine, comments happy Iger, some will Following questions. we to take

turn to the Bob me to let get over Iger call that, with started. So

Bob Iger

and industries, pandemic good specifics. the call earnings in Christine unprecedented. Like other Obviously, our Bob through both much so now are will everyone. us and since world and walk afternoon, the facing the has you many the has and Thanks, hit changed hard last and challenges are we Lowell companies

someone really as the our days has However, other and XX and successfully. for I natural to absolute unforeseen ability last through downturns, including disasters tough years, economic over period get recover through and company events, been let this in challenging awhile have who some around confidence this

has to in the Bob was as we and partnership resilient. Company over And a in and history entered will in transition. announced its an I hand ensure with company’s Bob repeatedly exceptional smooth to Disney We objectives demonstrated when he believe of And by no I a and management strong exceptionally February, Walt this led Chapek. it crisis The this nearly different. is now be XXX-year support that as team CEO, and work successful time continue said

hands on when issues facing. working would the address together deck challenge all difficult dealing of is approach team we with closely magnitude, taking the you entire an to a expect are As this

strength Of of to course, one ESPN the strong the and them: is connection and have Marvel, Star brands emotional our Pixar, ABC, Disney, key to our Wars. resilience people

In crisis. we shown that throughout fact, have have connection with this consumers recent studies maintained

a of been also necessary important that, than or what has We now. collection And create assets. tremendous we beyond more right have never more

news. what friends, crisis because good to around for to In doing and family all ever, happy people fact, parks believe these theaters want continue the it’s possible films sports the or things familiar inspiration to stories hope is on the to people’s that They missed it’s things feeling we our enrich reason we our togetherness. and them resume of than experience joy live is ESPN. reasons, tell with want uplift movie going and the People visiting world lives. quite and ends. theme will messages create now connected watching our They or of that make find and appreciated see whether people comfort And more optimism. will once they this in enjoy This same activities feel and we that

am have this, and writing operations our time. from I through get with that we number have Disney+. the a extremely store. continuing teams doubt networks, about working postproduction have development it creative While projects, we will no I active, been also pipeline are in And I work what’s across our much studios been creative including take excited keep company our of our to of of and shutdown, while parts but and fortunate some media will

forward valiantly to advice and and of others, fighting take making we I and face to want and the of our medical opportunity of to flatten all who to this want your employees curve strategy to a take all patience times. more heeding my our Even helping difference. in to commitment, everyone trying myself, is about going for talk Bob to these the quarter and gratitude Before it express during to understanding moment questions, the over sincere continue I Christine to around save unwavering proud adversity, and also across mission all turn behalf answer officials our incredible Bob to and them. thank to and of the the to their a dedication it’s the the world who lives of are health of On professionals company country ingenuity, by be and show couldn’t I our

over And hand with will that, it I to Bob.

Bob Chapek

financially afternoon a Thanks, psychologically, personally doing world. us new When hope physically, could are none this pandemic and most neighbor, nothing tremendous imagined colleague. affected This ago, the our and I profound member And Bob suffering job, through someone we months been of the like on around X.X stepped way either and I everyone. one about safe. into that are us in has of another lives, impact know you sacrifice well or or ever loss. they family devastating millions all good now of and had have staying friend, lifetime. everyone causing seeing in is just or hardship This experienced a have

people the see inspiring and responders caring selflessness the across from the others providing services adversity, acts courageous Fortunately, our throughout workers frontlines the humanity best communities. through we of of first compassion in demonstrated essential for on country, our healthcare and hospitals to amidst the

of for grateful efforts. deeply are We and their appreciative

safeguarding national team providing our Here a Bob the our ABC local our security could who maintaining we key starting clock; they News proud compelling global personnel programming and them. staff be are our providing as in to the teams information grateful and live parks not absence at resorts, Disney, are phenomenal our and ESPN we are around and mentioned, also factual and own critical of sports, job of and employees, with more doing

hotels companies, cruise our to suspended and our film EPS COVID-XX. widespread due ensure guest the have retail businesses of fell adjusted in the our line, these ongoing while share has quarter I $X.XX shuttered experienced earlier domestic closed other the a primarily of disruption. financial many operations indefinitely, In parks the more will suspended have our like from second halted productions we Disney, to In and to $X.XX about safety impacted. hugely and fiscal were and know, steps our just you And necessary been mid-March, As year and well-being results stores. TV employees, talk for and the a depth Christine impact quarter, outlined. our

well our a the destruction ability the I our does, share thoughts we company on and our weather as confidence want as few she to storm. to Before seeing are across

a While of our be cautious, predict operations, different a begin resuming reopening and to ensure able too approach all scenarios when to it’s of parks. early our are deliberate to eventual we evaluating of we sensible will the number to

world, parks prevention take our federal closed around the since since capacity measures and that approach procedures Tokyo of and mid-March. as well have state comply health parks The and as you Kong As may control and been include and January, implementation with and we know, February, guidelines. guest Shanghai since U.S. Hong Paris our density

in of we retail and and Shendi China. We park area, to Shanghai certain May on weeks of the recent reopening to and government gradual Disneytown, semblance a successful and Group, are Shanghai encouraging XX. return food beverage restrictions of signs adjacent normalcy our lifting of And in the of Disneyland partners, seeing in plan light some our open

health screenings government We on distancing required will density contact guest limits phased tracing These and the systems. entry social strict a reservation other take with and and an advanced temperature approach and include use procedures. and detection masks, using using early attendance controlled of system, prevention

a which Chicago XX-part Dance. Michael ever Moving compelling Networks, ranks The This been content most took included through in engaging XX, sports bigger innovative has new historically on draft feet driven was Bulls, from more the viewers documentary absence the releasing, remote that life program what is technological series, particularly one the all up to months than viewed the one Jordan ESPN deliver currently anticipated into camera continues ESPN with and live XXX to May as plus XX an has before sports draft. fans in impressive ESPN million docuseries want. by feeds event. in America, Media the male a audience a finding ever ways and U.S. than X The event early, amongst demos X-day NFL key resulted stepped turn over virtual Last with number truly and highly the and of This since the also The homes the the halted. record across

these among look was adults April last of you events, XX% to XX. XX at two impact prime-time year versus audience, When up ESPN’s the

among this tanked it fact, the as In key cable network demographic. top

part as is ESPN series. three rolling winning forward, of for award be films going XX XX to its new out Going

on air June also XX. ESPYs are virtual We to going XXXX

fans. the ESPN XX. when our positioned for back we best will period anyone offerings in they in saw we studio of else. several gradual for more level continue the innovations the expand bring more ESPN without we bringing week strong. with And with straight beginning process, can turnaround great Additionally, on if stance, draft than will the back spectators be NFL XX hours same of deliver and to count And programming programs do, marquee each quick live May This their to it’s Sports ESPN of weekday. and sports to return to where come its experience believe is benefit sports a that will studio a

are our upcoming films. studio excited On side, we the about of incredibly slate

Guy production tentpole for movies. had Widow Marvel’s COVID-XX, on for with dates X, our release theatres closed XX, a Black reschedule However, XX. Free December have XXth for Disney’s we shutdown of and These number Pixar’s Century’s November Soul to for July and XX, include due November to set Mulan

theatrical know, As debut starting Disney+ XX. slated your already June a for Artemis exclusively of on will run, originally Fowl, in many

the have business. priority I is our said, to pleased we response company’s has direct-to-consumer exceeded our top our expectations. growth our particular And that our Disney+ As key even say am in and highest to to

a in highly just X to the early of initial markets. and months in the March, successful have as in we XX globally, milestone We In in April service subscribers million since for Europe, We Western a planned have in late us. thrilled into Disney+ launch been that performance an followed announced successful COVID-XX, India. by other of incredibly surpassed significant launch we and we despite November our with had continue expand launch

we the X We there to and more with the have in pleased seen then since is come. growth been quite that weeks have

families released were This in Disney+ Disney+ content continues out will series, Latin one in Portugal the Rise book the special NASA’s new Onward, Disney+’s on SVOD X Mercury. fall of a to end by premier Belgium, shelter America documentary series, Yesterday’s Nordics, in at as Stuff, and as original of National collection on and IX: Frozen towards year. the making of available for behind of Tom The the Right and Luxembourg of September most the of and with successful Episode Disney’s will Pixar’s the grow, home. the early a original The which Skywalker follow library about Wolfe Japan The along premier offering based robust Geographic’s Project by Mandalorian, with begin rolling the followed of about June, and including scenes

XX% million on quarter, amongst This have critically others. Hulu’s well FX Everywhere, FX on continue of the series Nearly, Little end original QX. subscribers network perform launch the Also, Hulu original total accessed the series, the content evidenced of and as from by service. library, strong acclaimed saw to XX current Fires extremely of had Hulu Hulu subscribers successful the hit at Hulu.

optimistic the are are we have what proud to-date we accomplished We future. for and of enormously

experienced to implement considerable as I impact on disruption have the us of COVID-XX forced manage to company. As the and of variety long-term pandemic. result our our measures said short a This earlier, businesses financial a

compensation substantial pay employees remain to executive those a were which be until company-wide, full their substantive will fortunate reduction duties. The unable able to X first for the effect a in first we was salaries to We in perform see were economic recovery. who to senior weeks

continuing this when company. XX. April layoffs, on their the crisis to decision impacted the with healthcare to receive end, furloughs very we Disney as no made to workers remain for begin However, full the by furlough process will benefits predict to while way difficult employees, paid allows the Unlike

employees work committed allows. situation to getting as as back We our the quickly to current are fully

that easy we not they have given with. believe were I challenges the ones these do right the faced While unprecedented been decisions, are

of franchises brands, that from Christine, me employees, turn Bob tremendous are position. exceptionally strong a before talented confident management Now, reiterate what will is just world company. dedicated and a and we exceptional crisis Disney and and this With storytelling I thousands it said continue over let for team consumers demonstrated we deliver and is that to a in emerge to great have that resilient around we the affinity an

will I Christine and happy about that, to answer With to to then turn we quarter the will more it your talk be over questions.

Christine McCarthy

Thanks, impact has affected unprecedented estimate Bob truly These Products Parks, Experiences at From and quarter significant with of related our a majority as COVID-XX much as number adverse company standpoint, COVID-XX with disruption times of impact in billion, we everyone. are income our good afternoon, operating segment. and second pandemic the financial the of that on a ways. our $X.X and the

the already to of comparability, on from $X.XX. certain performance. affecting quarter Bob share earnings per pandemic of highlighted we taken operations number have As were excluding Chapek a the financial a mitigate result, second items impact the continuing our for steps

very on liquidity fund during this strengthening been our operations have to adequate also to have crisis. position focused resources we our We ensure

liquidity Our who and years a sheet approach that have balance followed to our the over remain balance have sheet and liquidity. Those historically prudent strong. the know managing we company taken

by of So equivalents after the and position the to relative billion quarter. billion steps position $XXX took a current to cash issued term to which further enhance quarter of balance $X in debt. $XX.X term cash week We from decisive proactive million contributed despite of business during a end we the start And we and ended, quarter our another we believe debt, a the challenges, strength. liquidity issuing

credit a serve XXX-day bank to credit our provides billion billion, us new of existing with which on capacity I $X the facility will note backstop total facility, Last $XX.XX $XX.XX closed commercial credit our facilities with billion. month, combined we $XX.XX facilities also paper of that program.

a to outflows. manage ongoing the of evaluating impact cash with And through are confident businesses, scenarios the in of crisis. overall, we while to managing range the pandemic respect on ability our We wide prudently COVID-XX potential feel our

strategies continue a a back the get flow financial share. to the of emerge We to constant of forego the to Board additional the has the payable This fiscal to a with July. at $X.XX for from company made actively mitigation position necessary cash From first dividend been which $X.X assuming semi-annual the in our payment preserves this crisis half in year, to cash evaluate dividend path. we decision flexibility standpoint, on billion have about held would per had growth

to million our fiscal prior now than due to parks. to work and reduce by spending capital we the also construction closing opportunities million refurbishment total primarily of $XXX expect or year, We identified lower prior and CapEx XXXX for be temporary our below driven $XXX guidance, about paused our

our rest too consider Disneyland, and were our trending parks the still ahead to spending the While with pandemic the to well Hong and in it for XXXX, Kong confident exception prior year. caused businesses remain COVID-XX of Prior capital is specific our we by the early resiliency implications decisions fiscal investment of the businesses. of in of disruptions more experiences

due domestic previously had challenges visitation Asia. second we other Walt from XX. in Hong World Disneyland that Disneyland Kong was down the significant closed Attendance of to parks disclosed, and XX% XX you March the at parts remind quarter. March As Resort and on I’ll closed declines China Disney in our faced

our Per growth attendance percentage period of domestic up the spending. was Per We were admissions, and and impact guest parks in parks approximately domestic domestic hotels higher points. spending capita during adverse XX% food occupancy XX% room had occupied closure XX%, hotels reflects approximately our down on an our estimate which room on decline on estimate was merchandise up of the open nights. had closure the adverse X% room points. occupied to XX beverage and of We nights impact XX the an a of spending was points at XX

estimate our $X last Products a Experiences the income businesses disruptions approximately As year. QX adversely businesses, at unprecedented of Parks, QX billion. and by compared Parks, We significantly to impacted operating to Experiences and was to the lower operating income Products disruption result QX our

Resort, limited we’ve the ahead, and into of can of cruise reopen is As reopening to parks we conditions look the under rest Disney reopen visibility we resorts, the plans and Shanghai and Disney ships which there announced while stores. timing our

our serve commitment the experience our we and of will the However, assets us we and are strength unwavering brands guests guest believe that once well to valuable our reopen.

year, to lower bad in At in receivables lower than of to theatrical due key included which our adversely more Studio business We results the titles included from and Star film particularly higher close. in studio results feel by lower impacted higher quarter, theaters aggregate, to given around was legacy QX Mary of impairments, of The a In studio key film comparable the by began by higher release theatrical the at and the pandemic income Entertainment, COVID-XX. play were results reserves theaters impacted Poppins which world. the the the Skywalker COVID-XX in film Captain its due Frozen as our theatrical to date relative was our decline Onward closure quarter and at Worldwide Wars, revenue last were the performance the to for and Marvel, of Dumbo. operating quarter distribution Returns exhibitors impact TV/SVOD was of distribution Rise stage worldwide Onward offset debt due by performance X, titles legacy in when

results administrative worldwide to Lion at a studio by quarter Aladdin, XXCF income offset distribution King, positive TV/SVOD driven and in and including content operating Story contributor an as from business offset than theatrical was TV/SVOD and higher partially loss the costs. sales in third by The general operating more parties. sales X The legacy Frozen were Toy Higher to X, Disney+, decrease a

in extent programming as due was broadcasting the of at lesser QX lower and due and was the was increase in network our quarter operations to operating operating due the an year. revenue and costs, benefit a higher consolidation costs. in and Awards Studios results production legacy affiliate offset last But and programming to The and legacy timing specials that accounting sales contractual Turning while to programming expenses higher new sales amortized. cable and network the of hours to More of be up marketing the reflecting expect programming XXCF, Broadcasting higher for to largely note is contained Networks, lower ABC fiscal capitalized by increase was was operations. The cost our Media increase to on lower in the to program guidance second partially increase a rate the roughly in comparable of second new from operating partially a costs resulted income more due the the by and to half income offset at guidance, broadcasting income higher At program production in year, the new quarter. during accounting higher from current expense we first in accounting Academy production in year XX-Q filing. costs half the guidance I’ll the are as detail production decrease

consolidation Football quarter Lower the ABC XXCF stations. with Jessica last to last Cable Network Ad Murder costs largely to ABC reflect rate than were year. owned broadcasting and reflect costs Get higher Higher sale QX programming costs by XXCF of driven the and the year. advertising Studios ESPN associated political was a for ESPN lower How at offset the production programming and our basketball X% launch production revenue and ACC and advertising at more year comparable cable contractual the revenue. Away revenue was program increases prior Total at ad higher of revenue college and of at was and Playoffs QX by consolidation by sales affiliate with where by higher primarily of results in growth the businesses, driven Network. the in in offset decrease College Jones the

NBA the in down week. viewership was live than events part latter more rates the and Total second by in quarter the as quarter, primarily advertising average higher were viewership. sporting revenue college the of basketball cancellation Total championship negatively ESPN X% offset was lower by impacted approximately of

quarter significantly coupled So the due are time in current last to the lack challenges far live sales of demand. this sports this linear ESPN’s cash with inventory ad reflecting marketplace limited domestic pacing below advertiser year, the

seen our the six this we first far time. original However, Last couple episodes have a bright documentary Dance, of spots of quarter so record for of The highest-rated with all viewership

event this on the NFL XX% to for growth events was pent-up these ever, most well viewers Draft, suggests demand audience capitalize on positioned two year. compelling there of to The Additionally, meaningful fans is continues reaching than and XX more million and versus from be the three-day watched last average ESPN the performance over ESPN programming sports of demand.

of a Networks are pre-existing acquisition on announced the some due affiliate International XXCF India, previously due based subscribers and operating to of Western service by to point and Europe number paid pleased the ongoing Total reflects at the higher the decrease the growth & X.X At in was and service ACC consolidation to XX widely around all a driven subscription quarter with world and during of base the European the of driven paid support decline very quarter, Disney+ revenue was to in which which total distribute in and Disney+ were the the $XX.X growth The with the rates, Hotstar. contributed at to markets distributed quarter. million about in offset losses million and $XXX costs to convert European including the launch to a launch subscriber success in And our of our of Hotstar tiers segment Disney+ Direct-to-Consumer a platforms cable X incurred rollout higher deals end Media of certain we and by XXCF the India of by launched to of both consolidation execution of Hulu. the our of subscribers in benefited Network. points affiliate by from increase broadcasting. XX% revenue from up the the points partially points of X

subscribers. X, Because quarter-end available As paid we information Form third executed quarter, we million current. during these between our launches those today, exceeded the we XX on about Disney+ XX-Q. of bring we number April and have More to in launches decided announced is numbers a

subscriber April had million X. subscribers As we of reflecting XX.X Xth, our mix approximately similar Disney+ generally May we to at estimate mix a

reflect operating the at change loss businesses. of Segment we year-over-year Hulu consolidation the an on a in guidance cable a results at and adverse the provided than the of international direct-to-consumer about little consolidation an our came operating from also segment last in businesses Results of quarter. income benefit impact the XXCF had $XXX million, which better

and direct-to-consumer $X.X businesses DTCI. in our billion and change services, to losses our networks expect our the drive adverse expect from Revenue investment content and approximately profit studio of and for quarter DTC sales primarily intersegment billion segment the income of about last We higher generate increased to DTC on in particular, continued international million. year-over-year impact $XXX in an million by operating $X.X media the Disney+ driven we operating compared to eliminations $XXX in increased QX eliminations to year third

the And expected. and XXCF QX of obviously operating reopen, Consolidating a we when very although we This XXCF remainder situation and purchase these estimate are accounting, guidance specific under the was excluding for netting of on positive net businesses control These than long-term prospects of EPS operating dilutive in a being some contribution around lack intend about million. times we ways. given we optimistic businesses and which the fully to the don’t are significant and We in and uncertain year. our of about operational taking dilutive $XXX our before the the conditions people provide finally, total Hulu’s our they impact a for income less expectations fluid full inter-segment to reopen acquisition the and eliminations contributed around the businesses of Hulu, impact million in approximately near-term challenges, and visibility or is segment it eliminations, operating Hulu second our of had XXCF’s remain out company. quarter. inter-segment in of in stake acquired, losses will partially segment income resulted impacted Despite the $XXX

to happy questions. will take And the to turn we be call with that, would over I your Lowell and

Lowell Singer

Thanks, Christine.

As I by let we do we transition that appropriate me to questions executive. am physically best not going the directing to to since your this afternoon, together my to note are Q&A, the moderate

ready with first operator, we And question. that, are the for

Operator

first question Stanley. from comes Morgan with Our Instructions] Ben Swinburne [Operator

is now open. Your line

Ben Swinburne

Thank will ask I two you. questions.

subscribers end of curious be you next seeing, are the based you the but the on guidance to lack of on us cash burn you about statement help helpful? the monthly quarters. of quarter was of are situation that sort anyway the end the the the potentially this assuming is visibility, just And couple way first guys direct-to-consumer move completely unprecedented this through number, over or on The the understand going your XXXX I as then growth the very on low are but parks this can income some parks on think you of by would – are probably business quarter a even there close of you certainly you on through kind dimensionalize impact to approaching be

Given business more, for staying your Thanks. you out? at if that’s originally that with happening people thoughts. reach home sooner Thanks impacting your am plans will you I faster or profitability and investing think around and streaming laid if than what’s wondering ramp – in just and the

Lowell Singer

Christine turn Thanks. Okay, I Ben. second. to to the with am and those over first the going start answer to

Christine McCarthy

well. well and Okay. Hi, family doing you? are you are as How your Hope Ben.

Ben Swinburne

Thank you.

Christine McCarthy

parks the best as question can. answer I me Let on

are and situation we know with you that’s a fluid things As very dealing are changing.

on the XXth of approximately our So, the Xish we domestic weeks parks the quarter and second Disneyland closed revenue results we parks on you Asian XX, Tokyo, that closed stream on fully on the closed, you the Hong get, Shanghai the the closed, the being XX. then And that closed in XX. XX, for is reflect royalty saw which that World had a Kong because closed January on

of billion it international the second for just then weeks the little about products and over quarter $X – have business and a billion, the are quarter to Asian attributable that roughly which or domestic cruise, $X So the the was think you that balance. you parks half. And the that for two is the could parks

you already that Hong we had related own think about domestic issues when Kong So issues. to their

has up So Chapek Hong closed. he we park softness the this closure then to to Kong had some quite doing be any and accelerated had he would been the would that. Shanghai Bob that we am just telegraphed are moment already going to there like the that add losses that ask well there. if of I And other And in until thoughts

Bob Chapek

that just everything of obviously trying capital. in the are in in and terms allocate we short also burn were responsible expenses as of labor term can cash the and we are but we of both we as longer doing term terms how operating this be situation while we it’s to mitigate to possible, impact No,

Lowell Singer

Okay. And feel Bob, do Christine anything, start and free. Disney+ the to want around second on then if you add question you want to

Bob Chapek

Sure.

are able We obviously the progress to thrilled increase base and with of we’ve how the Disney+ been there.

wouldn’t Disney+ of Mandalorian would our to terms in hit like certainly actual really drives investment in But of profitability. reach new new we programming the in not that we that guidance business. that and prepared give projections any update terms certainly programming, We’re when know the

into Disney+ those And think investments and continue subscription we’ll and drive to so retention. exciting make always we have new rates planned to the I programming with as

Christine McCarthy

we new in would I that launching still are add just And, Ben, markets.

to it’s we appropriate. Disney+ it’s a had and still think good we’ll have we really when early update while start So

Ben Swinburne

Okay. Thank you.

Lowell Singer

question Operator, you. thank Ben, net please.

Operator

you. Thank

with from comes JPMorgan. question Alexia next Our Quadrani

Your now line is open.

Alexia Quadrani

hope I is Thank safe everybody and you very well. much.

then two questions, a Just question. one follow-up quick second and

pinpoint the question of second can you you terms now know that in you to when the just generally what my the and on a capacity opening, do operate park tell following if about at right is breakeven get obviously business. is And profitability? guys of on of to side or Just I still of could resume we what think the on can’t and trying capacity up parks, get sort studio comments us very you profitably domestic open, wonder your then which could or you speak sense I just of sort fluid just

movies opening scheduled overall, your will are theaters? guess much climate? comfortable tentpole theater decision consideration to to at likely is released start begin openings what the first to movies in that how most minimal the be of in with late releasing also this you films a one the and be in on July are of capacity in I international We guess I

Lowell Singer

Alright. Chapek, Alexia, to questions. over for Bob thanks that the I’ll turn you.

Bob Chapek

Hello, Alright. reopening it we need net make look profit. it and to we park at contribution hurdle in positive how what actually to make at as have sense, Alexia we terms of a overhead and to our look

for profitability point a contribution Another not it’s level. just but about necessarily, the net positive word, making contribution at break-even

not is contribution different, So would least any that what site we we at the a positive going thinking while and level. park every overhead that we’re to profit frankly are is reopen that take. approach we And make that’s to completely can operating unless

opens idea get In terms of studio terms type film in opening second what audiences is number of those week and movie a return are there point opens And does. going terms semblance see before that that in We’re when a that hoping to of good is for the up of movies. Mulan will one pretty normal, of of at question a that competitive some showtimes number up? to of our we’re there the because it it screens in that of

move gate. fingers some as demand. the incredible balance with between our first number big are the social combined practiced pent-up distancing theaters an what’s got of But our again So seats in by be exhibitors limited of that’s of crossed. to Obviously,

will shortly find a out we’ll out was find maybe movie. week we think, the competitive I and before

Alexia Quadrani

you. Thank

Lowell Singer

Alexia, question please. thanks the Operator, for questions. next

Operator

Thank you.

comes Credit Suisse. with Doug from Mitchelson question next Our

Your now line open. is

Doug Mitchelson

Thanks so as a questions well clarification. Two much. and

plan the sort the Ben’s accelerated accelerate. in any launches that change launching the toward streaming world, the pursue could I costs of year? reasons has that. lines could question, of considering international delaying the shift around – of crisis given your to you along to understand also understand Hulu Following could next I potential Hulu have

very There’s to productions employees just large-scale of films launching a employees buzz be these back for days up On like start photography? for masks And the quick premium much. of lot the think windows? of film can the VOD revenue do clarification, side, might replace on Marvel Shanghai try window lost. theatrical you and are in principal terms Thank or any comments some when reopening, guests? for the that on new The to you

Lowell Singer

Okay. going over Doug. I’m Bob those Thanks. turn to to Chapek.

Bob Chapek

Okay.

Hulu of sort in though, the now you make uncertainty of the can said you Hulu about we, situation happening, away, immediately either cash because internationally, that interest international. term given our and terms business is frankly that’s sort everything any plans still In of that And the But business, given an short was argument long-term, are COVID second Right faced overall again? to make in got again no investment the of that we’re we’ve question internationally. our bullish with. only around situation

Lowell Singer

large-scale production then and – Production window.

Bob Chapek

when Oh, will and – yes. large-scale it production

large-scale absolutely of these of going theme in productions production, be go and the put guaranteeing other do we we’re terms we they same that going own productions. responsible as are as we’re parks terms process to with partners do to of employees with through our how our terms both In our that us in filmmakers

no got we’ve do proceed. third to our would of when be of we sort will responsible we type So question? that very projections that, terms and hope the when in procedures can of of we And into implement but the parks we mask exactly same

Doug Mitchelson

try the Any to thoughts of sort any months? around implications of at coming in premium to – on VOD restrictions offset the restricted the theatrical window

Bob Chapek

Yes.

to value launch experience movies. overall the very much blockbuster we So in the theatrical of believe

because had to aren’t may some But anybody As or like either open have make to you in needs certain situations also and calendar COVID, viable. or just that know, realize because $X ‘XX. we changing of films we of to that we changes to that be theaters extent year overall open financially aren’t because consumer evolving the billion X strategy dynamics

to each right going during movies are now coronavirus evaluate we’re So one a doing situation. this as of case-by-case situation our on we

Disney+ – And I all been is not our but you Fowl in given of that plan. over know was originally year. have the film, demographics that for the later theatrically which moving to the of think appeal Artemis movies rescheduled other Temple

the power much we our believe platform So that of for launch movies. big very in

Doug Mitchelson

and And or Shanghai? guests you employees then just for in Thank lastly masks very much.

Bob Chapek

employees. be of guests characters it’s at for the from that going and are terms characters The only masks in Shanghai not will a masks they’ll crowds. be Yes, and wear to distance face

Doug Mitchelson

all. you Thank

Lowell Singer

Operator, Doug, question thank you. next please.

Operator

Thank you.

next Ehrlich comes Bank Jessica America of with question Reif Our from Securities.

Your line is now open.

Jessica Reif Ehrlich

Hi, thank you. okay. One… Hope questions. is Two everybody

Lowell Singer

speak up bit, could please. you a Jessica, little

Jessica Reif Ehrlich

Sure.

are think your how of about crisis? as you competitors, how need it’s sports, an conversely that And percent you resizing the is come can business pre-crisis for this thinking The opportunity however is first you result much how about and since were operating in orders that many is will or like bid us longer-term you changes And income? will built? remind pending your or the a seems business model you back, business what whether of cancel ships versus that question this question etcetera? you in terms contracts are And revenue ships this being CapEx, the can last cruise second

Lowell Singer

Okay.

question. can the turn the cruise over address Bob then business I’ll think So I Chapek. Christine And to question and he model

Bob Chapek

Okay.

slate linear on make of – highly think as it’s really premature and sports any I in sports and as what to given obviously along the from future linear to the to business those live In terms than that think details other to give incredibly specific rides of a in the the continue rights value remain sports want think to we we us rights how we an from valuable have interest and the unique over digital. the they live make we though, play and go very of they digital. assets ESPN, evolution And Existing trends about bit own real that, with it to we a disciplined as is interested to that going ABC. consumer we manner. with part on a we’re the the always consumer do big transition And done we’re we think in ESPN+ have models, strategy

In competitive the in opening trimmings if at term the responsible financial on data that big as that going standpoint, will, experiences businesses but of are we oriented with to you through job but lot our since interested to we parks our theme COVID continue go agree expenditures of cruising them the in out there they our parks we’re plans not businesses are be our help theme behind of ideas done intellectual extent big And a have. be and ahead going they And feel, online. a in trust terms property still CapEx there good woes that shows guests those those that of that because be Christine future from business act after. before a just to the such of resilient will that at slightly to majority Interestingly have such our our enough in her to in had us but possible businesses to and ideas the long always really terms and the come of remarks, to have responsible the obviously industry assurance hit. Those over more back against as next Obviously some last our Imagineers the have good business, way any a goes for plan cruise planning plagued our have our plans. be and and said we a that will that comb, question, great just investing to long than term. the months essentially of and take like of capital few much guests ship of all for where our protect of has we travel probably that Disney research the tremendous here in really COVID over certain doing we’re finer-tooth we love

Lowell Singer

about the Christine, do to of component talk you that cruise segment? want just

Christine McCarthy

our within a includes to that relatively of high of income in size cruise has also of intent given It’s repeat being the revenue. just of Bob the the we income, business it percentage segment, builds Jessica the a revenue and break don’t our operating business experience. operating of products. percent small this on consumer satisfaction and and highest down but includes parks now one for of and the said very a this global – that is businesses some Sure. individual so our things that it is rated business terms guest and businesses But said, the

who So tend on cruises. multiple people of back go go a one for lot to

shareholders. an look value ROIC long business it perspective, – at So for perspective, nice from when also we business ROI and it’s term very returning creating a a it’s

Jessica Reif Ehrlich

Thank you.

Lowell Singer

Jessica question next thanks the for questions. please. Operator,

Operator

Thank you.

Our next with Michael comes MoffettNathanson. from Nathanson question

now is line Your open.

Michael Nathanson

two Is at opening? want Thanks. I staff Chapek. employees your opening. measure to of the to full and you what look have What signals number two. up optimization? the in Ben’s Bob opening? you any you up an One of an from And to signals, but the parks have wonder, in park do have impact for a guys of is, basically history question any do staff for one. us furloughed it then of type That’s giving Christine, How COVID, anticipation the you you type anticipation drives were answering in So you I helpful for April. experience of then in in

world. So how change would employee that answer furloughed

the those of my the So variable becomes much post how So are furloughs? cost base questions.

Lowell Singer

Chapek, the Thank you first Okay. one? start the for do you Bob with want to questions.

Bob Chapek

hypothesis that of because if our pent-up trouble demand at to standard the less our XX% something probably signals of filling going for terms we park of capacity is than not that we look Yes, we’re that. up open in have opening,

, of accordingly at eventually. Therefore of able save whether that’s be will to level type we staff to our it’s will crowds, have park. we’ll XX% we level XX% that that that typical level, be at what XX%, or whatever So whatever

of of sort and to level going said always make when it’s what as variable that or I entire slide for of our and cost so the going much a be possible. the we’re yield targeting why variable contribution and that, parks inside be practice approach that like as looked the obviously is the huge will And we’re basis of as that we’ll a optimization would sort really to gives strategy a In contribution cover at to that as for, the decisions decisions at of what have. terms we that’s Therefore, we’ll Obviously, keep component net and how us we’re looking with structure cost that attendance. to to labor our saying not. overall a just ability and base opposed on profit

Michael Nathanson

Okay.

Lowell Singer

And, question? you to Christine, want take second the do

Christine McCarthy

Sure. Hi, Michael.

Michael Nathanson

Christine. Hi,

Christine McCarthy

paying On the we segment saw employees, included everybody. our full furloughed QX fully for impact that on so the parks

April numbers. do early just we most employees until when the employees. of sheer continued the park furlough those to companywide But in by were over We that did XXX,XXX segment

we portion while still are their So medical they paying furloughed, are of their benefits.

important parks, which about So thought they’re that it We to benefits. of too big do. their component, for as not levels. three taxes pocket is The of insurance. or we chunk the is depreciation, was very, about and very non-cash fixed taxes, out is think of And our the we item. any that when think costs property There a depreciation

more to will what that – then include not not parks the information also and pretty we costs for just we we took – into a that now goods have also employees, Then where in that in on And two, in of how have includes flexibility significant furlough it do be obviously couple costs is months. what closed and curve. And SG&A. we we’re and term, items. are then are to those of variable do put once time cost And short cash do just another variable weeks, to and had you the more The looking are semi-fixed. you labor, that’s chunk early the the they that would had costs wouldn’t we long indicated have that of until again fixed call it we labor are where at semi-fixed there but it is have sold the done other we

taking to can eliminate whatever we’ve other there So expenses. measures costs and we operating been

are QX, that area appropriate the closed. things the current So employees but furloughed being we’ve SG&A will state of in done believe also benefit the we given

Lowell Singer

please. question thanks next the Hey, for questions. Operator,

Operator

you. Thank

Steven with Our Fargo. next from question Wells comes Cahall

open. line now Your is

Steven Cahall

Yes, thank you.

screening on sort thinking Just it bit would far and safety. about, as of us you into attendance Pandora’s waiting decide kind wanted thinking and and lot. And help sort a think the or you’re product, pricing parks have that contingency Thank am of on Box, that who demand for opened talk but ad the going imagine about are below about that you both it Could you on a the question are the in just pent-up Hulu, how a ad second follow-up versus gets the if of wondering and of your I you I driving today much about ARPU you. a modest plans up versus willingness brand seems subscription in product to and then you about of about vaccine? ARPU a and the ARPU what come talked was how little subs got then to of wait forward? to to versus whole like live measures sequential ARPU and kind growth you how lot was

Lowell Singer

will ask Chapek the first will parks take question Christine take Bob Okay. about the I then to and Hulu question.

Bob Chapek

Okay.

of terms going a limit our of tickets, is whole by that with ways way go we will to same have disappointed. out reached and your that through X:XX promise have no we sort up are people you Shanghai and a.m. that deal don’t the In of plans at bunch situation they of and gates then showing finding the deal that this then going that’s dated back contingency that but one domestically, we with forward, in so

that particular oversubscription, you that are demand conscious of to to we if going very relative So have. are we will,

something very that so similar. ticketing And we dated either handle through will or

Christine McCarthy

Hulu TV and think that’s the Steve, increase at was increase. because year-over-year on roughly we And in sub. took that XX% live quarter ARPU, That and in I $XX you’re XX% up the price that per ARPU. really was the looking a reflected It’s

product, a number. that’s mention of the reflected is, what period coming seasonality I SVOD declined bit would which first actually is one the year-over-year. it on is there is there and Hulu in But to quarter the some advertising thing out On our little the SVOD holiday

Lowell Singer

question next Steve. Thanks, Operator, please.

Operator

you. Thank

comes from question Bazinet next Our Jason Citi. with

is now open. line Your

Jason Bazinet

just what dividend owners if on that could the second how two aren’t I soon? Q. you’re that dividend then questions beyond And to a that dividend, just elaborate could even thinking, One continue back you one your major terms is have of how Thanks. the one pay to and just if the can to don’t come though paying bit of swing potentially sports the long you not sports, in there provide in endure was not the terms sports just from factors rights little are color on the you’ve pay? decided of decision

Lowell Singer

those paying Thank you, both to of on sports take Jason. I and so dividend. ask will questions, Christine rights

Christine McCarthy

– not Hi, already But you our is Jason. very the discussing can we And conference them just forward now. the I leagues, to and working the of to I tell to payments closely into in And the leagues specifics partners live going with return are am the you what the events. paying impressed that of are On are that agreements. we various are into cash are get and we very, with discussions we are active looking XX-Q.

businesses really these And that. very dividend, the very, disruption at made to quarter. we the future this We on for see have don’t is leave always or this closed just us ball keep crystal allows into So long how it our tough I fully. are But will a for going a that partially decisions. decision to

the dividend next So we will address in months. again the X

Jason Bazinet

helpful. Thank very you. Okay,

Lowell Singer

Jason Operator, next the questions. question for thanks please.

Operator

you. Thank

comes question from Hodulik John next with Our UBS.

now open. Your is line

John Hodulik

quick two on then park a Maybe and second Hey, question. Thanks. the follow-ups great.

typical are from that sort you on then a ad how anything in of trends to versus guys percentage there far attendance parks many terms us anything say get of in tell May versus week? in are can out limitations next could in great? two, tell up trying open of on second Number flew, the question us you April tell when sense drove you is U.S. would revenue park what the can capacity First, you us visitors the be state? say Shanghai for thus of local about attendees And of Thanks. or what XXXX

Lowell Singer

you do you take Thank trends ad parks Christine, want you, John. the Bob, question? questions take then to want the do to and Okay.

Bob Chapek

Sure.

got You it.

Disney to at putting be XX,XXX our capacity day. a Roughly is be The Shanghai government about on want that. In terms of to XX% they that. tends us a limit of Resort,

So a it’s XX,XXX day.

either as We’re backing new below we on to don’t entering going up that and the up the sure to to park. have wheels through far lines have processes with into training just they open our guests actually procedures or our park as make wade any

approach we’re point be after actually be and what weeks But even guideline is the restrictions to that those lifting of some So that government’s going few a the we to very, of slowly. at there will very up XX%. could

metrics the are there. those So

as the go that fly In attendees, part Anaheim there, talking overnight fairly on it families but might Orlando. drive-in terms those – both but annual predominance that in less of drive-in about. folks actually has stay lot a of which terms market at folks depends less and lot parks and of Obviously, fly visit and a actually you’re much pass a in different a guests in has overnight it’s U.S. Park that that program to big market have stay a overnight big well, park Orlando really the robust guests we significantly where more of that

John Hodulik

it. Got

Christine McCarthy

on your a this ad whole our revenue, on has pandemic John. obviously to Hi, COVID-XX had sales. question ad answer And impact significant

of for sporting anyone categories advertisers events and the due the I for fair to really advertising side pullback impacted. that one due it’s us, in from to – think business in are or say other. live lack And the most the that’s on

in increasing net network. all it more restaurants, domestic retail, in movie will at But lack you groups things we industry are declines advertisers in. or other those we we some live financial And opportunistically those – of goods. the as we’ve like pullbacks sporting spend industries because telecom, auto, of their things and the that the at seen on have we studios, significant all hand, packaged demand events consumer out is the seeing the travel, have some sales. tourism, from services, the also tech, expecting of net ad than DTC streaming are a that, what are and broadcast seen will ESPN we So When are see decline of impact services like

John Hodulik

Christine. Thanks, Okay.

Lowell Singer

think will one John, you. take question we Operator, thank more I today.

Operator

you. Thank

with Our comes from Research. Wolfe Janedis final question John

is line now open. Your

John Janedis

we scripted not Thank a lot the timing, of lot will you. same time start sports time. live could I of be, spoke Maybe one, guess hope Depending next from the one see programming back fourth come sports quick over the be on the and to at may there that to you months. and prime couple a hitting quarter there in

you follow-up would that talk thinking be of fall to about relative of maybe any to John, So then your season non-sports can advertising? of air the about winter terms on ability as programming? a one quick maybe some you And to magnitude order kind ABC on us the of you Christine ESPN of or a how traditionally in are content maybe can in terms give and on sports

Lowell Singer

Hey, John. the and Thanks back. for questions welcome

John Janedis

you. Thank

Lowell Singer

Christine? and Bob Chapek, first you to want do the to take one over then we turn will it

Bob Chapek

they creative and at months over our two the I the have anything fact over think nimble that can last it’s very nimble. shown be be and ESPN ABC executives if being at

for which million able of So and of to think nights, number and over to know being to three outlet that us over whether as to ABC speaks is or And households ESPN an ESPN changes to a being that huge also was how fact one back going We how a in networks be I success of and everything another those Draft the obviously can or they lens on example given a through point guests nimble. come out unbelievable essentially do adjust job perfect being at in cast between play. the increase how to it’s volumes such happens of come want toggling terms the made to the ABC that and that they and the over the quite our suspect ESPN+, I and our between we’ve executives you what would fact enjoy consumers terms able in I a ESPN able enjoy. on do into phenomenal forward changes of and our our toggle depending is we XX same of to NFL sports back, that and the future, they the what had to that look environment.

Christine McCarthy

unit about magnitude sales question your as into we on ad declines, order sports Media group we – now ad one of of combined And and the may the John. Hi, in XXXX segment. you sells versus Networks our non-sports one for who sales back remember are we have across

non-sports. we out intend don’t break and versus haven’t to sports really – So, really we

the decline However, year-over-year hitting your it is fair you is and that being more sports, math expectations, that to sales ESPN. there’s around definitely more significantly ad impacted but i.e., say can that is do with ESPN

John Janedis

very Thank you much.

Lowell Singer

on Thank John. estimates us are document referred information provided transactions. GAAP XXCF our of thanks acquisition. the of unaudited an about Relations a results performance XXCF remarks Okay, on everyone but periods that joining precise in Also that not of equivalent non-GAAP were inter-segment this Thanks IR our thanks. that are to assets measures the for historical reconciliation and year. records, to you, of call the estimates certain before estimates Note website our later of can be based post These Yes. of website. Investor of we content prior In includes to our more analysis nonetheless measures are treatment questions today. again today, and the found a measures on for will we

and statements time to certain we on the beliefs Let the our or basis statements make and performance do me We statements update these views at constitute forward-looking undertake about our assumptions may also these financial laws. regarding plans, them on including any estimates of and we or the call, business obligations remind you states. under securities events statements that not expectations future this make

of differ in today Form safe risks of the results materially and Securities stay from our and Thanks number Exchange variety uncertainties expressed including Report or call. may XX-Q factors a XX-K, Once on everyone. with today’s for and factors, to in subject results the on please a implied again, quarterly Commission. joining and actual are reports our us and light Form this statements concludes other Forward-looking in Annual of contained filings

Operator

call. Ladies Thank concludes for participating. today’s this gentlemen, you conference and

disconnect. now may You