Disney CFO Hugh Johnston on Q4 Earnings, Streaming Strategy, and Consumer Spending

Q4 Earnings and Financial Performance

• 🎯 Disney reported $1.11 earnings per share, exceeding estimates by 6 cents, with revenue at $22.5 billion, slightly below expectations.
• 📈 Over the past year, Disney achieved 19% EPS growth, and has maintained this growth rate annually for the last three years, positioning itself as an earnings compounder.
• 💰 The company announced a doubling of its share repurchase program to $7 billion and a 50% increase in its dividend, signaling strong and sustained cash flow.

Direct-to-Consumer (DTC) and Streaming Strategy

• 🚀 The DTC segment had a terrific quarter, adding 12.5 million net new subscribers and achieving 40% operating income growth, reaching $1.3 billion for the year.
• 🤝 A significant portion of new subscribers came from wholesale deals (like Charter) and retail additions, with over half of retail additions being international.
• 📺 Bundling strategies, particularly with ESPN, are proving effective, with 80% of new retail ESPN subscribers opting for bundled packages, enhancing engagement and retention.

Parks and Experiences Business

• 🎢 The experiences business saw revenue grow 6% and operating income grow 13%.
• ✈️ Consumer behavior in the parks shows resilience, with bookings for Q1 up 3% and per-cap spending up 5%.
• 🚢 Cruise ship capacity has increased, yet ships are selling out at previous rates, indicating strong consumer demand for Disney experiences.

Disney's Integrated Ecosystem and Market Valuation

• 🧩 Disney's integrated ecosystem, combining content, theme parks, and streaming, is seen as a significant strength, with examples like Lilo and Stitch demonstrating cross-platform success.
• 💡 Despite strong performance, the CFO believes the company's stock is underpriced, expecting investors to build conviction in its long-term strategy.
• 🌐 The DTC strategy is broad, encompassing news, sports, entertainment, and potentially gaming, serving as a portal into all things Disney.

YouTube TV Negotiations

• 🗣️ Negotiations with YouTube TV are ongoing and described as a challenging battle that Disney prepared for.
• ⚠️ While acknowledging the situation, the CFO downplayed concerns about legacy broadcasting power dilution, stating that the ongoing negotiations are a reality of the current landscape.