Disney CFO Hugh Johnston on Q4 Performance, Streaming Growth, and CEO Succession

Disney's Fourth Quarter Performance

• 🎯 Disney's overall fourth quarter performance exceeded Wall Street expectations, with earnings beating estimates by 6 cents per share.
• 📈 The experiences business showed strong growth, with 6% revenue growth and 13% operating income growth.
• 🏈 Sports performed very strongly, coinciding with the launch of a new direct-to-consumer (DTC) product.
• 🎬 Weakness in films and TV was primarily attributed to the absence of India's cricket rights from the current year's numbers, which were present in the previous year.
• 🚀 The company ended the year with significant momentum, growing EPS by 19% for the year and achieving a 19% CAGR over the last three years.

Streaming Strategy and Profitability

• 💡 Disney is investing heavily in streaming, films, and TV, with a strong slate of upcoming movies including Zootopia 2, Avatar: Fire and Ash, and Toy Story 5.
• 🌟 The company is confident in streaming's continued profitability through 2026, driven by quality content and significant product investments.
• 🛠️ Investments include creating a unified app, improving recommendation engines, and enhancing navigation within the DTC app.
• 💰 While the first quarter of 2026 streaming operating income projection ($375 million) is lower than anticipated by some on Wall Street, this is due to strategic investments in bundling, which increases retention and reduces churn.
• 📈 Disney aspires to achieve double-digit growth for its streaming business along with double-digit margins this coming year.

Distribution and ESPN

• 🤝 Disney is in active negotiations with YouTube TV regarding distribution, aiming for a deal that values their content and provides consumer access.
• 📺 If an agreement isn't reached, Disney anticipates consumers will shift to other platforms where their content is available.
• 📊 The new ESPN streaming app has had a strong start in its first five weeks, with high engagement and 80% of new subscriptions being bundled, benefiting the entire Disney Plus ecosystem.

CEO Succession

• 🗓️ The Disney board is expected to name a successor to CEO Bob Iger sometime during the first calendar quarter of 2026.
• 📢 The board has been transparent about the succession process, with the announcement anticipated by the end of March 2026.