“Our progress has allowed us to move beyond this period of fixing and begin building our businesses again.”
That was the message that Disney’s Chief Executive Officer Bob Iger had for investors and consumers after The Walt Disney Company (NYSE: DIS) reported its fiscal full year and fourth quarter earnings on Wednesday.
Iger—who returned to the position of CEO roughly a year ago—struck a tone of optimism regarding the company’s future.
“Our results this quarter speak volumes about the underlying strength of our company, and the remarkable amount of work we have accomplished this past year.”
Iger continued by saying that “as we look forward, we are focusing on four key building opportunities that will be central to our success.”
- Achieving significant and sustained profitability in our streaming business
- Building ESPN into the preeminent digital sports platform
- Improving the output and economics of our film studios
- Turbocharging growth in our Experiences business
“We have already made considerable progress on these four opportunities, and we will continue to move forward with a sense of purpose and urgency,” Iger noted.
A Path to Achieving Significant and Sustained Profitability in Streaming
First, Iger noted that more than 50% of new U.S. subscribers in the fourth quarter chose the ad-supported Disney+ product.
“We have the best advertiser technology in the streaming business globally, and we have just introduced new tools that will make this an even more attractive platform for advertisers, much as we’ve done with Hulu,” he said.
Speaking of Hulu, Iger said the company remains “on track to roll out a more unified one-app experience domestically, making extensive general entertainment content available to bundle subscribers via Disney+.”
He mentioned that the company will launch a beta version for bundle subscribers in December, to give “parents time to set up profiles and parental controls that work best for their families ahead of the official launch in early spring 2024.”
“Now that we have realigned our pricing and marketing strategies, focused aggressively on getting the technology right, merged our creative and distribution teams, and restored creative excellence as our singular motivating priority with the content we create, we are bullish about the future of our streaming business,” Iger said. “And as you consider the components and the future of that business, just imagine the opportunities that a further combined Disney+, Hulu, and ESPN streaming experience could offer us as a company and our consumers.”
Another core building opportunity for Disney is “taking ESPN, which is already the world’s leading sports brand, and turning it into the preeminent digital sports platform, allowing us to reach fans in compelling new ways and fully integrating key features into our primary ESPN offering.”
“We are already moving quickly down this path, and we are exploring strategic partnerships to help advance our efforts through marketing, technology, distribution, and additional content,” Iger said. “As we continue to develop our streaming business, the continued strength of ESPN, relative to the backdrop of notable linear industry declines, demonstrates the value of sports and the power of the ESPN brand.”
Improving Output and Economics at Studios
Next, according to Iger, is “the need to strengthen the creative output of our film studio, which generates value throughout the entire company.”
Iger pointed out that the company has four of the top 10 highest grossing films of the year at the global box office and mentioned more new releases are still to come.
That includes The Marvels from Marvel Studios, which hits theaters on Friday, and Wish, Disney’s newest animated film, which will be in theaters on November 22nd.
Turbocharging Growth at Parks and Experiences
Finally, Iger spoke about Disney’s Experiences segment and how the company has an opportunity to build it “into an even bigger and more successful cash-flow generation business.”
“Parks and Experiences overall remains a growth story, and we are managing our portfolio exceptionally well,” Iger said.
He added, “even in the case of Walt Disney World, where we have a tough comparison to the prior year, when you look at this year’s numbers compared to pre-pandemic levels in fiscal ’19, we have seen growth in revenue and operating income of over 25 and 30%, respectively.”
He noted that “Over the last five years, return on invested capital has nearly doubled in our domestic parks, and we have seen sizeable increases over that same timeframe across the total Experiences portfolio as well. Not to mention, the improved guest experience ratings we’re now seeing at every one of our parks.”
“As we announced in September, we plan to turbocharge growth in our Experiences business through strategic investments over the next decade,” Iger added. “Given our wealth of IP, innovative technology, buildable land, unmatched creativity, and strong returns on invested capital, we’re confident about the potential from our new investments.”
Iger wrapped up his remarks by saying that “looking at the company as a whole, today we are focused on driving profitable growth and value creation as we move from a period of fixing to a new era of building.”
Iger continued by saying that “When you combine all of that with our unrivaled portfolio of valuable businesses, brands, and assets – and the way we manage them together – Disney has a strong hand that differentiates us from others in our industry.”
“Our results this quarter are testament to the work we have done across the company this past year, and I am bullish about the opportunities we have to create lasting growth and shareholder value, and to strengthen Disney’s position as the world’s leading entertainment company,” he said.
The information above should be read together with the full Q4 FY 23 Disney Earnings Report and earnings call (both available here), which discuss additional information, including additional challenges and risks the company’s businesses face and additional information about Q4 FY23 performance.
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