We welcome Bloomberg Tech co hosts Ed Ludlow and Caroline Hyde, and they are joined by Disney c FO Hugh Johnston.
Take it away, Thank you very much. Indeed, it's wonderful to be joined by you, Hugh, with Ed and I across various parts of America. You just first start with us for a moment. Will you rating Disney's overall fourth quarter performance? You were strong in parks, Look, you were strong in streaming, but there was some weakness in films and TV. Talk us through how you rate yourself?
Yeah, actually I thought it was a good quarter overall, and frankly versus Wall Street, we beat expectations by six cents. So, as you noted, the experiences business did very very well, six percent revenue growth, thirteen percent of why growth was terrific. Sports did very strongly while we were launching the new DTC product, which is off to a great start. And then in terms of experience the entertainment business, it was largely just the overlap of the film slate that drove
the numbers. I know the linear business looked a little bit soft, but that's primarily due to the fact that we had India in the numbers last year where we made eighty four million bucks and wasn't in the numbers this year. Take that out Apple Staples basis. Overall, I thought the quarter was good and it actually allows us to end the year with a lot of momentum as
we think about where we are right now. We grew EPs nineteen percent for the year and nineteen percent Keeger for the last three years, and that's why we both guided to double digit EPs growth in twenty six and on top of that, doubled the share of purchase and increased the dividend by fifty percent. Hugh, good morning.
On that momentum, the focus for a lot is streaming, right and you have the confidence to say streaming is going to continue to be profitable through twenty twenty six. What are the factors behind that? What allows you to have the confidence to have such visibility into how that streaming business is going well?
Of course, streaming always begins with the quality of the kind that we have and the quality of the slate that we have going forward. So if you think about the film slate we have right now, number one, we obviously have Zotopia two, followed by Avatar, follow a Brad the Double Wars Product two, followed by Toy Story five, Mowana, and then we've got an Avengers movie as well. So if I look at all of that playing its way into the streaming service, certainly feel good about those ten
pole events. In addition to that, our TV side continues to perform very strongly. The ratings are great, the number of hit shows are great. And then on top of that, we're investing in the product in a significant way, creating a unified app, and in addition to that, improving our recommendation engines and improving the navigation withinside within the DTC app. Put all of that together and what we really see
is just a huge opportunity for growth. We aspire to grow that business double digits along with the double digit margins we expect to achieve this coming year. And as a result, I think we're going to continue to see that business do really well and be a real growth driver for Disney.
The profitability streaming operating inn come for the first quarter of twenty twenty six you got to be three hundred and seventy five million dollars. That's a lot less than the street was anticipating.
Why is that? I think it's primarily due to the fact that we're investing in product in the business and we're investing in bundling. So we all know that bundling ultimately is a very profitable thing to invest in. It increases retention, reduces churn, increases engagement, and that's not a theory. We have proof on that. But initially, when you do bundling,
you're making an investment on top of that. The things I was talking about related to recommendation engines and the like, all of that requires some investment in the early part of the year, but the paybacks on that are going to be tremendous. So we certainly feel great about it. And for the full year, the double digit margin we got to do is very much in line with what we had indicated a year ago.
How close a Disney and YouTube TV to a resolution and what do you plan to do? That kind of gives our audience right now a sense of what your strategy for distribution is on how you resolve that.
Well, in terms of where we are right now, it's an active negotiation, so that's obviously going to be driven by both sides. We don't control that. What I can tell you is We've put very much a very attractive deal on the table, very much in line with and in a few areas, perhaps better what we're doing with others, and we feel like we're making the right proposal to value the content that we create and to give consumers
access to this great content on YouTube. That said, if YouTube chooses not to engage with us on that front, obviously that content is available elsewhere. Our expectation is that at some point consumers will shift to other opportunities.
Well, consumers want ESPN and consumers could get ESPN the streaming app performing At the moment, how do you measure you own success there?
Yeah, it's early days. Obviously, the product has only been in the market as of the end of the quarter about five weeks so far off to a great start. And we think about it from two perspectives. Number one, the perspective of are we getting engagement, And the answer is yes. People love the Sports Center for You capability,
They love the Discover sports capability that we have. In addition to that, in terms of the subscriptions that we're getting, eighty percent of those are bundled subscriptions, So it's not just benefiting ESPN, it's benefiting the entirety of the Disney Plus ecosystem. So we feel great about it from both perspectives. It's off to a great start and what we've seen as engagement goes up when people do subscribe to the service.
Hugh, is this the last earnings report and quarter before Disney's board names a successor to Bob Iger's CEO.
That's a great question. So what the board has previously indicated, and I will say the board has been about as transparent as any CEO succession I have ever seen in my long career. What the board is indicated is that will take place sometime during the first calendar quarter of twenty six. We report in next February. Whether that'll be before or after, I'll be up to the board, but we should have it done by the end of March.
Disney CFO, Hugh Johnson, great talk again, Thank you very much,