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Indiana University Advertiser / Mint Mobile Advertiser
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Bloomberg Tech Host
We welcome Bloomberg Tech co hosts Ed.
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Disney CFO Hugh Johnston
Ludlow and Caroline Hyde and they are.
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Bloomberg Tech Host
Joined by Disney CFO 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. Hugh, 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.
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Disney CFO Hugh Johnston
Yeah, actually I thought it was a good quarter Overall and frankly versus Wall street we beat expectations by 6 cents. So as you noted, the experiences business did very, very well. 6% revenue growth, 13% 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, 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 84 million bucks and wasn't in the numbers this year. Take that out apples to apples 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 19% for the year and 19% CAGR for the last three years. And that's why we both guided to double digit epos growth in 26 and on top of that doubled the share repurchase and increased the dividend by 50%.
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Bloomberg Tech Co-host (possibly Caroline Hyde or Ed Ludlow)
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 2026. What are the factors behind that? What allows you to have the confidence to have such visibility into how that streaming business is going?
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Disney CFO Hugh Johnston
Well, of course streaming always begins with the quality of, of the content that we have and the quality slate that we have going forward. So if you think about the film slate we have right now, number one, we, we obviously have Zootopia 2 followed by Avatar, followed by the Devil Wears Prada 2 followed by Toy Story 5, Moana 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 tentpole 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 within, 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 the that business do really well and be a real growth driver for Disney.
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Bloomberg Tech Host
But the profitability, Hughes streaming operating income for the first quarter of 2026, you got to be $375 million. That's a lot less than the street was anticipating. Why is that?
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Disney CFO Hugh Johnston
I think it's primarily due to the fact that we're investing in product, in the business and we're investing in, in. 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, 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, we had indicated a year ago.
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Bloomberg Tech Co-host (possibly Caroline Hyde or Ed Ludlow)
Hugh, how close are 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.
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Disney CFO Hugh Johnston
Well, in terms of where we are right now, it's an act of negotiation. So that's obviously, obviously going to be driven by both sides. We don't control that. What I can tell you is we put very much a very attractive deal on the table, very much in line with and in a few areas, perhaps better than what we're doing with, 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, if YouTube chooses not to, to engage with us on that front, obviously that content is available elsewhere. And our expectation is that at some point consumers will shift other to other opportunities.
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Bloomberg Tech Host
While consumers want ESPN and consumers could get espn, the streaming app, performing at the moment, how do you measure your own success there?
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Disney CFO Hugh Johnston
Yeah, it's early days. Obviously the product's 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 SportsCenter 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, getting 80% 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 is engagement goes up when people do subscribe to the service.
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Bloomberg Tech Co-host (possibly Caroline Hyde or Ed Ludlow)
Hugh, is this the last earnings report and quarter before Disney's board names a successor to Bob Iger's CEO?
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Disney CFO Hugh Johnston
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 has indicated is that will take place sometime during the first calendar quarter of 26. We report in in next February. Whether that'll be before or after, I'll be up to the board. But we should have it done by, by the end of March.
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Bloomberg Tech Co-host (possibly Caroline Hyde or Ed Ludlow)
Disney CFO Hugh Johnson, Great to talk again. Thank you very much.
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Bloomberg Tech Host
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Disney CFO Hugh Johnston
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Indiana University Advertiser / Mint Mobile Advertiser
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