UBS Global Media and Communications Conference December 9, 2024

UBS Global Media and

Communications Conference
December 9, 2024

Disney Speakers:

Hugh Johnston
Sr. Executive Vice President & Chief Financial Officer

©Disney
UBS Global Media and Communications Conference December 9, 2024

PRESENTATION

Voice Over

Certain statements in this discussion may constitute “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding
expectations, beliefs, plans or goals; strategy, focus or priorities; guidance; future growth and
performance, including opportunities for expansion and impact of strategic initiatives; future
profitability, margins and related drivers; future capital or content expenditures; trends; drivers
of demand; efficiencies; future product or service offerings (including nature, timing and
pricing); consumer and advertiser sentiment, behavior or demand; value of our intellectual
property and content offerings; impact of organizational structure and leadership decisions; and
other statements that are not historical in nature. Any information that is not historical in
nature is subject to change. These statements are made on the basis of management’s views
and assumptions regarding future events and business performance as of the time the
statements are made. Management does not undertake any obligation to update these
statements.

Actual results may differ materially from those expressed or implied. Such differences may
result from actions taken by the Company, including restructuring or strategic initiatives
(including capital investments, asset acquisitions or dispositions, new or expanded business
lines or cessation of certain operations), our execution of our business plans (including the
content we create and IP we invest in, our pricing decisions, our cost structure and our
management and other personnel decisions), our ability to execute on cost rationalization while
preserving revenue, the discovery of additional information or other business decisions, as well
as from developments beyond the Company’s control.

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Additional factors are set forth in the Company’s most recent Annual Report on Form 10-K and
subsequent filings with the Securities and Exchange Commission, including quarterly reports on
Form 10-Q.

John Hodulik – UBS

Thank you all for joining us. It's been great. Fantastic. Again, I'm John Hodulik, Media and
Telecom analyst here at UBS. And I'm very happy to introduce Hugh Johnston, the Senior
Executive Vice President and CFO of Disney. Hugh, thanks for joining us.

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Happy to be here.

John Hodulik – UBS

So to set the stage, Hugh, actually last week was your one-year anniversary as the CFO of
Disney, and just given all the change and learning a new industry and everything going on in
media, it must feel like 10 years.

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Well, I don't know if I'd go quite to that, but it's been an exciting year to say the least.

John Hodulik – UBS

So, to start us off and set the table for the rest of the conversation, can you talk a little bit about
the changes you've made at the company thus far, what changes you feel you still have to make,
and the financial position of Disney as we sit here looking out into 2025?

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Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Happy to talk a little bit about that. As you might imagine, for those of you who don't know, I
was with PepsiCo prior to coming to Disney for 35 years. So, it was not an insignificant decision
to make a -- to come over to Disney.

I had a hypothesis, as you do, in terms of joining a new company because you want to go in with
some sense as to what -- where you think the company is. And that was mostly around the
notion that the company was emerging from a period of industry disruption that had gone out
for at least the last five to seven years, maybe as many as 10 years.

The good news is that hypothesis has actually played out better than I would have expected.
The company clearly is emerging from that disruptive period as a winner, which is kind of what I
was assuming going in. And I thought there were a couple of places that I could probably add to
that sort of improved performance of the company.

Number one was I thought there was probably an opportunity on the cost side, so to be able to
reduce costs in certain areas and then take that money, deliver some to investors, and plow
some back into the business in terms of reinvestment.

Number two, I thought maybe -- Walt Disney has always been a well-managed company
financially -- I thought in terms of the planning and forecasting processes, there might be an
opportunity to make that a little bit tighter, which enables you to do two things: one, use your
assets more effectively; and number two, communicate better with investors.

And I think there's still opportunities to do that even more so. But those are probably a couple
of initial things that came in with, and it's playing out pretty well that way.

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John Hodulik – UBS

And are there any sort of major sort of tentpole things that you're still hoping to drive through
as we look out into '25?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

I mean, we need to continue to focus on eliminating unnecessary costs to put money back into
the big bets that we're making as a company. And you're all familiar with the big bets, of course:
the streaming bet, which is working out very well, and then the capital bet with the parks and
the cruise line and all of that. The more we can do to give ourselves breathing space by
managing costs tightly, I think the better off we're going to be as a company.

And we spent a lot of time -- I mentioned the forecasting and planning processes -- we spent a
lot of time during the course of the spring into the summer doing a long-range plan, then an
AOP, then we went back and revisited the long-range plan. And that led us to the guidance that
we provided to all of you, which candidly, I thought was quite important.

If you sort of take a big step back from it, which is relatively easy to do in your first year, we
were asking you all to fund two big bets for us. Number one, operating losses in streaming,
which you had done for four or five years to the tune of many billions of dollars. And number
two, capital into the parks and into the cruise line because we thought there were great returns
in that business. And given the size of the bets, as soon as we could reasonably give you a sense
as to what you should expect in terms of the returns on those bets, I thought it was important
for us to do that.

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So, I and the management team spent a lot of time and a lot of detailed planning, getting
ourselves aligned around it, such that we could give you that guidance, so that you knew what
the payback would look like roughly on the bets that we're making on your and our behalf.

John Hodulik – UBS

That's great. And that's a great framework. Why don't we start with Experiences? And maybe
sort of touch on cruise first. Obviously, it's not a huge piece of your business, but it's actually
growing very rapidly. With the launch of the Treasure, you now have six ships with seven more
in development. How should we think of the cruise business as a driver of that segment?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

It's going to be a significant contributor. As you noted, we're going to double the size of the fleet
over the course of the next several years.

It's funny. Cruise is a wonderful business. If you could own it for your family, you'd really want to
because it's got high margins. It's got good returns. Consumers absolutely love the product. It's
the highest reviewed product of any of the products that we have. And I mean really, really
exceptionally well-reviewed from a consumer perspective.

It's got lots of layers of competitive advantage because of all the IP that we put into the ships in
terms of sort of all the Disney characters and the Disney service model into the ships, where
you have a captive audience, and they really respond to the Disney service model as well.

And in addition to that, there's lots of untapped global growth potential on the cruise ship.

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So, you put all of that together and you say, yeah, if you're ever going to look at an investment
and say, does it have layers of advantage, does it have attractive financials, does it have a
consumer proposition? This is the one that does, and as a result, it will become a bigger and
bigger piece of the line of business over time.

John Hodulik – UBS

And how should we think of the -- you don't have to give us a number -- but how should we
think of the margins in that business, especially compared to, say, domestic parks? It's
meaningfully better, correct?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

They're -- I'll just call them, they're not -- they don't detract from the business by any stretch of
imagination. I'll leave it at that.

John Hodulik – UBS

You mentioned the big investment cycle going on at the company, especially at the parks, which
includes the largest ever expansion of Magic Kingdom, new Monsters Inc. Land at Hollywood
Studios, Indiana Jones and Encanto at Animal Kingdom, and many, many more. Can

you give us the sort of broad outlines as to the financial impact that the upgrades and
expansions will have in the parks business?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Happy to talk about that. I mean you all know the parks business is -- it's basically an asset of
one. It doesn't really have any material competition. Obviously, there's Universal and there's
other parks out there, but a Disney theme park is pretty unique in terms of the amount of IP in
it, the scale of the parks, the service, again, is a fairly unique asset.

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And you all see the financials on that. They're quite attractive. The return profile is terrific. The
growth profile is terrific. And we've obviously had tons and tons of success there and expect to
continue to have tons of success. So, as we looked at it, we still have a lot of untapped land
within the existing footprint of the parks, so expanding attractions and expanding capacity
allows us to expand attendance without deteriorating the service model. So, people feel good
about that.

In addition to that, the opportunity to leverage technology to make the guest experience so
much better by virtue of getting people through lines quickly. If you've been through a Disney
park, the number one challenge, obviously, is how do you get through the lines and all of that.
To the degree we can use technology to make that experience even better, we're going to do
that.

And then frankly, we're investing in the cast because ultimately, they are the front line. They are
the delivery of the service. Each one of those interactions matters a lot.

So, as we sort of look forward, we're basically creating new lands, new attractions, really across
just about all of the parks. And given the level of demand that's out there for it, we're expecting
to be able to both get increased attendance, get higher pricing because, again, you were
delivering more value. Value is what you get as a consumer, price is what you pay. People feel
good about the value they're getting, so we ought to be able to take more pricing in that.

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And as a result, we'll drive good financial results out of it, in line with the guidance that we all
shared with you of 6% to 8% OI growth this year and double -- or high single-digit growth in the
subsequent couple of years. 1

John Hodulik – UBS

So, you mentioned pricing. Is that something -- is that a comment more domestic or
international as well? And is it sort of -- I think you guys have, in the past, you've talked about
raising some prices on some peripheral areas, but not really the base, sort of, low end?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

We have to be smart about pricing, particularly being sensitive to the consumer and the
consumer who is sort of more focused on the value end of the offering. We want to be able to
tap into those families and build the habit of coming to Disneyland or Disney World not
onetime, but multiple times.

And as a result, when we tend to take pricing or add to per caps, it tends to happen in a couple
of areas. Number one, it tends to happen more at the premium end. So, the value end, which is
-- the value pricing is available, I believe, about 100 days a year -- those prices haven't moved up
much in recent years. It's the premium end that's moved up, and then the value-added services
that we have like Lightning Lane and those types of things. That's where -- again where we're
delivering more value-- we feel comfortable taking more price. Other than that, we're trying to -
- at the value end -- to keep people coming to the parks early in their family's lives, trying to
keep those prices in a place where it's accessible to them.

1
Guidance provided in posted Prepared Management Remarks dated November 14, 2024: FY25, 6% to 8%
Experiences segment OI growth compared to FY24; FY26, high single digit percentage Experiences segment OI
growth.

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John Hodulik – UBS

That makes sense. And then the international parks. Are the international parks all the way --
how do you think of the growth in that sort of sliver of the Experiences segment? And are they
all the way back from COVID at this point?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

I have to say I don't know that because I wasn't here for it, but I know they're doing very well.
And if I had to guess, I would guess they're probably all the way back, but it's probably worth
checking, looking at the numbers.

Look, we're optimistic about where the international parks are at right now. Last year, broadly,
was a pretty good year for the international parks. As we mentioned on the most recent call,
China was a little bit soft, and Paris was soft because of the Olympics, which, by the way, we
have history on.

And we know when the Olympic shows up, the park that is in that city tends to lose some
attendance. I will tell you, I was in Paris during that time frame, and I went and visited the park.
You could see it. People were coming to Paris for the Olympics or they weren't coming to Paris.
So, there were some crowds in Paris, but not nearly to the degree you would expect. The good
news is the month the Olympics were over, the attendance came right back. So, we certainly
feel good about that.

John Hodulik – UBS

You’re able to get on all the rides with no lines?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

It was relatively easy, yes.

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John Hodulik – UBS

So, lastly on parks, as you said, you gave guides for the 6% to 8% operating income growth this
year. We've gotten a lot of pushback, especially given maybe a bit of a softer consumer and
then new competition from the Epic Universe in Orlando. So how should we think of that 6% to
8% growth and the impact that the Epic might -- may have?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

So, there's a lot of pushes and pulls on that, but let me kind of go through it. First of all, we
mentioned on the call, it was likely to be more in the second half than in the first half. Why is
that? Number one, we had two hurricanes at Walt Disney World in the -- what is our first
quarter, the fourth quarter calendar otherwise. So those obviously had an impact. We also had
the prelaunch cost of the most recent ship, which is about $90 million dollars, and that's not an
insignificant number in the quarter.

In addition to that, we actually see more of the business building initiatives coming on through
the course of the year. So the Treasure, the new ship -- they typically make money in their first
quarter where we start to put people on the ship. That happens basically at New Year. So that
will be incremental operating income that will be coming basically from the moment we start.

Number two, we do have some vacation club properties coming on during the course of the
year and particularly in the latter half of the year. So that should be additional operating income
support.

And then last but not least, we have some negative overlaps that we’ll be going over, which will
be beneficial to the operating income growth rate as well. Number one, there was higher labor
costs in the last half of the year -- in the last half of '23 -- '24, sorry, in Disneyland Resort. And in
addition to that, the Disneyland Paris overlap that we were just talking about. So, you sort of
add all that up, and it does tilt toward the back half.

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More broadly, as we look at things, the consumer is actually doing okay right now. We obviously
saw a little bit of a hiccup in the summer with the parks. Right now, the consumer seems to be
doing fine. So from that perspective, we're quite confident, and we've got good visibility in
terms of the guide.
In terms of Epic, we actually have built some negative in for that. Whether it will be as
significant as we built into it remains to be seen, but we're pretty cautious and conservative on
that. That said, the history is you tend to get higher attendance in Orlando when there's
something big and new in the market. So, it may be a factor of, okay, the Universal guys will gain
a little bit of share, but we'll see more category growth than we see share loss. Net-net, it sort
of works out okay. But we have built a hedge in for that just to make sure we were covered.

John Hodulik – UBS

On the attendance side?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

On the attendance side.

John Hodulik – UBS

Got it. Makes sense. Okay.

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

By the way, one last thing on that. I mentioned this on the earnings call as well, but the early
bookings that we see for next summer are actually good. They’re up year-over-year. So know it’s
early, we’ve got a lot of time to go. But at least the data that we have suggests that it’s positive,
not negative.

John Hodulik – UBS

That would incorporate Epic Universe as well, right? People start --

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Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Absolutely.

John Hodulik – UBS

Makes sense. Maybe shifting to DTC. As you pointed out, you've seen major improvements in
profitability and are now targeting the 10% plus margins in fiscal ‘26, making it actually the
biggest driver of growth in EBIT in '26. Can you step back and sort of point to what the big
drivers of that growth are?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Happy to. I mean, number one, the biggest driver of all, of course, is the content that we have
on the service. That's what makes people want to go to the Disney+ service. And with the
recent content that we've been producing, it's really having the desired impact. Whether it's
Inside Out 2, which turned out to be the biggest animated movie ever, Deadpool, now Moana 2,
we've got Mufasa: The Lion King coming next. That movie content, really those big tentpoles do
drive people into the service and once they're in, they tend to stay.

They also tend to drive viewership of the movies that we had before. So Moana 2 did terrifically
well. The biggest movie watched on the services most recently was Moana. And this is across all
the services. It's doing incredibly well right now because people sort of like to refresh on what it
is, the stories were and all of that.

Number two is, actually, the TV series that we have right now. You saw with Shōgun and the like
-- we won 60 Emmys, did phenomenally well in terms of the creative side on TV as well. And
that, again, plays its way into the streaming service as they move from linear over into the
streaming side. So that's also super supportive.

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So, number one, content by far. Number two, we're clearly going to take some pricing. We did in
October. That's worked out very well as far as -- certainly feel good about that. Number three,
subscriber growth. In a lot of ways, you almost have to think about this business as a software-
like business. Each incremental subscriber basically brings very little cost. It's almost all sort of
incremental margin that comes with it. And then the decision we have to make is how much of
that margin do you deliver versus reinvest back in the product. So, password sharing, in
particular, is working out well for us in terms of subscriber growth, but that's going to be a big
driver. Ad monetization is going to be a big one for us and continues to be a big one for us. And
this is something where relative to our streaming competitors, we've got an awful lot of
experience with advertising monetization. We've built our own ad engines, and we've got a tech
stack that basically is second to none. And as a result, we're able to deliver audience like
basically nobody else can. And then you'll see G&A leverage as well. G&A, whether it's on the
tech side or whether it's on the operating side, even marketing will provide us with some
leverage.

So, you add all of those things up, you can see a pathway very easily to getting to the margins
that we've talked about. And again, that's '26. Our intent certainly isn't to stop at 10% margins
in '26, not by any stretch of the imagination. 2

John Hodulik – UBS

In terms of -- just a quick follow-up on the password sharing. Is that something we should see
gain momentum, the benefit as we move through 2025?

2
Operating margin for Entertainment SVOD DTC businesses (excluding our Hulu Live DMVPD service) is calculated
as operating income divided by revenue. Operating income for Entertainment SVOD DTC businesses (excluding our
Hulu Live DMVPD service) is a non-GAAP financial measure. The most comparable GAAP measure to this non-GAAP
measure is Entertainment segment operating income. See the discussion on page 26 for how we define and
calculate this measure and why the Company is not providing forward-looking quantitative reconciliation of
operating income (and related margin) for our Entertainment SVOD DTC businesses (excluding our Hulu Live
DMVPD service) to the most comparable GAAP measure.

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Hugh Johnston – Chief Financial Officer, The Walt Disney Company

It'll -- you'll get a little bit of it at the beginning, and then each quarter should be incrementally
stronger in terms of the benefit.

John Hodulik – UBS

Great. Bigger picture, we can see your DTC business is converging. And Bob has talked about
Disney+ as ultimately being the home of all things Disney. Can you help frame the long-term
product vision for Disney+?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Happy to talk about that. It's funny, I actually view Disney+ as the most strategic asset that we
have in the company right now for a couple of reasons.

Number one, it takes Disney from being more of a business-to-business company into being a
direct-to-consumer company, where you have relationships with right now, 175 million
households and over time, I expect that number to continue to grow. 3 When you're able to
build that level of insight around how consumers are consuming entertainment, that's an
enormously valuable asset for the entire rest of the company because all of a sudden, you can
actually market to people in a much more targeted way.

As I think about what Disney+ can be, I really think about it as it can be the place you get up in
the morning and you go to Disney+. Do you want to get the news? Great. You can find the news
on Disney+. At noon, do you want to check in on sports? Great. With the ESPN tile, you can
check in on Disney+. In the evening, you want to watch some entertainment? Great. Whether
it's the Hulu side or whether it's the Disney side, phenomenal amount of entertainment that sits
on that asset. On the weekend, you want to sit down and watch a ball game? ESPN is the place.

3
Ended FY24 with 174.7 million Disney+ Core and Hulu paid subscriptions in aggregate

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That brand portfolio inside of Disney+ is basically second to none. No one else has news plus
sports plus general entertainment plus all family entertainment. I mean there's just so many
potential elements of where we can take this thing. It has the potential to be truly the portal,
not only into all things Disney, but over time, obviously, we may license some other things to be
on the platform as well. But I think it can be the go-to entertainment asset.

John Hodulik – UBS

That makes sense. The -- so ESPN, you're talking about sports being on the platform, and the
ESPN tile now is on the Disney+ home screen. Probably too early to talk about what you've seen
so far, but what do you hope to sort of drive?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

It's only been a handful of days, so it is a bit early on that front. In many ways, it's a little bit of
what I was just talking about, but then to sort of zero it into what it is that ESPN+ can do for the
Disney+ asset. It creates, in many ways, an objector to churn.

And when you think about -- what drives churn? And somebody says, well, you know what,
there's not that much I need right now, and it's easy for me to get out of it, so let me churn out,
and then I'll come back in later. What you really need in the household is one objector.
Somebody to say, no, no, no, we can't turn it off because of…

And it may be someone who likes general entertainment. It may be the Disney+ -- the kids
movies and things like that, the all-family types of things. It may be sports. Oh, no, we can't turn
it off because we've got ESPN right now. I'm in season for my team. It may be news. Somebody
who's just a news junkie and says, what, no, there's no way I'm going to give up that asset. And
by virtue of putting in all of these assets, you really -- you see the churn go down. I mean we've
already proven that. So, in terms of what it does for ESPN, you think right now, what we're

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essentially doing is getting people used to the idea of finding ESPN on Disney+ as opposed to
finding it elsewhere.

Now when we finally launch ESPN flagship, which is going to be a much more sophisticated
product sometime in early fall of next year, that product is going to be about much more
interaction. It's really not going to be just an analogue product delivered digitally, but it will be a
true digital native type of product. So if you want to do ESPN -- betting through ESPN BET, you'd
be able to do it on the app. 4 If you want to do fantasy tracking, you'd be able to do it through
ESPN+. If you want to do e-commerce connected to sports, the opportunities will be there to do
that. And there's a whole variety of other product features that we're working on right now that
you'll see in a few months.

I don't want to give the whole thing away at this point. Jimmy Pitaro will kill me. But the reality
of it is this is really going to be an extremely interactive sports product, and sports fans love to
be interacting with sports. It's part of what motivates them to be sports fan. I think by virtue of
putting it on Disney+, there's huge benefit to the service of having ESPN. And there's huge
benefit to ESPN of being on the service. It really works both ways.

John Hodulik – UBS

And lastly, before we move off DTC -- news, I think is a new category. I don't believe it's on there
now.

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

It's on there. You can find it. We can probably make it a little more prominent, but more to
come on that some time, too.

4
The ESPN App will allow tracking of bets placed through ESPN Bet account linking

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John Hodulik – UBS

Maybe turning to linear real quick. As you manage through the changing linear landscape, how
do you think about the structure of affiliate renewals going forward and other levers you have
to manage the business?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

So, a couple of things on linear. Number one, in terms of the deals that we've done most
recently, they're really kind of bespoke deals to the individual that we're negotiating with.
In terms of the Charter deal, it was sort of a hybrid deal. It gave us some level of DTC access. So
from that standpoint, worked out very well for them, worked out very well for us.

With DIRECTV, basically, the deal allowed us to keep our entire broad array of channels available
on DIRECTV. So we were certainly happy with that outcome.

So, you really do have to approach each of them with the, okay, what is the person on the other
side of the table looking to do? What are we looking to do? And then be very smart about
cutting a deal on that.

In terms of linear more broadly, this is one of the beauties of being one of the three really big
streaming services in the United States. When people -- when consumers choose to cut the cord
and they're going to choose that at their own rate based on their own individual circumstances,
we're there to catch them. And when they come over to the streaming side, we're perfectly
happy with that. To the degree that they stay on the linear side, we're perfectly fine with that as
well. We've really built, in a lot of ways, a natural hedge.

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John Hodulik – UBS

Turning to sports, and you talked about the flagship launch and all the capabilities there. How
should we think about expenses associated with the flagship launch? For instance, I would
imagine that there's likely to be some big promotional push once you launch next year?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

The expenses will mostly be marketing, what will sort of come through incrementally. There'll
be some money in technology, but we've already built so much of that. The technology piece of
it will be relatively less.

So, as you might imagine, in a couple of months leading up to the launch and in a couple of
months post the launch, you'll see an uptick in marketing expenses. Obviously, we've
incorporated that -- all that into the guide. But you've got to go create awareness with these
products. And the ESPN team is pretty good about reaching out to sports fans. So I'm pretty
optimistic they'll be able to spend the money efficiently.

John Hodulik – UBS

And do you foresee the launch of flagship and the sale of that product helping to lower the
churn at Disney+ and Hulu?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Yes. No, I think --

John Hodulik – UBS

It's back to your one objector issue.

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Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Exactly. It just sort of creates that incremental objective. I mean the more things you can put
into the service -- and ESPN sports is obviously an immense asset in this country -- the more
things we can put into the service that are value-add without creating too much clutter and
confusion, the better off it will be for Disney+ and the better off for ESPN. It will get them more
viewers.

John Hodulik – UBS

Going back to your guidance, there was some surprise on the guide for sports growth in EBIT,
operating income in '26. I think for '25, you have it sort of the organic is sort of down 10%. Then
you have nice growth in '26 despite the fact that you have NBA, potentially UFC. Maybe talk
about, sort of, your sports portfolio and, sort of, how you see that evolving over time. And do
you need to bulk up for a different -- do you need more assets as we go into the launch of --

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

No. No, we really don't. We feel good about the portfolio of rights deals and assets that we
have. I mean, if you look at how we try to run ESPN, and ESPN has somewhere in the 30s to
maybe low 40s in terms of market share of sports viewership.

We don't need to have everything. What we need to have is the critical mass of the right things.
And if you look at what we have right now between the NFL and college football and the NBA,
all of the things that we have are really sort of tentpole types of sports. And then we fill around
them with other sports.

With the tentpoles, we've pretty well got our deals in place well into the next decade, so we've
got phenomenal predictability. I mean in terms of predicting sort of outcomes on the cost side,
ESPN is pretty straightforward in that regard.

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So, we have had some escalators built into these deals, and these are things that are easy to
model and easy to build in. But we don't feel like we need to go out and do something
dramatically different in terms of the portfolio of assets we have. And we feel like we've got
really strong visibility into the future on that front.

In terms of what happens beyond those tentpoles, we'll sort of see and play it out as it goes. In
a lot of ways, one of the things that's beneficial to ESPN is we actually, to some degree, have the
ability through the storytelling and through our reach to sort of build a sport -- an emerging
sport or a nascent sport -- into something bigger. If you look at how women's basketball went
over the last couple of years, obviously, Caitlin Clark was a big story, and it's sort of all the things
that were happening inside of women's college basketball. But ESPN also took it and really blew
out those stories and made them much more visible and much more notable.

In fact, the women's college basketball championships were some of the highest-rated
programs we had across any sport this year. It's truly amazing. And I think ESPN was a
contributor to it. Obviously, the players are the story, but our ability to do the storytelling kind
of basically amplifies it, which makes us attractive from a rights deal perspective. If you're the
owner of the right, you want somebody who can make your sport look really, really
good.

John Hodulik – UBS

Last on sports is Venu. We talked about it with Steve Tomsic at Fox. Is it -- how important would
you say it is to the overall sports distribution strategy, or your distribution of your sports rights?
And if it doesn't, sort of, move forward given the -- does that change your approach at all?

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Hugh Johnston – Chief Financial Officer, The Walt Disney Company

No. We're fine either way. I mean obviously, we thought it was a good idea. We still think -- if
you go back, ESPN's strategy is to sort of meet the fan where they want to be met. And for a
subset of sports fans, they don't necessarily need to have 100% of sports, but they'd like to have
something more than just ESPN.

That was the concept behind Venu was to give that sports fan the consumer access that they
want at a price point that they found attractive. If it happens, I think it's great for sports fans. If
it doesn't happen, I think it will be a shame for sports fans, but we'll see where it goes.

John Hodulik – UBS

I agree. Actually, one last question. ESPN+ versus the ESPN flagship product, is that -- I think I
remember reading that they eventually get folded in from -- is that from day one?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

We haven't declared at all specifically how -- what the naming conventions are going to be, but I
would think of ESPN+ premium being what flagship is going to be. Flagship's just an internal
name. I don't -- we're not going to go with that. It's not the public name.

John Hodulik – UBS

Two more topics. Turning to content. As you pointed out, the studios had a string of recent
successes, and it looks like the creative output is back on track. What should we attribute this
sort of pretty dramatic, I would say, improvement in the output and the sort of resonance that
you're seeing behind your content over the last year, year and a half?

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Hugh Johnston – Chief Financial Officer, The Walt Disney Company

It's funny. When I came to Disney, part of the conversation was around output of the creative
side and the studios and what is it that should be expected. And the team was firmly committed
to the notion of, look, when we launch streaming, we tried to get too much out of the studios.
And the creative talent isn't infinitely expandable. I mean, there's a limited number of human
beings who can do this stuff.
And when they pushed them to go faster to create more content for the streaming service,
candidly, quality suffered. And you could see it. And consumers could see it, and you saw it in
the box office, and you saw it in terms of the TV ratings as well.

When Bob came back, one of the things he realized very quickly is we need to raise the bar on
quality, and one of the ways we're going to do that is we're going to slow down a bit on
quantity. Now I started saying that when I started visiting all of you back in January or February
of this year. Maybe I didn't have a lot of credibility at that point. It's like what does the soda guy
know about making movies? But I was really representing the team message on that one. And I
think what you've seen play out this year is exactly that.

Again, I'll go back to the whether Inside Out 2 or whether it's Deadpool or whether it's the way
Moana 2 has taken off, or all of the Emmy's on the TV side, by contracting a bit on output, the
quality of the output has gone up dramatically. And I've sat in lots of meetings now watching
them give notes on movies and things like that. You can see the level of detail that people get
into to take those movies from good to great. It's a lot of grinding, painstaking work. It's
impressive to watch.

But the result of it is you're seeing, frankly, much, much higher-quality output. And as we look
towards '25, whether it's Captain America or Lilo & Stitch, I've got a lot of optimism on that
front as well. And Mufasa coming up, which I've seen, I think it's going to be a phenomenal
movie. I think people are actually going to love this movie. So from that standpoint, very, very

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optimistic that this creative turn is not a so-called lottery ticket. This is actually -- there's a
process here, and that process is going to sustain itself over time.

And the best proof point of it is, before the push on quantity came kind of 2015 to 2019, Disney
was producing multiple billion dollar hits every year. Looks like we're back to that. So, I think the
proof point is not just meet the horizon -- or just showing a short period of evidence. I think
there's a longer period of evidence that really supports that.

And as you know, and I believe many of you know as well, that the ability to monetize creative
inside of Disney right now is probably greater than it's ever been partly because of the
streaming service, partly because now when we do an attraction, whether it's an attraction in
the parks or an attraction on the ships, everything is connected to Disney IP. So, it used to be
there were things in the parks that were just sort of these random attractions, and they were
perfectly fine, but they weren't part of the Disney ecosystem. And the stuff that's within the
Disney ecosystem really monetizes tremendously well.

John Hodulik – UBS

Again, when you provided your guidance, you sort of laid out a content spend of about $26
billion dollars, which is up only slightly compared to the fiscal ‘24 numbers. And I think within
that, you obviously you have some sports rights inflation, so.

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

$26 or $24 billion? 5

John Hodulik – UBS

Was it $26? I might have a typo here.

5
The Company currently expects its fiscal 2025 spend on produced and licensed content to be approximately $24
billion including sports rights but excluding Star India

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Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Okay.

John Hodulik – UBS

So, clarification on the content spend, and then is that the right number? And how should we
think of that -- maybe just the entertainment spend piece going forward?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

I think for the most part, that's a good number. The one place you might see it escalate a little
bit, not the near term, but over the course of the next couple of years, is international
streaming. Because there's an opportunity, I think, to create some local programming that
would help grow the subscriber base in that business even more so. That to me may be the one
opportunity.

But again, it's not going to be disruptive to the guidance. It's not going to be disruptive to
anything that we've shared with all of you. But I look at international on the streaming side as a
good incremental opportunity for us at relatively high margins. So -- but aside from that, I think
that number, whether it's $26 or $24, is a good number, and it's one that we ought to be able to
run with for a few years.

John Hodulik – UBS

And from an international standpoint, you're talking about local content in the DTC business
that can help drive the subscriber growth outside of the US.

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Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Things like telenovelas in Latin America or in Korea, we've had a lot of -- or in Asia, we've got a
lot of success with some Korean dramas and things like that. Same thing will be true, I believe,
in Europe.

But it's important to remember on that, that's not a -- there is no international. There are
segments of the world. You target that segment. If you believe you can drive good returns out of
it, it's an incremental business proposition that will do nothing but make us more profitable in
streaming.

John Hodulik – UBS

Wrapping up, obviously a lot of moving parts at Disney that we've addressed here today and a
number of big projects that you have moving forward. How would you describe the visibility
into the financial growth that you've laid out at this stage in the process?

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

I think it's actually quite good. I mean, I've talked a lot about the notion of Disney being an
earnings compounder. Because the brands are so strong and the IP is so strong and our ability to
take price is consistent and our ability to manage cost is fairly -- there's a good opportunity
there as well.

So, as I sort of said -- and look at all of the work that we did in the long-range planning process,
this was very detailed, painstaking work to make sure we really understood what was
happening on the cost side, what our expectations were on the return side, lots of in-depth
analysis.

So, I do feel like we've got pretty good visibility, number one. And number two, because you
can't predict everything perfectly, we've got levers to manage so that if we do get surprised,

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whether it's in the parks, whether we get surprised elsewhere in the portfolio, we have the
ability to pull those levers and to deliver the guidance regardless of what's dealt to us in those
scenarios.

John Hodulik – UBS

Sounds good. It’s a great way to wrap up. Thanks, Hugh.

Hugh Johnston – Chief Financial Officer, The Walt Disney Company

Thank you. Appreciate the time.

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Non-GAAP Financial Measures

Operating Income for Entertainment SVOD DTC businesses (excluding our Hulu Live DMVPD service)

Operating income for Entertainment SVOD DTC businesses (excluding our Hulu Live DMVPD service)
consists of operating income for the Direct-to-Consumer line of business at the Entertainment segment
less our Hulu Live DMVPD service. The Company uses operating income (and related margin) for
Entertainment SVOD DTC businesses (excluding our Hulu Live DMVPD service) as a measure of the
performance of our Entertainment SVOD direct-to-consumer services separate from our Hulu Live
DMVPD service, which we believe assists investors by allowing them to evaluate the performance of
these SVOD direct-to-consumer services. The Company is not providing the forward-looking measure
Entertainment segment operating income (and related margin), which is the most directly comparable
GAAP measure to operating income (and related margin) for Entertainment SVOD DTC businesses
(excluding our Hulu Live DMVPD service) or quantitative reconciliation of forward-looking operating
income (and related margin) for our Entertainment SVOD DTC businesses (excluding our Hulu Live
DMVPD service) or quantitative reconciliation of forward-looking operating income (and related margin)
for our Entertainment SVOD DTC businesses (excluding our Hulu Live DMVPD service) to the most
directly comparable GAAP measure. The Company is unable to predict or estimate with reasonable
certainty the ultimate outcome of certain significant items required for such GAAP and non-GAAP
measures without unreasonable effort. Information about other adjusting items that is currently not
available to the Company could have a potentially unpredictable and significant impact on future GAAP
and non-GAAP financial results.

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Forward-Looking Statements

Certain statements in this discussion may constitute “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements regarding our expectations, beliefs, plans, financial prospects, trends or outlook
and guidance; financial or performance estimates and expectations (including estimated or expected revenues, earnings, operating
income and margins) and expected drivers; business plans and opportunities; future programming and production costs, capital
expenditures and investments, including opportunities for growth and expansion; impact of organizational structure and leadership
decisions; plans, expectations or drivers, as applicable, for direct-to-consumer profitability, advertising, revenue and subscriber
growth, pricing, product acceptance and enhancements, expansion, changes to subscription offerings, churn, engagement and
margins; anticipated demand, financial prospects, timing, availability, pricing, utilization or nature of our offerings; consumer and
advertiser sentiment, behavior or demand; cost reductions and available efficiencies; strategies and strategic priorities and
opportunities; expected benefits of new initiatives and offerings; value of our intellectual property, content offerings, businesses
and assets, including franchises and brands; and other statements that are not historical in nature. Any information that is not
historical in nature is subject to change. These statements are made on the basis of management’s views and assumptions
regarding future events and business performance as of the time the statements are made. Management does not undertake any
obligation to update these statements.

Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the
Company, including restructuring or strategic initiatives (including capital investments, asset acquisitions or dispositions, new or
expanded business lines or cessation of certain operations), our execution of our business plans (including the content we create
and IP we invest in, our pricing decisions, our cost structure and our management and other personnel decisions), our ability to
quickly execute on cost rationalization while preserving revenue, the discovery of additional information or other business
decisions, as well as from developments beyond the Company’s control, including:

• the occurrence of subsequent events;

• deterioration in domestic and global economic conditions or a failure of conditions to improve as anticipated;
• deterioration in or pressures from competitive conditions, including competition to create or acquire content,
competition for talent and competition for advertising revenue;
• consumer preferences and acceptance of our content, offerings, pricing model and price increases, and corresponding
subscriber additions and churn, and the market for advertising sales on our direct-to-consumer services and linear
networks;
• health concerns and their impact on our businesses and productions;
• international, political or military developments;
• regulatory and legal developments;
• technological developments;
• labor markets and activities, including work stoppages;
• adverse weather conditions or natural disasters; and
• availability of content.

Such developments may further affect entertainment, travel and leisure businesses generally and may, among other things, affect
(or further affect, as applicable):

• our operations, business plans or profitability, including direct-to-consumer profitability;

• demand for our products and services;
• the performance of the Company’s content;
• our ability to create or obtain desirable content at or under the value we assign the content;
• the advertising market for programming;
• taxation; and
• performance of some or all Company businesses either directly or through their impact on those who distribute our
products.

Additional factors are set forth in the Company’s most recent Annual Report on Form 10-K, including under the captions “Risk
Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” quarterly
reports on Form 10-Q, including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and subsequent filings with the Securities and Exchange Commission.
The terms “Company,” “Disney,” “we,” and “our” are used above and in this discussion to refer collectively to the parent company
and the subsidiaries through which our various businesses are actually conducted.

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