1
00:00:02,520 --> 00:00:07,920
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:07,920 --> 00:00:10,200
Speaker 2: So to the earnings and focus on Disney. The company's

3
00:00:10,240 --> 00:00:13,560
Speaker 2: first quarter earnings topping estimates, fueled by success in its

4
00:00:13,560 --> 00:00:16,880
Speaker 2: movie studios and streaming business. The stock is positive and

5
00:00:16,960 --> 00:00:20,280
Speaker 2: joining us Now's the Disney CFO Hugh Johnston. Welcome back

6
00:00:20,320 --> 00:00:22,400
Speaker 2: to the program sir. We'll talk about how solid these

7
00:00:22,480 --> 00:00:25,040
Speaker 2: numbers aren't just the moment. There's one headline the least

8
00:00:25,040 --> 00:00:26,920
Speaker 2: from me. We're talking about a little bit earlier this morning.

9
00:00:26,920 --> 00:00:29,080
Speaker 2: We'd love an explanation from you on it. Just seeing

10
00:00:29,080 --> 00:00:32,960
Speaker 2: a second quarter modest decline in Disney Plus subscribers quarter

11
00:00:33,080 --> 00:00:35,760
Speaker 2: on quarter, could you explain that we tested the limit

12
00:00:35,840 --> 00:00:38,240
Speaker 2: of price tolerance and consumers. What's going on there?

13
00:00:39,400 --> 00:00:42,800
Speaker 1: Good morning, Jonathan, No, I don't think so at all. Actually,

14
00:00:42,880 --> 00:00:46,200
Speaker 1: that's really sort of more seasonal decline than anything else.

15
00:00:46,640 --> 00:00:48,680
Speaker 1: A year over year will will certainly be up, so

16
00:00:49,200 --> 00:00:52,760
Speaker 1: certainly not concerned from that perspective. More broadly, the streaming

17
00:00:52,800 --> 00:00:56,360
Speaker 1: business is doing extremely well. This is a business were

18
00:00:56,560 --> 00:00:58,640
Speaker 1: we invested pretty heavily in a couple of years ago,

19
00:00:59,080 --> 00:01:02,160
Speaker 1: and what you're seeing now is the benefit of those investments.

20
00:01:02,240 --> 00:01:07,040
Speaker 1: Our expectation is will continue to grow subs, will improve margins.

21
00:01:07,080 --> 00:01:08,800
Speaker 1: We should make more than a billion dollars in that

22
00:01:08,880 --> 00:01:11,839
Speaker 1: business this year, and next year we're looking at double

23
00:01:11,840 --> 00:01:15,240
Speaker 1: digit margins in that business. So certainly a ton of

24
00:01:15,280 --> 00:01:18,120
Speaker 1: positive momentum. Now you get into the question of why.

25
00:01:18,319 --> 00:01:20,880
Speaker 1: A lot of it is the great content that's coming

26
00:01:20,920 --> 00:01:23,280
Speaker 1: from the studio side of the house, both on the

27
00:01:23,319 --> 00:01:24,280
Speaker 1: TV and the.

28
00:01:24,200 --> 00:01:26,440
Speaker 3: Movie side of our entertainment business.

29
00:01:26,959 --> 00:01:31,160
Speaker 1: We Wanta to Inside Out to Deadpool, all terrific hits,

30
00:01:31,240 --> 00:01:34,880
Speaker 1: and on the TV side, the combination of Abbot, Elementary,

31
00:01:35,080 --> 00:01:40,119
Speaker 1: Showgun and high potential causing viewership to grow. We're seeing

32
00:01:40,200 --> 00:01:44,440
Speaker 1: higher engagement, We're seeing churn ultimately coming down over the

33
00:01:44,480 --> 00:01:45,240
Speaker 1: course of this year.

34
00:01:45,520 --> 00:01:46,399
Speaker 3: So we feel like.

35
00:01:46,319 --> 00:01:48,440
Speaker 1: The streaming business is going to be one of the

36
00:01:48,480 --> 00:01:50,520
Speaker 1: big drivers for our company going forward.

37
00:01:50,600 --> 00:01:52,680
Speaker 2: Here, you know how much I love Showgun and least

38
00:01:52,720 --> 00:01:54,600
Speaker 2: so I can say love Momana two as well. So

39
00:01:54,720 --> 00:01:58,000
Speaker 2: the content SLEN is looking pretty good so far. I

40
00:01:58,040 --> 00:02:00,080
Speaker 2: did want to talk about the cost issue though, and

41
00:02:00,120 --> 00:02:02,920
Speaker 2: clearly not an issue from you, so I appreciate the explanation.

42
00:02:03,240 --> 00:02:05,480
Speaker 2: Conversation we've had over the last few days or so

43
00:02:05,680 --> 00:02:08,200
Speaker 2: is if we get tariffs, can companies pass on the costs.

44
00:02:08,360 --> 00:02:10,639
Speaker 2: I'd like to know from your perspective and for the company,

45
00:02:10,840 --> 00:02:13,280
Speaker 2: the additional tarists that have gone onto China, how that

46
00:02:13,320 --> 00:02:15,680
Speaker 2: could impact your business. How are you thinking about things?

47
00:02:16,880 --> 00:02:20,680
Speaker 1: Yeah, right now, based on what's been proposed, And obviously

48
00:02:20,760 --> 00:02:23,320
Speaker 1: this is a rapidly evolving environment, so we're going to

49
00:02:23,360 --> 00:02:25,120
Speaker 1: react as we learn things.

50
00:02:25,840 --> 00:02:27,440
Speaker 3: The impact would be im material to us.

51
00:02:27,600 --> 00:02:30,760
Speaker 1: So from that perspective, really, the Walt Disney Company will

52
00:02:30,760 --> 00:02:32,720
Speaker 1: be fine based on what's on the table right now.

53
00:02:33,360 --> 00:02:35,760
Speaker 4: At the same time, there's a question about the American

54
00:02:35,840 --> 00:02:39,880
Speaker 4: brand at a time when they're increasing tensions between the

55
00:02:40,040 --> 00:02:44,120
Speaker 4: US and China, the US and Europe. Given the fact

56
00:02:44,400 --> 00:02:47,280
Speaker 4: that the experiences side of your business has been such

57
00:02:47,280 --> 00:02:50,160
Speaker 4: a driver of growth for you, are you concerned Have

58
00:02:50,240 --> 00:02:53,760
Speaker 4: you seen any pullback in attendance in some of the

59
00:02:53,840 --> 00:02:59,239
Speaker 4: areas like Shanghai, like France, like Paris? They could potentially

60
00:03:00,240 --> 00:03:02,359
Speaker 4: have some feelings around the negotiations.

61
00:03:03,600 --> 00:03:07,080
Speaker 1: Now, broadly speaking, the international parks business did very well.

62
00:03:07,120 --> 00:03:10,600
Speaker 1: Profitability was up twenty eight percent for the quarter. Attendance

63
00:03:10,639 --> 00:03:14,840
Speaker 1: broadly speaking was up, So from that perspective, we certainly

64
00:03:14,840 --> 00:03:18,600
Speaker 1: feel good. Disneyland Paris actually had a terrific quarter, so

65
00:03:19,000 --> 00:03:22,520
Speaker 1: freely positive in that regard. Candidly, in many ways, what

66
00:03:22,560 --> 00:03:25,359
Speaker 1: the Walt Disney Company represents is an opportunity to.

67
00:03:25,320 --> 00:03:27,840
Speaker 3: Get away from all of the things that are happening.

68
00:03:27,480 --> 00:03:30,440
Speaker 1: In the world right Our job is to basically bring

69
00:03:30,480 --> 00:03:34,520
Speaker 1: families joy, bring them together, give them smiles. So I

70
00:03:34,560 --> 00:03:36,800
Speaker 1: think in many ways we're not a part of that

71
00:03:36,960 --> 00:03:39,040
Speaker 1: conversation at the.

72
00:03:38,960 --> 00:03:41,000
Speaker 4: Same time, and it's sort of pulling together the idea

73
00:03:41,040 --> 00:03:45,200
Speaker 4: of experiences and the smiles and the streaming business, the

74
00:03:45,280 --> 00:03:47,760
Speaker 4: idea that how much are people willing to pay for this?

75
00:03:48,080 --> 00:03:50,560
Speaker 4: John was alluding to that with terifs, but just more broadly,

76
00:03:50,960 --> 00:03:53,800
Speaker 4: how much are you seeing consumers push back against some

77
00:03:53,800 --> 00:03:56,360
Speaker 4: of the price increases, whether it's at the parks or

78
00:03:56,400 --> 00:03:59,080
Speaker 4: whether it's at the streaming services, just simply because of

79
00:03:59,080 --> 00:04:00,640
Speaker 4: how much prices of our already gone up.

80
00:04:01,720 --> 00:04:05,040
Speaker 1: Yeah, We're not to be perfectly candid, and I think

81
00:04:05,080 --> 00:04:09,800
Speaker 1: it's always important to remember from a consumer perspective, prices

82
00:04:09,880 --> 00:04:13,160
Speaker 1: what you pay, and value is what you get, and

83
00:04:13,440 --> 00:04:16,440
Speaker 1: if you deliver sufficient value to the consumer, they are

84
00:04:16,480 --> 00:04:19,000
Speaker 1: willing to pay the price. And I you see that

85
00:04:19,040 --> 00:04:22,080
Speaker 1: going on broadly with companies these days. Companies that deliver

86
00:04:22,160 --> 00:04:25,760
Speaker 1: a lot of value they're pricing is being accepted by consumers.

87
00:04:25,800 --> 00:04:28,359
Speaker 1: And if you look at the value of a Disney vacation,

88
00:04:28,480 --> 00:04:30,440
Speaker 1: if you look at the value of all the things

89
00:04:30,440 --> 00:04:33,640
Speaker 1: that we're able to deliver on the streaming service, people

90
00:04:33,680 --> 00:04:35,800
Speaker 1: are willing to pay to pay the price for that

91
00:04:35,880 --> 00:04:38,440
Speaker 1: because frankly, they're getting a lot for it. So we

92
00:04:38,480 --> 00:04:41,120
Speaker 1: haven't seen pushback really in a material way at all

93
00:04:41,120 --> 00:04:41,760
Speaker 1: in that regard.

94
00:04:42,000 --> 00:04:43,960
Speaker 2: You're speaking of the streaming business. Can we talk about

95
00:04:44,000 --> 00:04:46,599
Speaker 2: Hulu just a little bit more. Where are we with

96
00:04:46,720 --> 00:04:50,000
Speaker 2: the negotiations with Comcast and we make it any progress.

97
00:04:51,960 --> 00:04:54,800
Speaker 1: We're still in the process and I probably won't kind

98
00:04:54,800 --> 00:04:57,480
Speaker 1: of go any further than that. I'd expect we'll get

99
00:04:57,480 --> 00:04:58,200
Speaker 1: some resolution.

100
00:04:58,360 --> 00:05:01,120
Speaker 2: Sometimes we'll holding things up few What are the sticking points?

101
00:05:02,279 --> 00:05:05,719
Speaker 1: Oh, it's I think just the usual people have different

102
00:05:05,720 --> 00:05:07,719
Speaker 1: points of view on the value of the assets.

103
00:05:07,800 --> 00:05:09,720
Speaker 3: So nothing more than that.

104
00:05:10,160 --> 00:05:12,760
Speaker 4: There is a content question here, Hugh, about what the

105
00:05:12,839 --> 00:05:16,120
Speaker 4: driver of growth is going to be from a streaming perspective,

106
00:05:16,279 --> 00:05:20,320
Speaker 4: whether it's instrumental and getting involved in some of the

107
00:05:20,360 --> 00:05:23,080
Speaker 4: sports world, or whether you can kind of lean into

108
00:05:23,279 --> 00:05:27,040
Speaker 4: existing brands. How you do content creation at a time

109
00:05:27,520 --> 00:05:30,800
Speaker 4: when there is a lot of question around what exactly

110
00:05:31,600 --> 00:05:33,240
Speaker 4: sells other than the legacy brands.

111
00:05:34,760 --> 00:05:37,599
Speaker 1: Yeah, I think when you look at the Walt Disney Company,

112
00:05:37,600 --> 00:05:40,600
Speaker 1: in many ways, we're best positioned from the standpoint of

113
00:05:41,080 --> 00:05:44,320
Speaker 1: streaming because we do generate so much of our own

114
00:05:44,360 --> 00:05:48,680
Speaker 1: content relative to some of our competitors in many ways.

115
00:05:48,680 --> 00:05:51,719
Speaker 1: To think about Disney Plus is it really can be

116
00:05:51,760 --> 00:05:54,240
Speaker 1: the portal into all things Disney and something you might

117
00:05:54,279 --> 00:05:56,320
Speaker 1: want to have on twenty four hours a day, seven

118
00:05:56,400 --> 00:06:00,080
Speaker 1: days a week, because if you want news, you'll be

119
00:06:00,080 --> 00:06:02,960
Speaker 1: able to find it through Disney Disney Plus, Hulu. If

120
00:06:03,000 --> 00:06:06,599
Speaker 1: you want sports, the ESPN tile, just one on Disney Plus.

121
00:06:06,880 --> 00:06:10,600
Speaker 1: If you want movie entertainment, TV entertainment. Obviously, with all

122
00:06:10,600 --> 00:06:14,719
Speaker 1: of our studios, we generate a tremendous amount of entertainment

123
00:06:14,800 --> 00:06:18,000
Speaker 1: from our own ip, so I think more than most

124
00:06:18,080 --> 00:06:21,600
Speaker 1: we're actually very well positioned to ascertain what the right

125
00:06:21,680 --> 00:06:25,120
Speaker 1: level of content is and to create that content for ourselves,

126
00:06:25,120 --> 00:06:27,560
Speaker 1: which obviously gives us some inherent advantages.

127
00:06:27,720 --> 00:06:28,200
Speaker 3: If we were.

128
00:06:28,120 --> 00:06:30,760
Speaker 4: Talking six months ago, we might have started the conversation

129
00:06:30,960 --> 00:06:33,680
Speaker 4: on artificial intelligence and how much you were using that

130
00:06:34,080 --> 00:06:36,919
Speaker 4: in your content creation at a time where that's increasingly

131
00:06:38,200 --> 00:06:41,520
Speaker 4: something that's being done. How much have you explored that

132
00:06:41,640 --> 00:06:45,039
Speaker 4: to lower costs, expedite the process of time to get

133
00:06:45,240 --> 00:06:47,800
Speaker 4: some of the movies and videos online.

134
00:06:49,120 --> 00:06:51,919
Speaker 1: We've got a number of use cases really across the

135
00:06:52,120 --> 00:06:55,960
Speaker 1: entire company, from the ability to create content, to the

136
00:06:56,000 --> 00:06:59,520
Speaker 1: ability to manage the company more efficiently, to the ability

137
00:06:59,560 --> 00:07:03,400
Speaker 1: to manage our guest experiences inside the parks.

138
00:07:03,080 --> 00:07:06,000
Speaker 3: And cruise business. So we're in the.

139
00:07:05,960 --> 00:07:08,480
Speaker 1: Early days of leveraging all that as our most companies,

140
00:07:08,520 --> 00:07:10,360
Speaker 1: because we really are very much in the early days

141
00:07:10,400 --> 00:07:15,040
Speaker 1: of artificial intelligence generally speaking, but we're experimenting a lot

142
00:07:15,120 --> 00:07:18,239
Speaker 1: to try to understand where can actually best add value

143
00:07:18,240 --> 00:07:19,360
Speaker 1: to the Walt Disney Company.

144
00:07:19,600 --> 00:07:22,000
Speaker 2: You do you see a shift in vibes in this

145
00:07:22,120 --> 00:07:24,840
Speaker 2: country where the kind of content that people want of

146
00:07:24,920 --> 00:07:26,440
Speaker 2: view is changing.

147
00:07:28,640 --> 00:07:32,280
Speaker 1: Not really, you know, it tends to be I think

148
00:07:32,440 --> 00:07:36,800
Speaker 1: more more based on age demographics than anything else. But

149
00:07:37,280 --> 00:07:40,200
Speaker 1: by and large, if you look at what we're able

150
00:07:40,240 --> 00:07:43,160
Speaker 1: to deliver by virtue of the broad base of IP

151
00:07:43,360 --> 00:07:46,720
Speaker 1: that we have, we have sort of the very traditional

152
00:07:46,760 --> 00:07:50,320
Speaker 1: things from the original Walt Disney Company right through to

153
00:07:50,520 --> 00:07:52,960
Speaker 1: things that come out of Marvel that come out of

154
00:07:53,000 --> 00:07:57,160
Speaker 1: Pixar that are sort of very current and contemporary. So

155
00:07:57,560 --> 00:07:59,960
Speaker 1: I don't see dramatic shifts going on by any stretch

156
00:08:00,080 --> 00:08:03,840
Speaker 1: to the imagination, and I do see our assets actually

157
00:08:03,920 --> 00:08:07,080
Speaker 1: appealing to a wide, wide array of consumers.

158
00:08:06,680 --> 00:08:08,560
Speaker 2: Here and you've got to run. We appreciate your time,

159
00:08:08,600 --> 00:08:11,720
Speaker 2: as always said, thank you. The Disney CFO, Hugh Johnston