Speaker 1: There's a lot to discuss with Hugh Johnston, the Disney
Speaker 1: CFO who joined us now. Hugh, it's great to catch
Speaker 1: up with you. We spoke for years in your years
Speaker 1: of PEPSI fantastic to see you in a new c
Speaker 1: Let's just get straight into these numbers if we can
Speaker 1: cost cutting. Can you walk us through where that cost
Speaker 1: cutting exercise is really buying?
Speaker 2: Yeah, it actually is. In Good morning to you John
Speaker 2: and to the team there. I'm very excited about that
Speaker 2: the progress that we've made on cost cutting. To be honest,
Speaker 2: when you do these programs, you're always looking for is
Speaker 2: it actually flowing to the bottom line, And what we
Speaker 2: communicated yesterday was five hundred million dollars of saves flowed
Speaker 2: through to the bottom line, and you can see it
Speaker 2: in the P and L in the form of margin
Speaker 2: improvement to the tune of three hundred and fifty basis points.
Speaker 2: That's a huge, huge margin jump and something that we've
Speaker 2: got a lot of confidence in will continue because we're
Speaker 2: really getting good traction and good momentum on managing our
Speaker 2: costs more tightly while reinvesting back in the business to
Speaker 2: drive the top line as well.
Speaker 1: So here you've got a really strong story to tow
Speaker 1: this morning the stock as well. I certainly don't want
Speaker 1: this conversation to drown into a conversation about activists, but
Speaker 1: I need to ask about now some paths. Have you
Speaker 1: spoken to him personally at all since you took on
Speaker 1: the new role.
Speaker 2: Yeah, I spoke to him a couple of times, briefly,
Speaker 2: not recently, And honestly, we're just at a very different
Speaker 2: spot on this. We feel right now like we've got
Speaker 2: terrific momentum. Bob and the team have spent the last
Speaker 2: year both fixing the business and now pivoting to building
Speaker 2: the business, and you can see it in the results,
Speaker 2: and you can see it in our confidence as well.
Speaker 2: The share of purchase that we've communicated, the earnings guidance
Speaker 2: we've communicated, the increase in the dividend all suggests that
Speaker 2: we have confidence that we're not only going to be
Speaker 2: able to do this for the short term, but we're
Speaker 2: going to be able to do it for multiple years.
Speaker 2: So honestly, I don't think we need any incremental help.
Speaker 2: I think we need to keep this management team focused
Speaker 2: on doing the things it's doing so that we can
Speaker 2: continue to deliver great results and make progress on the
Speaker 2: big strategic issues that will help us emerge from the
Speaker 2: disruption that's going on in media in a much much
Speaker 2: stronger position than we were in before.
Speaker 1: To some analysts, including our run in Bloomberg Intelligence, wondering
Speaker 1: whether you've been too conservative on the outlook for streaming
Speaker 1: to turn a profit by the fall, see what would
Speaker 1: you say back to them this morning.
Speaker 2: I'd say the guidances is to do Q four. If
Speaker 2: we do better, we do better. But the guide is
Speaker 2: Q four.
Speaker 3: You can you give us a name and maybe a
Speaker 3: price for this bundle of the sports bundle. Everyone's just
Speaker 3: asking that forty dollars, fifty dollars, call it Spike.
Speaker 2: Yeah. No, we haven't come up with a name for
Speaker 2: it yet. You know, the focus when you do a
Speaker 2: three way JV is on how do we make sure
Speaker 2: that we get the operating principles right so that the
Speaker 2: parties are aligned up front and they're aligned on going
Speaker 2: and delivering a great product to consumers. And that's the
Speaker 2: real focus here is how do we make it easier
Speaker 2: and reduce friction for the sports fans. So we're going
Speaker 2: to get to pricing shortly. We'll get to a name
Speaker 2: at some point, I'm sure. But what's most important is
Speaker 2: I think we're going to deliver a product that's going
Speaker 2: to make your life a hole lot better if you're
Speaker 2: a sports consumer. Hugh.
Speaker 3: Do you think that ultimately the idea of a bundle
Speaker 3: going back to the future and getting people with reduced
Speaker 3: friction to find their sports team and find the game
Speaker 3: that they want to watch is going to take eyeballs
Speaker 3: away from some of the other providers, the cable networks
Speaker 3: that have traditionally had these contracts. You're going to be
Speaker 3: directly on some of these sports rights.
Speaker 2: Well, I think it's going to be targeted more at
Speaker 2: people who either were never in the cable bundle or
Speaker 2: people who had already departed from the cable bundle, you know,
Speaker 2: at the margins. Might there be a little bit of shifting, Yeah,
Speaker 2: there could be, But to tell you the truth, I
Speaker 2: don't think sports is going to be the reason that
Speaker 2: someone makes that shift all by itself. I think there
Speaker 2: are a lot of factors that weigh into that. From
Speaker 2: our perspective, we're focused on meeting the fan wherever they
Speaker 2: choose to be. I don't think we're motivating the fan
Speaker 2: to move. But if the fan does move. We want
Speaker 2: to be there because we want ESPN to be everywhere.
Speaker 1: He We're super interested in how you're going to bid
Speaker 1: for those sporting rights. Do you think you might bid
Speaker 1: for them as joint venture? How's this going to work
Speaker 1: in a months and years to come.
Speaker 2: No, quite the opposite. We all will be bidding independently.
Speaker 2: And that's something that we're quite firm on is that
Speaker 2: is not the purpose of the venture. The purpose of
Speaker 2: the venture is purely distribution. It's not about procurement of content.
Speaker 2: So we'll continue to compete with each other for sports
Speaker 2: rights just as we always have. It'll actually, I think,
Speaker 2: be a great benefit to the league because it's no
Speaker 2: different in terms of the way we bid for sports rights.
Speaker 2: But that reduced friction benefits all of the leagues as well.
Speaker 2: So I think the leagues will actually be pretty optimistic about.
Speaker 1: There was some reporting yesterday that suggested the leagues weren't
Speaker 1: aware of this joint venture. Q. Have you've spoken to them?
Speaker 2: I have not personally, but we certainly have as the
Speaker 2: Walt Disney Company. Candidly, when you're putting together a three
Speaker 2: way GV and a three way GV in the media, business.
Speaker 2: Trying to keep it private until you get the deal
Speaker 2: done is challenging enough to involve more parties, frankly, just
Speaker 2: would have created I think too much risk. So we
Speaker 2: certainly let them know the moment that we announce it. Here.
Speaker 3: We have lots more questions about the sports and the streaming,
Speaker 3: and hopefully we can ask you about them. But I
Speaker 3: do want to shift gears just a bit to Shanghai's utopia.
Speaker 3: The idea that the Chinese offerings of Disney did pretty
Speaker 3: well actually worstallwarts, which was surprising because we've heard a
Speaker 3: lot of a different tone from other US companies. How
Speaker 3: much are you seeing Disney welcomed in China despite some
Speaker 3: of the rhetoric that we've heard out of the Chinese
Speaker 3: Communist Party.
Speaker 2: Yeah, we're very much welcomed. You know, Disney is just
Speaker 2: sort of a beloved brand. It's part of the reason
Speaker 2: that I came here, is it truly is an iconic,
Speaker 2: beloved brand, not just in the United States, but really
Speaker 2: almost everywhere in the world. So the Chinese consumer is
Speaker 2: very much responding to what's a fabulous park experience, which,
Speaker 2: by the way, has been true in the rest of
Speaker 2: our international parks as well, every one of our international
Speaker 2: parks made money in the quarter, and they're all doing
Speaker 2: extremely well. International parks revenue grow thirty five percent. So
Speaker 2: I'm very, very optimistic about all the parks outside I views,
Speaker 2: including the park in China.
Speaker 1: We thought people loved McDonald's and Starbucks as well. But
Speaker 1: there's been boycotts in certain places against America Inc. And
Speaker 1: you think of the Walt Disney company, I think as
Speaker 1: the company behind America Inc. All around the world. To you,
Speaker 1: how have you avoided that as a company.
Speaker 2: It's a great question, and in all candor, I'm so
Speaker 2: new here, I'm not sure I can give you a
Speaker 2: great reason in that regard, other than the fact that
Speaker 2: as a company, what we're really focused on is just
Speaker 2: bringing joy to families, right, We're about bringing smile to
Speaker 2: people's faces, or about families coming together. And given that's
Speaker 2: who we are, I think maybe we tend to be
Speaker 2: a little bit more immune to that than most here.
Speaker 1: It sounds like you've been there years based on that response,
Speaker 1: Hugh Johnson, it's good to hear from you, sir. Thank
Speaker 1: you very much for being with us. We look forward
Speaker 1: to catching up with you in the quarters and the years.
Speaker 1: To come. Hugh Johnson there the Disney CFO