Walt Disney Co
For the period ended Mar 30, 2024. Filed May 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 30, 2024 · Filed May 7, 2024
DIS$116.75-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-30; filed 2024-02-07.
0001744489-24-000081
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-30; filed 2024-05-07.
0001744489-24-000152
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 287 previous paragraphs and 395 current paragraphs.
167 unchanged; 73 reworded; 117 added; 45 removed; 2 previous and 38 current paragraphs rearranged.
Tables are not compared: 42 previous and 69 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (117)
Current report
•Current Six-Month Period Results Compared to Prior-Year Six-Month Period
Current report
Service revenues for the quarter increased 1%, or $0.2 billion, to $19.8 billion resulting from higher DTC subscription revenue and increased revenue at our theme parks and resorts. These increases were partially offset by lower theatrical distribution revenue and, to a lesser extent, lower TV/VOD distribution revenue.
Current report
Product revenues for the quarter increased 4%, or $0.1 billion, to $2.3 billion due to higher sales volumes of merchandise, food and beverage at our theme parks and resorts.
Current report
In the current quarter, the Company recorded charges of $2,052 million due to goodwill impairments related to the Star India Transaction and entertainment linear networks. In the prior-year quarter, the Company recognized charges of $152 million primarily for severance.
Current report
Other income, net
Current report
Income from equity investees decreased $32 million, to $141 million from $173 million, due to lower income from A+E Television Networks.
Current report
•Restructuring and impairment charges of $2,052 million
Current report
•TFCF and Hulu acquisition amortization of $434 million
Current report
•TFCF and Hulu acquisition amortization of $558 million
Current report
•Restructuring and impairment charges of $152 million
Current report
•Other income of $149 million due to the DraftKings gain
Current report
CURRENT SIX-MONTH PERIOD RESULTS COMPARED TO PRIOR-YEAR SIX-MONTH PERIOD
Current report
Revenues for the current period increased $0.3 billion, to $45.6 billion; net income attributable to Disney decreased $0.7 billion, to $1.9 billion; and EPS decreased to $1.03 from $1.39 in the prior-year period. The EPS decrease was due to goodwill impairments in the current period, partially offset by higher operating income at Entertainment and Experiences.
Current report
Product revenues for the current period increased 3%, or $0.2 billion, to $4.9 billion, due to higher sales volumes of merchandise, food and beverage at our theme parks and resorts.
Current report
Costs and expenses
Current report
Cost of products for the current period increased 4%, or $0.1 billion, to $3.2 billion, due to inflation and higher sales volumes of merchandise, food and beverage at our theme parks and resorts.
Current report
Depreciation and amortization decreased 5%, or $0.1 billion, to $2.5 billion due to lower TFCF & Hulu intangible amortization.
Current report
Restructuring and impairment charges
Current report
In the current period, the Company recorded charges of $2,052 million due to goodwill impairments related to the Star India Transaction and entertainment linear networks.
Current report
Other income, net
Current report
Income from equity investees decreased $42 million, to $322 million from $364 million, due to lower income from A+E Television Networks.
Current report
Effective Income Tax Rate
Current report
The increase in the effective income tax rate was due to an unfavorable impact from the goodwill impairments recognized in the current period, which are not tax deductible, partially offset by a lower effective tax rate on foreign earnings in the current period.
Current report
Noncontrolling Interests
Current report
Results for the six months ended March 30, 2024 were impacted by the following:
Current report
•Restructuring and impairment charges of $2,052 million
Current report
•TFCF and Hulu acquisition amortization of $885 million
Current report
Results for the six months ended April 1, 2023 were impacted by the following:
Current report
•TFCF and Hulu acquisition amortization of $1,137 million
Current report
•Restructuring and impairment charges of $221 million
Current report
•Other income of $107 million due to the DraftKings gain of $79 million and a gain on the sale of a business of $28 million
Current report
BUSINESS SEGMENT RESULTS
Current report
The increase in operating income in the current quarter compared to the prior-year quarter was due to improved results at Direct-to-Consumer, partially offset by declines at Linear Networks and Content Sales/Licensing and Other.
Current report
Higher international advertising revenue was attributable to an increase of 10% from higher rates, partially offset by a decrease of 3% from an unfavorable foreign exchange impact.
Current report
The decrease in domestic programming and production costs was due to a lower average cost mix of programming at ABC Network, partially offset by an increase in the average cost of programming at FX Channels.
Current report
The decrease in other operating expenses was primarily due to lower technology and distribution costs.
Current report
Income from equity investees decreased $19 million, to $140 million from $159 million, due to lower income from A+E Television Networks attributable to decreases in advertising and affiliate revenue.
Current report
Domestic Disney+ average monthly revenue per paid subscriber decreased from $8.15 to $8.00 due to a higher mix of wholesale subscribers, partially offset by increases in retail pricing.
Current report
International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber increased from $5.91 to $6.66 due to increases in retail pricing and a lower mix of subscribers to promotional offerings.
Current report
Disney+ Hotstar average monthly revenue per paid subscriber decreased from $1.28 to $0.70 due to lower advertising revenue.
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Removed paragraphs (45)
Previous report
Revenues
Previous report
Product revenues for the quarter increased 2%, or $0.1 billion, to $2.6 billion due to higher sales volumes of merchandise, food and beverage at our theme parks and resorts.
Previous report
Other expense, net
Previous report
Interest expense, net
Previous report
Equity in the Income of Investees
Previous report
Income from equity investees decreased $10 million, to $181 million from $191 million, due to lower income from A+E Television Networks.
Previous report
•TFCF and Hulu acquisition amortization of $451 million
Previous report
•TFCF and Hulu acquisition amortization of $579 million
Previous report
•Impairment charges of $69 million
Previous report
•Other expense, net of $42 million due to the DraftKings loss of $70 million, partially offset by a $28 million gain on the sale of a business
Previous report
Revenues
Previous report
Revenues - Affiliate fees
Previous report
Other revenue decreased $19 million, to $43 million from $62 million, primarily due to an unfavorable movement of the U.S. dollar against major currencies including the impact of our hedging program (Foreign Exchange Impact).
Previous report
The decrease in other operating expenses included lower technology and distribution costs.
Previous report
Selling, general, administrative and other costs decreased $34 million, to $557 million from $591 million, due to lower marketing costs.
Previous report
Equity in the Income of Investees
Previous report
Revenues - Subscription fees
Previous report
Average Monthly Revenue Per Paid Subscriber - First Quarter of Fiscal 2024 Comparison to Fourth Quarter of Fiscal 2023
Previous report
Domestic Disney+ average monthly revenue per paid subscriber increased from $7.50 to $8.15 due to increases in retail pricing, partially offset by a higher mix of subscribers to promotional offerings.
Previous report
International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber decreased from $6.10 to $5.91 due to a higher mix of subscribers to promotional offerings.
Previous report
Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $90.08 to $93.61 due to increases in retail pricing.
Previous report
Domestic Disney+ average monthly revenue per paid subscriber increased from $5.95 to $8.15 due to increases in retail pricing and higher advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.
Previous report
International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber increased from $5.62 to $5.91 due to increases in retail pricing and a favorable Foreign Exchange Impact, partially offset by a higher mix of subscribers to promotional offerings.
Previous report
Disney+ Hotstar average monthly revenue per paid subscriber increased from $0.74 to $1.28 due to higher advertising revenue and increases in retail pricing, partially offset by a higher mix of subscribers from lower-priced markets.
Previous report
Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $87.90 to $93.61 due to increases in retail pricing, partially offset by lower per-subscriber advertising revenue.
Previous report
Selling, general, administrative and other costs increased $34 million, to $1,121 million from $1,087 million, due to an increase in marketing costs at Hulu.
Previous report
Depreciation and amortization
Previous report
Operating loss from Content Sales/Licensing and Other increased $223 million to $224 million from $1 million primarily due to lower theatrical distribution results.
Previous report
Revenues - Affiliate fees
Previous report
Domestic ESPN affiliate revenue was comparable to the prior-year quarter as an increase of 6% from higher contractual rates was offset by a decrease of 6% from fewer subscribers.
Previous report
The increase in international ESPN affiliate revenue was due to an increase of 41% from higher contractual rates, partially offset by decreases of 20% from fewer subscribers and 13% from an unfavorable Foreign Exchange Impact.
Previous report
Lower domestic ESPN advertising revenue was due to decreases of 1% from lower rates and 1% from fewer impressions. These decreases reflected the timing of College Football Playoff (CFP) games relative to our fiscal period, partially offset by the benefits from the timing of the week 17 NFL game that aired in the current quarter compared to the second quarter of the prior year and the simulcast of certain NFL games on the ABC Network. The timing of CFP games reflected the airing of three CFP host games compared to the airing of two host games and two semi-final games in the prior-year quarter.
Previous report
Revenues - Subscription fees
Previous report
Subscription fees increased $36 million, to $415 million from $379 million, due to increases of 6% from higher rates and 3% from more subscribers.
Previous report
Other revenue increased $54 million, to $400 million from $346 million, due to higher sub-licensing fees from ICC cricket programming.
Previous report
Average Monthly Revenue Per Paid Subscriber - First Quarter of Fiscal 2024 Comparison to Fourth Quarter of Fiscal 2023
Previous report
ESPN+ average monthly revenue per paid subscriber increased from $5.34 to $6.09 due to increases in retail pricing and higher advertising revenue.
Previous report
ESPN+ average monthly revenue per paid subscriber increased from $5.53 to $6.09 due to increases in retail pricing and higher advertising revenue.
Previous report
Other operating expenses decreased $36 million, to $220 million from $256 million, primarily due to lower technology and distribution costs.
Previous report
Selling, general, administrative and other costs increased $45 million, to $341 million from $296 million, reflecting the comparison to the gain on the sale of an interest in our X Games business in the prior-year quarter and an unfavorable Foreign Exchange Impact.
Showing the first 40 of 45 passages. Open the source sections for the rest.
Reworded paragraphs (73)
Previous wording
Revenues for the quarter were comparable to the prior-year quarter at $23.5 billion; net income attributable to Disney increased to $1.9 billion in the current quarter compared to $1.3 billion in the prior-year quarter; and diluted earnings per share (EPS) attributable to Disney increased to $1.04 compared to $0.70 in the prior-year quarter. The EPS increase was primarily due to higher operating income at Entertainment, Experiences and, to a lesser extent, Sports.
Current wording
Revenues for the quarter increased 1%, or $0.3 billion, to $22.1 billion; net income attributable to Disney decreased to a loss of $20 million in the current quarter compared to income of $1.3 billion in the prior-year quarter; and diluted earnings per share (EPS) attributable to Disney decreased to a loss of $0.01 compared to income of $0.69 in the prior-year quarter. The EPS decrease was due to goodwill impairments in the current quarter, partially offset by higher operating income at Entertainment and Experiences.
Previous wording
Cost of services for the quarter decreased 6%, or $0.9 billion, to $13.9 billion primarily due to lower programming and production costs and, to a lesser extent, lower technical support costs, partially offset by the impact of inflation and increased volumes at our theme parks and resorts. The decrease in programming and production costs was due to lower amortization resulting from lower theatrical and TV/VOD distribution revenue and a decrease in programming and production cost amortization at Entertainment Linear Networks and Direct-to-Consumer, partially offset by Sports.
Current wording
Cost of services for the quarter decreased 4%, or $0.5 billion, to $12.7 billion due to lower programming and production costs and, to a lesser extent, lower distribution costs at Entertainment, partially offset by the impact of inflation and increased volumes at our theme parks and resorts.
Previous wording
Cost of products for the quarter increased 4%, or $0.1 billion, to $1.7 billion due to higher sales volumes of merchandise, food and beverage and cost inflation at our theme parks and resorts.
Current wording
Cost of products for the quarter increased 4%, or $0.1 billion, to $1.5 billion due to inflation and higher sales volumes of merchandise, food and beverage at our theme parks and resorts.
Previous wording
Selling, general, administrative and other costs decreased 1% to $3.8 billion, primarily due to lower marketing costs.
Current wording
Selling, general, administrative and other costs increased 5%, or $0.2 billion, to $3.8 billion, primarily due to higher marketing costs.
Previous wording
Depreciation and amortization decreased 5% to $1.2 billion due to lower TFCF and Hulu acquisition amortization and lower depreciation at Experiences.
Current wording
Depreciation and amortization decreased 5%, or $0.1 billion, to $1.2 billion driven by lower TFCF and Hulu acquisition amortization.
Previous wording
The increase in the effective income tax rate was due to the impact of adjustments related to prior years, which was unfavorable in the current quarter and favorable in the prior-year quarter, partially offset by lower effective tax rates on foreign earnings compared to the prior-year quarter.
Current wording
The increase in the effective income tax rate was due to an unfavorable impact from the goodwill impairments recognized in the current quarter, which are not tax deductible, partially offset by a benefit from adjustments related to prior years, which were favorable in the current quarter and unfavorable in the prior-year quarter.
Previous wording
See Note 14 to the Consolidated Financial Statements in the 2023 Annual Report on Form 10-K.
Current wording
The increase in net income attributable to noncontrolling interests was primarily due to improved results at Hong Kong Disneyland Resort, partially offset by the comparison to the accretion of NBCU’s interest in Hulu in the prior-year quarter with no accretion in the current quarter as we had fully accreted to the amount paid in December 2023 (see Note 1 to the Condensed Consolidated Financial Statements).
Previous wording
Service revenues for the quarter were comparable to prior-year quarter at $21.0 billion as lower theatrical distribution revenue and, to a lesser extent, lower TV/VOD distribution revenue were largely offset by higher DTC subscription revenue and increased revenues at our theme parks and resorts.
Current wording
Service revenues for the current period increased $0.1 billion to $40.7 billion, resulting from higher DTC subscription revenue and increased revenue at our theme parks and resorts. These increases were largely offset by lower theatrical distribution revenue and, to a lesser extent, lower TV/VOD distribution revenue.
Previous wording
In the prior-year quarter, the Company recognized charges of $69 million related to exiting our businesses in Russia.
Current wording
In the prior-year period, the Company recorded charges of $221 million primarily for severance and costs related to exiting our businesses in Russia.
Previous wording
Other expense, net in the prior-year quarter included a DraftKings loss of $70 million, partially offset by a $28 million gain on the sale of a business.
Current wording
Other income, net in the prior-year period included a DraftKings gain of $79 million and a $28 million gain on the sale of a business.
Previous wording
The increase in interest expense was due to higher average rates, partially offset by lower average debt balances.
Current wording
The increase in interest expense was due to higher average rates, partially offset by higher capitalized interest.
Previous wording
The increase in interest income, investment income and other was driven by higher interest income on cash balances reflecting an increase in interest rates.
Current wording
The increase in interest income, investment income and other resulted from from higher interest income on cash balances and a favorable comparison of pension and postretirement benefit costs, other than service cost.
Previous wording
The increase in net income attributable to noncontrolling interests was primarily due to improved results at our Asia Theme Parks, the accretion of Hulu’s noncontrolling interest to the amount paid to NBCU in December 2023 (see Note 1 to the Condensed Consolidated Financial Statements) and, to a lesser extent, improved results at ESPN, partially offset by the comparison to the impact of the prior year purchase of Major League Baseball’s 15% interest in BAMTech LLC.
Current wording
The increase in net income from continuing operations attributable to noncontrolling interests was due to improved results at our Asia Theme Parks, the accretion of Hulu’s noncontrolling interest to the amount paid in December 2023 (see Note 1 to the Condensed Consolidated Financial Statements) and improved results at ESPN, partially offset by the impact of the purchase of Major League Baseball’s 15% interest in BAMtech LLC in the prior-year period.
Previous wording
The Company’s businesses are subject to the effects of seasonality. Consequently, the operating results for the quarter ended December 30, 2023 for each business segment, and for the Company as a whole, are not necessarily indicative of results to be expected for the full year.
Current wording
The Company’s businesses are subject to the effects of seasonality. Consequently, the operating results for the six months ended March 30, 2024 for each business segment, and for the Company as a whole, are not necessarily indicative of results to be expected for the full year.
Previous wording
The decrease in domestic affiliate revenue was due to a decrease of 10% from fewer subscribers, including the impact of the non-carriage of certain networks by an affiliate, partially offset by an increase of 5% from higher contractual rates.
Current wording
The decrease in domestic affiliate revenue was primarily due to a decrease of 12% from fewer subscribers, including the impact of the non-renewal of carriage of certain networks by an affiliate, partially offset by an increase of 7% from higher contractual rates.
Previous wording
Lower international affiliate revenue was primarily attributable to a decrease of 7% from fewer subscribers.
Current wording
Lower international affiliate revenue was primarily attributable to decreases of 11% from fewer subscribers and 4% from lower contractual rates.
Previous wording
The decline in domestic advertising revenue reflected decreases of 15% from fewer impressions, driven by a decrease at ABC Network, and 11% from lower rates primarily attributable to a decrease in political advertising at the owned television stations. Fewer network impressions were in part due to the impact of the guild strikes on our programming schedule primarily due to a shift of units to the Sports segment reflecting the simulcast of certain NFL games.
Current wording
The decline in domestic advertising revenue was due to a decrease of 12% from fewer impressions, partially offset by an increase of 3% from higher rates primarily due to increased political advertising at the owned television stations. The decrease in impressions was due to lower average viewership.
Previous wording
Operating income from Linear Networks decreased $94 million, to $1,236 million from $1,330 million, due to decreases at our domestic and international businesses and lower income from equity investees.
Current wording
Operating income from Linear Networks decreased $207 million, to $752 million from $959 million, due to decreases at our domestic and international businesses.
Previous wording
Growth in subscription fees in the current quarter compared to the prior-year quarter reflected increases of 13% from higher rates attributable to increases in retail pricing at Disney+ Core and, to a lesser extent, Hulu, and 4% from more subscribers, due to growth at Disney+ Core and Hulu.
Current wording
Growth in subscription fees in the current quarter compared to the prior-year quarter reflected increases of 9% from higher rates attributable to increases in retail pricing at Disney+ Core and Hulu, and 6% from more subscribers due to growth at Disney+ Core.
Previous wording
(1)See discussion on page 50 —DTC Product Descriptions, Key Definitions and Supplemental Information.
Current wording
(1)See discussion on pages 71-72 —DTC Product Descriptions, Key Definitions and Supplemental Information.
Previous wording
Average Monthly Revenue Per Paid Subscriber - First Quarter of Fiscal 2024 Comparison to First Quarter of Fiscal 2023
Current wording
Average Monthly Revenue Per Paid Subscriber - Second Quarter of Fiscal 2024 Comparison to First Quarter of Fiscal 2024
Previous wording
Hulu SVOD Only average monthly revenue per paid subscriber increased from $12.11 to $12.29 due to increases in retail pricing, partially offset by lower per-subscriber advertising revenue and a higher mix of subscribers to promotional offerings.
Current wording
Hulu SVOD Only average monthly revenue per paid subscriber decreased from $12.29 to $11.84 due to lower advertising revenue, partially offset by increases in retail pricing.
Previous wording
Disney+ Hotstar average monthly revenue per paid subscriber increased from $0.70 to $1.28 due to higher advertising revenue and increases in retail pricing, partially offset by a higher mix of subscribers from lower-priced markets.
Current wording
Disney+ Hotstar average monthly revenue per paid subscriber increased from $0.59 to $0.70 due to increases in retail pricing, partially offset by a higher mix of subscribers from lower-priced markets and lower advertising revenue.
Previous wording
Hulu SVOD Only average monthly revenue per paid subscriber decreased from $12.46 to $12.29 reflecting lower per-subscriber advertising revenue, a higher mix of subscribers to multi-product offerings, lower per-subscriber premium add-on revenue and a higher mix of subscribers to promotional offerings, partially offset by increases in retail pricing.
Current wording
Hulu SVOD Only average monthly revenue per paid subscriber increased from $11.73 to $11.84 reflecting increases in retail pricing, partially offset by a higher mix of subscribers to multi-product offerings and to promotional offerings, lower premium add-on revenue and a higher mix of wholesale subscribers.
Previous wording
Higher programming and production costs at Hulu in the current quarter compared to the prior-year quarter were due to more content provided on the service and higher subscriber-based fees for programming the Live TV service. These increases were partially offset by lower average costs per hour of content available on the service. The increase in subscriber-based fees for programming the Live TV service was attributable to rate increases and more subscribers.
Current wording
Higher programming and production costs at Hulu in the current quarter compared to the prior-year quarter were primarily due to higher subscriber-based fees for programming the Hulu Live TV service and more programming provided on the service, partially offset by lower average costs per hour of content available on the service. The increase in Hulu Live TV subscriber-based fees was attributable to rate increases and more subscribers.
Previous wording
The decrease in other operating expense was due to lower technology and distribution spend reflecting the impact of cost saving initiatives.
Current wording
The decrease in other operating expense was due to lower distribution costs.
Previous wording
(1)In the current quarter, amortization of intangible assets was $282 million and amortization of step-up on film and television costs was $68 million. In the prior-year quarter, amortization of intangible assets was $318 million and amortization of step-up on film and television costs was $159 million.
Current wording
(2)In the current quarter, amortization of intangible assets was $271 million and amortization of step-up on film and television costs was $69 million. In the prior-year quarter, amortization of intangible assets was $309 million and amortization of step-up on film and television costs was $147 million.
Previous wording
(1)See discussion on page 50 —DTC Product Descriptions, Key Definitions and Supplemental Information.
Current wording
(1)See discussion on page 71-72 —DTC Product Descriptions, Key Definitions and Supplemental Information.
Previous wording
Average Monthly Revenue Per Paid Subscriber - First Quarter of Fiscal 2024 Comparison to First Quarter of Fiscal 2023
Current wording
Average Monthly Revenue Per Paid Subscriber - Second Quarter of Fiscal 2024 Comparison to First Quarter of Fiscal 2024
Previous wording
Domestic ESPN programming and production costs decreased in the current quarter compared to the prior-year quarter due to lower CFP rights costs attributable to the timing of games relative to our fiscal periods.
Current wording
Domestic ESPN programming and production costs increased in the current quarter compared to the prior-year quarter due to higher CFP rights costs attributable to the additional game in the current quarter.
Previous wording
Higher international ESPN programming and production costs were attributable to a new contract for soccer programming rights and an increase in production costs due to inflation, partially offset by a favorable Foreign Exchange Impact.
Current wording
International ESPN programming and production costs were comparable to the prior-year quarter due to a favorable foreign exchange impact, largely offset by inflation and higher costs for soccer programming.
Previous wording
Higher resorts and vacations revenue was primarily due to increases of 3% from higher average ticket prices for cruise line sailings and 2% from additional passenger cruise days.
Current wording
Higher resorts and vacations revenue was due to increases of 5% from higher average ticket prices for cruise line sailings, 2% from higher occupied hotel room nights and 2% from an increase in average daily hotel room rates.
Previous wording
Parks & Experiences merchandise, food and beverage revenue growth reflected increases of 5% from higher volume and 1% from guest spending growth. Higher volume was attributable to an increase at our international parks and experiences due to growth at Shanghai Disney Resort and, to a lesser extent, at Hong Kong Disneyland Resort.
Current wording
Parks & Experiences merchandise, food and beverage revenue growth resulted from increases of 4% from higher volumes and 2% from guest spending growth. Higher volumes were primarily attributable to an increase at our international parks and experiences reflecting growth at Hong Kong Disneyland Resort.
Previous wording
(6)Per room guest spending is used to analyze guest spending at our hotels and is defined as total revenue from room rentals and sales of food, beverage and merchandise at our hotels, divided by total occupied hotel room nights. In the third quarter of the prior fiscal year, the Company revised its method of allocating revenue on the sales of Disneyland Paris vacation packages between hotel room revenue and admissions revenue. The new method resulted in a decrease in the percentage of revenue allocated to hotel rooms. If we had applied the new method in the prior-year quarter, the impact would have been a decrease of approximately $17 million in the prior-year quarter.
Current wording
(6)Per room guest spending is used to analyze guest spending at our hotels and is defined as total revenue from room rentals and sales of food, beverage and merchandise at our hotels, divided by total occupied hotel room nights. In the third quarter of the prior fiscal year, the Company revised its method of allocating revenue on the sales of Disneyland Paris vacation packages between hotel room revenue and admissions revenue. The new method resulted in a decrease in the percentage of revenue allocated to hotel rooms. If we had applied the new method in the prior-year quarter, the impact would have been a decrease of approximately $9 million in the prior-year quarter.
Previous wording
Higher operating labor was primarily due to inflation. The increase in infrastructure costs was driven by higher operations support costs and increased costs for new guest offerings. Higher other operating expense was primarily attributable to inflation, increased costs for new guest offerings and higher operations support costs.
Current wording
Higher operating labor was primarily due to inflation. The increase in infrastructure costs was driven by higher costs for new guest offerings and an increase in operations support costs. Cost of goods sold and distribution costs increased due to higher volumes. The increase in other operating expense was attributable to volume growth, higher operations support costs and inflation.
Previous wording
Depreciation and amortization decreased $21 million, to $622 million from $643 million, due to lower depreciation at our domestic parks and experiences.
Current wording
Depreciation and amortization decreased $16 million, to $635 million from $651 million, due to lower depreciation at our domestic parks and experiences.
Previous wording
Segment operating income increased from $2,862 million to $3,105 million due to growth at our international parks and resorts.
Current wording
Segment operating income increased from $2,036 million to $2,286 million due to growth at our international and domestic parks and experiences.
Previous wording
The increase in operating income was due to improved results at Direct-to-Consumer, partially offset by a decline at Content Sales/Licensing and Other.
Current wording
The increase in operating income was due to improved results at Direct-to-Consumer, partially offset by declines at Content Sales/Licensing and Other and Linear Networks.
Previous wording
The decrease in domestic programming and production costs was primarily due to fewer hours of scripted programming in the current quarter, reflecting the impact of the guild strikes. Scripted programming was primarily replaced with lower average cost non-scripted programming as well as ESPN on ABC sports programming, the costs of which are recognized in the Sports segment.
Current wording
The decrease in domestic programming and production costs was due to fewer hours of scripted programming in the current period, reflecting the impact of guild strikes. Scripted programming was primarily replaced with lower average cost non-scripted programming as well as ESPN on ABC sports programming, the costs of which are recognized in the Sports segment.
Previous wording
International programming and production costs increased primarily due to inflation.
Current wording
International programming and production costs increased due to inflation.
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Rearranged current paragraphs (38)
Current report — wording carried from elsewhere
Other income, net in the prior-year quarter included a DraftKings gain of $149 million.
Current report — wording carried from elsewhere
Cost of services for the current period decreased 5%, or $1.4 billion, to $26.6 billion, primarily due to lower programming and production costs and, to a lesser extent, lower distribution costs at Entertainment, partially offset by the impact of inflation and increased volumes at our theme parks and resorts.
Current report — wording carried from elsewhere
Interest expense, net is as follows:
Current report — wording carried from elsewhere
Certain Items Impacting Results in the Six Month Period
Current report — wording carried from elsewhere
A summary of the impact of these items on EPS is as follows:
Current report — wording carried from elsewhere
(1)Tax benefit (expense) amounts are determined using the tax rate applicable to the individual item.
Current report — wording carried from elsewhere
(2)EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.
Current report — wording carried from elsewhere
The decrease in Entertainment revenues was primarily due to lower theatrical distribution revenue and, to a lesser extent, a decrease in TV/VOD distribution revenue, partially offset by subscription revenue growth.
Current report — wording carried from elsewhere
Higher advertising revenue in the current quarter compared to the prior-year quarter reflected an increase of 25% from higher impressions, partially offset by a decrease of 17% from lower rates.
Current report — wording carried from elsewhere
Programming and production costs at Disney+ and other in the current quarter were comparable to the prior-year quarter as lower average costs per hour of content available was offset by more content provided on the service.
Current report — wording carried from elsewhere
The decrease in programming and production costs was due to lower production cost amortization attributable to the decreases in theatrical and TV/VOD distribution revenues, partially offset by higher film cost impairments in the current quarter.
Current report — wording carried from elsewhere
The decrease in distribution costs and cost of goods sold was attributable to lower theatrical distribution costs.
Current report — wording carried from elsewhere
Operating Income (Loss) from Content Sales/Licensing and Other
Current report — wording carried from elsewhere
Theme park admissions revenue growth was due to increases of 12% from higher average per capita ticket revenue and 4% from attendance growth. Attendance growth was due to an increase at our international parks attributable to higher attendance at Hong Kong Disneyland Resort, which benefited from the park being open for more days in the current quarter, Shanghai Disney Resort and, to a lesser extent, Disneyland Paris. Growth in attendance at our domestic parks was due to an increase in attendance at Disneyland Resort.
Current report — wording carried from elsewhere
Merchandise licensing and retail revenue was comparable to the prior-year quarter as an increase of 5% from licensing was largely offset by decreases of 2% from retail and 2% from an unfavorable foreign exchange impact. The increase in licensing revenue was driven by higher sales of products based on Spider-Man and Mickey and Friends, partially offset by a decrease in sales of products based on Star Wars.
Current report — wording carried from elsewhere
Revenue and operating results for the Entertainment segment are as follows:
Current report — wording carried from elsewhere
Operating results for Linear Networks are as follows:
Current report — wording carried from elsewhere
The decrease in domestic affiliate revenue was due to a decline of 11% from fewer subscribers, including the impact of the non-renewal of carriage of certain networks by an affiliate, partially offset by an increase of 6% from higher contractual rates.
Current report — wording carried from elsewhere
Operating income from Linear Networks decreased $301 million, to $1,988 million from $2,289 million, due to decreases at our domestic and international businesses.
Current report — wording carried from elsewhere
The following table provides supplemental revenue and operating income detail for Linear Networks:
Current report — wording carried from elsewhere
Operating results for Direct-to-Consumer are as follows:
Current report — wording carried from elsewhere
Growth in subscription fees reflected an increase of 10% from higher rates attributable to increases in retail pricing at Disney+ Core and, to a lesser extent, Hulu, and 5% from more subscribers due to growth at Disney+ Core and, to a lesser extent, Hulu.
Current report — wording carried from elsewhere
Higher programming and production costs at Hulu were due to higher subscriber-based fees for programming the Hulu Live TV service and more programming provided on the service, partially offset by lower average costs per hour of content available on the service. The increase in Hulu Live TV subscriber-based fees was attributable to rate increases and more subscribers.
Current report — wording carried from elsewhere
Operating results for Content Sales/Licensing and Other are as follows:
Current report — wording carried from elsewhere
The decrease in TV/VOD distribution revenue was attributable to lower sales of episodic content.
Current report — wording carried from elsewhere
Items Excluded from Segment Operating Income Related to Entertainment
Current report — wording carried from elsewhere
The following table presents supplemental information for items related to the Entertainment segment that are excluded from segment operating income:
Current report — wording carried from elsewhere
(2)In the current period, amortization of intangible assets was $553 million and amortization of step-up on film and television costs was $137 million. In the prior-year period, amortization of intangible assets was $627 million and amortization of step-up on film and television costs was $306 million.
Current report — wording carried from elsewhere
Operating results for Sports are as follows:
Current report — wording carried from elsewhere
The following table provides supplemental revenue and operating income (loss) detail for Sports:
Current report — wording carried from elsewhere
Items Excluded from Segment Operating Income Related to Sports
Current report — wording carried from elsewhere
The following table presents supplemental information for items related to the Sports segment that are excluded from segment operating income:
Current report — wording carried from elsewhere
Operating results for the Experiences segment are as follows:
Current report — wording carried from elsewhere
Revenues - Park & Experiences merchandise, food and beverage
Current report — wording carried from elsewhere
(1)In the third quarter of the prior fiscal year, the Company revised its method of allocating revenue on the sales of Disneyland Paris vacation packages between hotel room revenue and admissions revenue. The new method resulted in a decrease in the percentage of revenue allocated to hotel rooms. If we had applied the new method in the prior-year period, the impact would have been a decrease of approximately $26 million in the prior-year period.
Current report — wording carried from elsewhere
The following table presents supplemental revenue and operating income (loss) detail for the Experiences segment:
Current report — wording carried from elsewhere
As discussed in Note 17 to the Condensed Consolidated Financial Statements, the Company recorded a non-cash goodwill impairment charge at our entertainment linear networks reporting unit of $0.7 billion. The entertainment linear networks reporting unit goodwill after impairment is approximately $6 billion.
Current report — wording carried from elsewhere
Average Monthly Revenue Per Paid Subscriber
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The decrease in other revenue was due to an unfavorable Foreign Exchange Impact.
Previous report — wording carried elsewhere
(2)Charges for the prior-year quarter related to exiting our businesses in Russia.