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What changed in Walt Disney Company (The)'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Walt Disney Company (The)'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+545 added−480 removedSource: 10-K (2023-11-21) vs 10-K (2022-11-29)

Top changes in Walt Disney Company (The)'s 2023 10-K

545 paragraphs added · 480 removed · 362 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

112 edited+30 added−51 removed42 unchanged
Biggest changeThe distribution organization has full accountability for the financial results of the entire media and entertainment business. 3 TABLE OF CONTENTS The operations of DMED’s significant lines of business are as follows: • Linear Networks ◦ Domestic Channels: ABC Television Network (ABC) and eight owned ABC television stations (Broadcasting), and Disney, ESPN, Freeform, FX and National Geographic branded domestic television networks (Cable) ◦ International Channels: Disney, ESPN, Fox, National Geographic and Star branded television networks outside of the U.S. ◦ A 50% equity investment in A+E Television Networks (A+E), which operates a variety of cable channels including A&E, HISTORY and Lifetime • Direct-to-Consumer ◦ Disney+, Disney+ Hotstar, ESPN+, Hulu and Star+ direct-to-consumer (DTC) video streaming services • Content Sales/Licensing ◦ Sale/licensing of film and television content to third-party television and subscription/advertising video-on-demand (TV/SVOD) services ◦ Theatrical distribution ◦ Home entertainment distribution (DVD, Blu-ray discs and electronic home video licenses) ◦ Music distribution ◦ Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays) DMED also includes the following activities that are reported with Content Sales/Licensing: • Post-production services by Industrial Light & Magic and Skywalker Sound • National Geographic magazine and online business • A 30% ownership interest in Tata Play Limited (formerly Tata Sky Limited), which operates a direct-to-home satellite distribution platform in India The significant revenues of DMED are as follows: • Affiliate fees - Fees charged by our Linear Networks to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g.
Biggest changeDTC service that offers general entertainment and family programming and a digital over-the-top (OTT) service that includes live linear streams of cable networks and the major broadcast networks 3 TABLE OF CONTENTS • Content Sales/Licensing ◦ Sale/licensing of film and episodic content to third-party television and video-on-demand (TV/VOD) services ◦ Theatrical distribution ◦ Home entertainment distribution: DVD and Blu-ray discs, electronic home video licenses and video-on-demand (VOD) rentals ◦ Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays) ◦ Intersegment allocation of revenues from the Experiences segment, which is meant to reflect royalties on consumer products merchandise licensing revenues generated on intellectual property (“IP”) created by the Entertainment segment ◦ Music distribution ◦ Post-production services by Industrial Light & Magic and Skywalker Sound Entertainment also includes the following activities that are reported with Content Sales/Licensing: • National Geographic magazine and online business (owned 73% by the Company) • A 30% ownership interest in Tata Play Limited, which operates a direct-to-home satellite distribution platform in India The significant revenues of Entertainment are as follows: • Affiliate fees - Fees charged to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g.
Consumer Products Licensing The Company’s merchandise licensing operations cover a diverse range of product categories, the most significant of which are: toys, apparel, games, home décor and furnishings, accessories, food, books, health and beauty, stationery, footwear, magazines and consumer electronics.
Consumer Products Licensing The Company’s merchandise licensing operations cover a diverse range of product categories, the most significant of which are: toys, apparel, games, home décor and furnishings, accessories, health and beauty, food, books, stationery, footwear, magazines and consumer electronics.
Genie+ and Lightning Lane) • Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships • Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties • Merchandise licensing and retail: ◦ Merchandise licensing - Royalties from licensing our IP for use on consumer goods ◦ Retail - Sales of merchandise through internet shopping sites generally branded shopDisney and at The Disney Store, as well as to wholesalers (including books, comic books and magazines) • Parks licensing and other - Revenues from sponsorships and co-branding opportunities, real estate rent and sales and royalties earned on Tokyo Disney Resort revenues The significant expenses of DPEP are as follows: • Operating expenses consisting primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings.
Genie+ and Lightning Lane) • Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties • Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships • Merchandise licensing and retail: ◦ Merchandise licensing - Royalties from licensing our IP for use on consumer goods ◦ Retail - Sales of merchandise through internet shopping sites (generally branded shopDisney) and at The Disney Store, as well as to wholesalers (including books, comic books and magazines) • Parks licensing and other - Revenues from sponsorships and co-branding opportunities, real estate rent and sales and royalties earned on Tokyo Disney Resort revenues The significant expenses of Experiences are as follows: • Operating expenses, consisting primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings.
We pay 100% of the tuition costs upfront for participating employees at a variety of in-network learning providers and universities and reimburse employees for applicable books and fees.
We pay 100% of the tuition costs upfront for eligible participating employees at a variety of in-network learning providers and universities and reimburse employees for applicable books and fees.
Disney Vacation Club (DVC) DVC offers ownership interests in 15 resort facilities located at the Walt Disney World Resort; Disneyland Resort; Aulani; Vero Beach, Florida; and Hilton Head Island, South Carolina. Available units are offered for sale under a vacation ownership plan and are operated as hotel rooms when not occupied by vacation club members.
Disney Vacation Club (DVC) DVC offers ownership interests in 16 resort facilities located at the Walt Disney World Resort; Disneyland Resort; Aulani; Vero Beach, Florida; and Hilton Head Island, South Carolina. Available units are offered for sale under a vacation ownership plan and are operated as hotel rooms when not occupied by vacation club members.
Adventures by Disney and National Geographic Expeditions Adventures by Disney and National Geographic Expeditions offer guided tour packages predominantly at non-Disney sites around the world. Walt Disney Imagineering Walt Disney Imagineering provides master planning, real estate development, attraction, entertainment and show design, engineering support, production support, project management and research and development for DPEP.
Adventures by Disney and National Geographic Expeditions Adventures by Disney and National Geographic Expeditions offer guided tour packages predominantly at non-Disney sites around the world. Walt Disney Imagineering Walt Disney Imagineering provides master planning, real estate development, attraction, entertainment and show design, engineering support, production support, project management and research and development.
Although we have received such renewals and approvals in the past or have been permitted to continue operations when renewal is delayed, there can be no assurance that this will be the case in the future. • Television and radio station ownership limits .
Although we have received such renewals and approvals in the past or have been permitted to continue operations when renewal is delayed, there can be no assurance that this will be the case in the future. • Station ownership limits .
We are providing the address to our internet site solely for the information of investors. We do not intend the address to be an active link or to otherwise incorporate the contents of the website into this report. 18 TABLE OF CONTENTS
We are providing the address to our internet site solely for the information of investors. We do not intend the address to be an active link or to otherwise incorporate the contents of the website into this report.
FX Channels Branded general entertainment television channels include: FX; FXM; and FXX (collectively FX Channels), which air a mix of original, library and licensed television series and films. National Geographic Channels Branded television channels include: National Geographic; Nat Geo Wild; and Nat Geo Mundo (collectively National Geographic Channels).
FX Channels Branded television channels include: FX; FXM; and FXX (collectively FX Channels), which air a mix of original, library and licensed television series and films. National Geographic Channels Branded television channels include: National Geographic; Nat Geo Wild; and Nat Geo Mundo (collectively National Geographic Channels).
Hotels — Hong Kong Disneyland Resort includes three themed hotels with a total of 1,750 rooms and approximately 16,000 square feet of conference meeting space. 16 TABLE OF CONTENTS Shanghai Disney Resort The Company owns a 43% interest in Shanghai Disney Resort and Shanghai Shendi (Group) Co., Ltd (Shendi) owns a 57% interest.
Hotels — Hong Kong Disneyland Resort includes three themed hotels with approximately 1,750 rooms and 16,000 square feet of conference meeting space. Shanghai Disney Resort The Company owns a 43% interest in Shanghai Disney Resort and Shanghai Shendi (Group) Co., Ltd (Shendi) owns a 57% interest.
New legislation, court action or regulation in this area could have an impact on the Company’s operations. 13 TABLE OF CONTENTS The foregoing is a brief summary of certain provisions of the Communications Act, other legislation and specific FCC rules and policies.
New legislation, court action or regulation in this area could have an impact on the Company’s operations. The foregoing is a brief summary of certain provisions of the Communications Act, other legislation and specific FCC rules and policies.
The resort includes theme parks (the Magic Kingdom, EPCOT, Disney’s Hollywood Studios and Disney’s Animal Kingdom); hotels; vacation club properties; a retail, dining and entertainment complex (Disney Springs); a sports 14 TABLE OF CONTENTS complex; conference centers; campgrounds; golf courses; water parks; and other recreational facilities designed to attract visitors for an extended stay.
The resort includes theme parks (the Magic Kingdom, EPCOT, Disney’s Hollywood Studios and Disney’s Animal Kingdom); hotels; vacation club properties; a retail, dining and entertainment complex (Disney Springs); a sports complex; conference centers; campgrounds; golf courses; water parks; and other recreational facilities designed to attract visitors for an extended stay.
With respect to the sale of advertising time, we compete with other television networks, independent television stations, MVPDs and other advertising media such as digital content, newspapers, magazines, radio and billboards. Our television and radio stations primarily compete for audiences and advertisers in local market areas. The Company’s Linear Networks compete with other networks for carriage by MVPDs.
With respect to the sale of advertising time, we compete with other television networks, independent television stations, MVPDs, other DTC streaming services and other advertising media such as digital content, newspapers, magazines, radio and billboards. Our television and radio stations primarily compete for audiences and advertisers in local market areas. Linear Networks compete with other networks for carriage by MVPDs.
FCC regulations that affect DMED include the following: • Licensing of television and radio stations . Each of the television and radio stations we own must be licensed by the FCC. These licenses are granted for periods of up to eight years, and we must obtain renewal of licenses as they expire in order to continue operating the stations.
FCC regulations that affect linear channels include the following: • Licensing of television stations . Each of the television stations we own must be licensed by the FCC. These licenses are granted for periods of up to eight years, and we must obtain renewal of licenses as they expire in order to continue operating the stations.
The FCC imposes limitations on the number of television stations and radio stations we can own in a specific market, on the combined number of television and radio stations we can own in a single market and on the aggregate percentage of the national audience that can be reached by television stations we own.
The FCC imposes limitations on the number of television stations and radio stations an entity can own in a specific market, on the combined number of television and radio stations an entity can own in a single market and on the aggregate percentage of the national audience that can be reached by television stations.
In addition, advertising revenues generated from sports programming are impacted by the timing of sports seasons and events, which varies throughout the year or may take place periodically (e.g. biannually, quadrennially). Affiliate revenues vary with the subscriber trends of MVPDs.
Advertising revenues generated from sports programming are also impacted by the timing of sports seasons and events, which timing may vary throughout the year or may take place periodically (e.g. biannually, quadrennially). Affiliate revenues vary with the subscriber trends of MVPDs.
In the U.S., rights include college football (including bowl games and the College Football Playoff) and basketball, the National Basketball Association (NBA), the National Football League (NFL), MLB, US Open Tennis, the Professional Golfers’ Association (PGA) Championship, the Women’s National Basketball Association (WNBA), soccer, Top Rank Boxing, the Wimbledon Championships, the Masters golf tournament, mixed martial arts and the National Hockey League (NHL).
Rights include the National Football League (NFL), college football (including bowl games and the College Football Playoff) and basketball, the National Basketball Association (NBA), mixed martial arts, Major League Baseball (MLB), the National Hockey League (NHL), soccer, Top Rank Boxing, US Open Tennis, the Masters golf tournament, the Wimbledon Championships, the Professional Golfers’ Association (PGA) Championship and the Women’s National Basketball Association (WNBA).
Federal Regulation Television and radio broadcasting are subject to extensive regulation by the Federal Communications Commission (FCC) under federal laws and regulations, including the Communications Act of 1934, as amended. Violation of FCC regulations can result in substantial monetary fines, limited renewals of licenses and, in egregious cases, denial of license renewal or revocation of a license.
FEDERAL REGULATION — ENTERTAINMENT AND SPORTS Television broadcasting is subject to extensive regulation by the Federal Communications Commission (FCC) under federal laws and regulations, including the Communications Act of 1934, as amended. Violation of FCC regulations can result in substantial monetary fines, limited renewals of licenses and, in egregious cases, denial of license renewal or revocation of a license.
Disneyland Paris includes two theme parks (Disneyland Park and Walt Disney Studios Park); seven themed resort hotels; two convention centers; a shopping, dining and entertainment complex (Disney Village); and a 27-hole golf facility. Of the 5,200 acres comprising the site, approximately half have been developed to date, including a planned community (Val d’Europe) and an eco-tourism destination (Villages Nature).
Disneyland Paris includes two theme parks (Disneyland Park and Walt Disney Studios Park); seven themed resort hotels; two convention centers; a shopping, dining and entertainment complex (Disney Village); and a 27-hole golf facility. Of the 5,200 acres comprising the site, approximately half have been developed to date, including a planned community (Val d’Europe).
A+E operates a variety of cable channels: • A&E – which offers entertainment programming including original reality and scripted series • HISTORY – which offers original series and event-driven specials • Lifetime and Lifetime Movie Network (LMN) – which offer female-focused programming • FYI – which offers contemporary lifestyle programming A+E programming is available in approximately 200 countries and territories.
A+E operates a variety of cable channels: • A&E – which generally offers unscripted entertainment programming • HISTORY – which offers original unscripted series and event-driven specials • Lifetime and Lifetime Movie Network (LMN) – which offer female-focused programming • FYI – which offers contemporary lifestyle programming A+E programming is available in approximately 200 countries and territories.
Domestically, we distribute directly to retailers and wholesalers. Internationally, we distribute directly and through independent distribution companies. Physical formats of our film and episodic television content are generally sold to retailers, such as Walmart and Target, and electronic formats are sold through e-tailers, such as Apple and Amazon, and MVPDs, such as Comcast and DirecTV.
Domestically and internationally, we distribute directly to retailers and through independent distribution companies. Electronic formats of our film and episodic content may be purchased through e-tailers such as Apple and Amazon, and MVPDs, such as Comcast and DirecTV, and physical formats are generally sold to retailers, such as Walmart and Target.
Some of the major properties licensed by the Company include: Mickey and Friends, Star Wars, Spider-Man, Disney Princess, Avengers, Frozen, Toy Story, Winnie the Pooh and Cars. Retail The Company sells Disney-, Marvel-, Pixar- and Lucasfilm-branded products through shopDisney branded internet sites and Disney Store branded retail locations.
Some of the major properties licensed by the Company include: Mickey and Friends, Star Wars, Spider-Man, Disney Princess, Avengers, Frozen, Toy Story, Winnie the Pooh and Lilo & Stitch. 15 TABLE OF CONTENTS Retail The Company sells Disney-, Marvel-, Pixar- and Lucasfilm-branded products through shopDisney branded internet sites and Disney Store branded retail locations.
The park features more than 300 species of live mammals, birds, reptiles and amphibians and 3,000 varieties of vegetation. Hotels, Vacation Club Properties and Other Resort Facilities — As of October 1, 2022, the Company owned and operated 19 resort hotels and vacation club facilities at the Walt Disney World Resort, with approximately 23,000 rooms and 3,600 vacation club units.
The park features more than 300 species of live mammals, birds, reptiles and amphibians and 3,000 varieties of vegetation. Hotels, Vacation Club Properties and Other Resort Facilities — As of September 30, 2023, the Company owned and operated 18 resort hotels and vacation club facilities at the Walt Disney World Resort, with approximately 23,000 rooms and 3,600 vacation club units.
These costs are expensed as incurred, which may result in a loss on a film in the theatrical markets, including in periods prior to the theatrical release of the film. Home Entertainment Distribution We distribute the Company’s film and episodic television content in home entertainment markets in physical (DVD and Blu-ray disc) and electronic formats globally.
These costs are expensed as incurred, which may result in a loss on a film in the theatrical markets, including in periods prior to the theatrical release of the film. Home Entertainment Distribution We distribute the Company’s film and episodic content in home entertainment markets on DVD and Blu-ray disc, through electronic home video licenses and VOD rentals globally.
At October 1, 2022, the Company owns and operates approximately 40 stores in Japan, 20 stores in North America, three stores in Europe and one store in China. The Company creates, distributes and publishes a variety of products in multiple countries and languages based on the Company’s branded franchises. The products include children’s books and comic books.
At September 30, 2023, the Company owns and operates approximately 40 stores in Japan, 20 stores in North America, two stores in Europe and one store in China. The Company creates, distributes and publishes a variety of products in multiple countries and languages based on the Company’s branded franchises. The products include children’s books and comic books.
Disneyland Paris Disneyland Paris is located on approximately 5,200-acres in Marne-la-Vallée, approximately 20 miles east of Paris, France. The land is being developed pursuant to a master agreement with French governmental authorities.
The resort also has approximately 480 vacation club units. Disneyland Paris Disneyland Paris is located on approximately 5,200-acres in Marne-la-Vallée, approximately 20 miles east of Paris, France. The land is being developed pursuant to a master agreement with French governmental authorities.
Consolidation and other market conditions in the cable, satellite and telecommunication distribution industry and other factors may adversely affect the Company’s ability to obtain and maintain contractual terms for the distribution of its various programming services that are as favorable as those currently in place. The Content Sales/Licensing businesses compete with all forms of entertainment.
Consolidation and other market conditions in the cable, satellite and telecommunication distribution industry and other factors may adversely affect the Company’s ability to obtain and maintain contractual terms for the distribution of its various programming services that are as favorable as those currently in place.
These include online, instructor-led and on-the-job learning formats as well as executive talent and succession planning paired with an individualized development approach. • Social Responsibility and Community: The Company’s longstanding commitment to Corporate Social Responsibility (CSR) helps differentiate the Company as an employer.
These include online, instructor-led and on-the-job learning formats as well as executive talent and succession planning paired with an individualized development approach. • Sustainability and Social Impact: The Company’s longstanding commitments to sustainability and social impact helps differentiate the Company as an employer.
The Company also operates Disney Movie Club, which sells DVD/Blu-ray discs directly to consumers in the U.S. and Canada. Distribution of film content in the home entertainment window generally starts within three months after the theatrical release. Electronic formats may be released up to two weeks ahead of the physical release.
The Company also operates Disney Movie Club, which sells DVD/Blu-ray discs directly to consumers in the U.S. and Canada. Distribution of film content in the home entertainment window generally starts within three months after the theatrical release. Electronic formats are typically available approximately four to eight weeks ahead of the physical release.
Distribution of episodic television content in the home entertainment window includes digital sales of season passes that can be purchased prior to, during and after the broadcast season with individual episodes typically available to season pass customers shortly after the initial airing of the show in each territory.
We also license titles to VOD e-tailers concurrent with physical home entertainment distribution. Distribution of episodic content in the home entertainment window includes electronic sales of season passes that can be purchased prior to, during and after the broadcast season with individual episodes typically available to season pass customers shortly after the initial airing of the show in each territory.
Additionally, the Company licenses our IP to a third party to operate Tokyo Disney Resort. ◦ Disney Cruise Line, Disney Vacation Club, National Geographic Expeditions (73% ownership interest), Adventures by Disney and Aulani, a Disney Resort & Spa in Hawaii • Consumer Products: ◦ Licensing of our trade names, characters, visual, literary and other IP to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games ◦ Sale of branded merchandise through online, retail and wholesale businesses, and development and publishing of books, comic books and magazines (except National Geographic magazine, which is reported in DMED) The significant revenues of DPEP are as follows: • Theme park admissions - Sales of tickets for admission to our theme parks and for premium access to certain attractions (e.g.
EXPERIENCES The significant lines of business within Experiences are as follows: • Parks & Experiences: ◦ Domestic: ▪ Theme parks and resorts: • Walt Disney World Resort in Florida • Disneyland Resort in California ▪ Experiences: • Disney Cruise Line • Disney Vacation Club • National Geographic Expeditions (owned 73% by the Company) and Adventures by Disney 11 TABLE OF CONTENTS • Aulani, a Disney Resort & Spa in Hawaii ◦ International: ▪ Theme parks and resorts: • Disneyland Paris • Hong Kong Disneyland Resort (48% ownership interest and consolidated in our financial results) • Shanghai Disney Resort (43% ownership interest and consolidated in our financial results) • In addition, the Company licenses its IP to a third party to operate Tokyo Disney Resort • Consumer Products: ◦ Licensing of our trade names, characters, visual, literary and other IP to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games ◦ Sale of branded merchandise through online, retail and wholesale businesses, and development and publishing of books, comic books and magazines (except National Geographic magazine, which is reported in Entertainment) The significant revenues of Experiences are as follows: • Theme park admissions - Sales of tickets for admission to our theme parks and for premium access to certain attractions (e.g.
Tokyo Disney Resort Tokyo Disney Resort is located on 494 acres of land, six miles east of downtown Tokyo, Japan. The Company earns royalties on revenues generated by the Tokyo Disney Resort, which is owned and operated by Oriental Land Co., Ltd. (OLC), a third-party Japanese corporation.
The Company earns royalties on revenues generated by the Tokyo Disney Resort, which is owned and operated by Oriental Land Co., Ltd. (OLC), a third-party Japanese corporation.
Federal legislation and FCC rules also limit the amount of commercial matter that may be shown on broadcast or cable channels during programming designed for children 12 years of age and younger.
Penalties for broadcasting indecent programming can be over $400,000 per indecent utterance or image per station. Federal legislation and FCC rules also limit the amount of commercial matter that may be shown on broadcast or cable channels during programming designed for children 12 years of age and younger.
The channel features a mix of live-action and animated programming. 5 TABLE OF CONTENTS ESPN Branded television channels include eight 24-hour domestic television sports channels: ESPN and ESPN2 (both of which are dedicated to professional and college sports as well as sports news and original programming); ESPNU (which is dedicated to college sports); ESPNEWS (which re-airs select ESPN studio shows and airs a variety of other programming); SEC Network (which is dedicated to Southeastern Conference college athletics); Longhorn Network (which is dedicated to The University of Texas athletics); ESPN Deportes (which airs professional and college sports as well as studio shows in Spanish); and ACC Network (which is dedicated to Atlantic Coast Conference college athletics).
Programming and production costs include amortization of licensed sports rights and production costs related to live sports and other sports-related programming. • Selling, general and administrative costs, including marketing costs • Depreciation and amortization Domestic ESPN Branded television channels include eight 24-hour domestic television sports channels: ESPN and ESPN2 (both of which are dedicated to professional and college sports as well as sports news and original programming); ESPNU (which is dedicated to college sports); ESPNEWS (which re-airs select ESPN studio shows and airs a variety of other programming); SEC Network (which is dedicated to Southeastern Conference college athletics); ACC Network (which is dedicated to Atlantic Coast Conference college athletics); ESPN Deportes (which airs professional and college sports as well as studio shows in Spanish); and Longhorn Network (which is dedicated to The University of Texas athletics).
Advertising revenues at Linear Networks and Direct-to-Consumer are subject to seasonal advertising patterns, changes in viewership levels and the demand for sports programming. In general, domestic advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months.
Advertising revenues at Linear Networks and Direct-to-Consumer are subject to seasonal advertising patterns and changes in viewership levels. In general, domestic advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months. Affiliate revenues vary with the subscriber trends of MVPDs.
The Company’s websites and digital products compete with other websites and entertainment products. 12 TABLE OF CONTENTS We also compete with other media and entertainment companies, independent production companies and SVOD services for the acquisition of sports rights, creative and performing talent, story properties, show concepts, scripted and other programming, advertiser support and exhibition outlets that are essential to the success of our DMED businesses.
We also compete with other media and entertainment companies, independent production companies and VOD services for creative and performing talent, story properties, show concepts, scripted and other programming, advertiser support, production facilities and exhibition outlets that are essential to the success of our Entertainment businesses.
Shanghai Disneyland — Shanghai Disneyland consists of seven themed areas: Adventure Isle, Fantasyland, Gardens of Imagination, Mickey Avenue, Tomorrowland, Toy Story Land and Treasure Cove. These areas feature themed attractions, shows, restaurants, merchandise shops and entertainment experiences. The Company is constructing an eighth themed area based on the animated film Zootopia .
Shanghai Disneyland — Shanghai Disneyland consists of seven themed areas: Adventure Isle, Fantasyland, Gardens of Imagination, Mickey Avenue, Tomorrowland, Toy Story Land and Treasure Cove. These areas feature themed attractions, shows, restaurants, merchandise shops and entertainment experiences.
These areas include themed attractions, restaurants, merchandise shops and entertainment experiences. Hotels, Vacation Club Units and Other Resort Facilities — Disneyland Resort includes three Company owned and operated hotels and vacation club facilities with approximately 2,400 rooms, 50 vacation club units and 180,000 square feet of conference meeting space.
Hotels, Vacation Club Units and Other Resort Facilities — Disneyland Resort includes three Company owned and operated hotels and vacation club facilities with approximately 2,400 rooms, 180 vacation club units and 180,000 square feet of conference meeting space.
Content Sales/Licensing and Other The majority of Content Sales/Licensing revenue is derived from TV/SVOD, theatrical and home entertainment distribution. In addition, revenue is generated from music distribution and stage plays. The Company also publishes National Geographic magazine and provides post-production services through Industrial Light & Magic and Skywalker Sound. These activities are reported with Content Sales/Licensing.
In addition, revenue is generated from music distribution, stage plays and post-production services through Industrial Light & Magic and Skywalker Sound. The Company also publishes National Geographic magazine, which is reported with Content Sales/Licensing.
All of our television stations are affiliated with ABC and collectively reach approximately 20% of the nation’s television households. 7 TABLE OF CONTENTS The stations we own are as follows: TV Station Market Television Market Ranking (1) WABC New York, NY 1 KABC Los Angeles, CA 2 WLS Chicago, IL 3 WPVI Philadelphia, PA 4 KGO San Francisco, CA 8 KTRK Houston, TX 9 WTVD Raleigh-Durham, NC 24 KFSN Fresno, CA 55 (1) Based on Nielsen Media Research, U.S.
The stations we own are as follows: TV Station Market Television Market Ranking (1) WABC New York, NY 1 KABC Los Angeles, CA 2 WLS Chicago, IL 3 WPVI Philadelphia, PA 4 KTRK Houston, TX 7 KGO San Francisco, CA 10 WTVD Raleigh-Durham, NC 23 KFSN Fresno, CA 53 (1) Based on Nielsen Media Research, U.S.
The Company’s linear networks businesses provide programming under multi-year licensing agreements with MVPDs and/or affiliated television stations that are generally based on contractually specified rates on a per subscriber basis.
The Company’s Linear Networks businesses provide programming under multi-year licensing agreements with MVPDs and/or affiliated television stations that are generally based on contractually specified rates on a per subscriber basis. The amounts that we can charge for our networks are largely dependent on the quality and quantity of programming that we can provide and the competitive market for programming services.
Disney+ Services (includes Disney+ Hotstar and Star+) Disney+ is a subscription-based DTC service with Disney, Pixar, Marvel, Star Wars and National Geographic branded programming, which are all top level selections or “tiles” within the Disney+ interface.
Disney+ (including Star+ in Latin America) Disney+ is a subscription-based DTC service with Disney, Pixar, Marvel, Star Wars and National Geographic branded programming, which are all top-level selections or “tiles” within the Disney+ interface. Outside the U.S. and Latin America, Disney+ also includes a Star branded tile, which features general entertainment programming.
The program helps our employees achieve their goals professionally - whether at Disney or beyond - by equipping them with the skills they need to succeed in the rapidly changing 21 st century career landscape.
The program helps our employees achieve their goals professionally - whether at Disney or beyond - by equipping them with the skills they need to succeed in the rapidly changing 21 st century career landscape. More than 15,000 current employees are enrolled and more than 3,800 current employees have graduated since the program launched in 2018.
The Company’s vacation club units range from deluxe studios to three-bedroom grand villas. Unit counts in this document are presented in terms of two-bedroom equivalents. DVC had approximately 4,400 vacation club units as of October 1, 2022 and is scheduled to open an additional 135 units at The Villas at Disneyland Hotel in 2023.
The Company’s vacation club units range from deluxe studios to three-bedroom grand villas. Unit counts in this document are presented in terms of two-bedroom equivalents. DVC had approximately 4,500 vacation club units as of September 30, 2023, including The Villas at Disneyland Hotel, which opened in September 2023.
Disney Village is an approximately 500,000-square-foot retail, dining and entertainment complex located between the theme parks and the hotels. A number of the Disney Village facilities are operated by third parties that pay rent to the Company. Val d’Europe is a planned community near Disneyland Paris that is being developed in phases.
In addition, five on-site hotels that are owned and operated by third parties provide approximately 1,500 rooms. Disney Village is an approximately 500,000-square-foot retail, dining and entertainment complex located between the theme parks and the hotels. A number of the Disney Village facilities are operated by third parties that pay rent to the Company.
Competition and Seasonality The Company’s Linear Networks and DTC streaming services compete for viewers primarily with other television networks, independent television stations and other media, such as other DTC streaming services and video games.
Competition and Seasonality Linear Networks and Direct-to-Consumer compete for viewers’ attention and audience share primarily with other television networks, independent television stations and other media, such as other DTC streaming services, social media and video games.
Walt Disney Studios Park is undergoing a multi-year expansion that will include a new themed area based on Frozen. Hotels and Other Facilities — Disneyland Paris operates seven resort hotels, with approximately 5,750 rooms and 250,000 square feet of conference meeting space. In addition, five on-site hotels that are owned and operated by third parties provide approximately 1,500 rooms.
These areas each include themed attractions, restaurants, merchandise shops and entertainment experiences. Walt Disney Studios Park is undergoing a multi-year expansion that will include a new themed area based on Frozen. Hotels and Other Facilities — Disneyland Paris operates seven resort hotels, with approximately 5,750 rooms and 250,000 square feet of conference meeting space.
The Company also supports employees who give back to our communities with a generous matching gifts program and a unique employee volunteering program, Disney VoluntEARS, which rewards volunteer hours with the opportunity to direct not-for-profit donations by the Company.
The Company also supports employees who give back to our communities with a generous U.S. matching gifts program, as well as Disney VoluntEARS, which rewards employees for their volunteer hours with the opportunity to direct not-for-profit donations from the Company to qualified non-profits of their choosing.
Downtown Disney is a themed 15-acre retail, entertainment and dining complex with approximately 30 venues located adjacent to both Disneyland and Disney California Adventure. Most of the Downtown Disney facilities are operated by third parties that pay rent to the Company.
Downtown Disney is a themed 15-acre retail, entertainment and dining complex with approximately 30 venues located adjacent to both Disneyland and Disney California Adventure.
Hulu Hulu is a subscription-based DTC service with general entertainment content from the Company’s various studios as well as content licensed from third parties. Hulu’s revenue is primarily derived from subscription fees and advertising sales.
Hulu Hulu is a domestic subscription-based DTC service with general entertainment content from the Company’s various studios as well as content licensed from third parties. Hulu’s revenue is primarily derived from subscription fees and Advertising. Hulu offers subscription VOD (SVOD) services with or without advertising in addition to a digital OTT MVPD (Live TV) service.
Walt Disney Studios Park — Walt Disney Studios Park includes five themed areas: Front Lot, Production Courtyard, Toon Studio, Worlds of Pixar and Avengers Campus, which opened in the summer of 2022. These areas each include themed attractions, restaurants, merchandise shops and entertainment experiences.
Disneyland Park — Disneyland Park consists of five themed areas: Adventureland, Discoveryland, Fantasyland, Frontierland and Main Street USA. These areas include themed attractions, restaurants, merchandise shops and entertainment experiences. Walt Disney Studios Park — Walt Disney Studios Park includes five themed areas: Front Lot, Production Courtyard, Toon Studio, Worlds of Pixar and Avengers Campus.
Aulani, a Disney Resort & Spa Aulani, a Disney Resort & Spa, is a Company-operated family resort on a 21-acre oceanfront property on Oahu, Hawaii featuring approximately 350 hotel rooms, an 18,000-square-foot spa and 12,000 square feet of conference meeting space. The resort also has approximately 480 vacation club units.
Most of the Downtown Disney facilities are operated by third parties that pay rent to the Company. 13 TABLE OF CONTENTS Aulani, a Disney Resort & Spa Aulani, a Disney Resort & Spa is a family resort on a 21-acre oceanfront property on Oahu, Hawaii featuring approximately 350 hotel rooms, an 18,000-square-foot spa and 12,000 square feet of conference meeting space.
The Company also plans to open additional units at Disney’s Polynesian Village Resort in late 2024. Storyliving by Disney The Company is developing its first Storyliving by Disney residential community, Cotino, in Rancho Mirage, California. Disney Cruise Line Disney Cruise Line is a five-ship vacation cruise line, which operates out of ports in North America and Europe.
The Company plans to open The Cabins at Disney’s Fort Wilderness Resort - A Disney Vacation Club Resort and additional units at Disney’s Polynesian Village Resort in 2024. Storyliving by Disney The Company is developing its first Storyliving by Disney residential community, Cotino, in Rancho Mirage, California.
Val d’Europe currently includes a regional train station, hotels and a town center consisting of a shopping center as well as office, commercial and residential space. Third parties operate these developments on land leased or purchased from the Company. Villages Nature is an eco-tourism resort that consists of recreational facilities, restaurants and 900 vacation units.
Val d’Europe is a planned community near Disneyland Paris that is being developed in phases. Val d’Europe currently includes a regional train station, hotels and a town center consisting of a shopping center as well as office, commercial and residential space. Third parties operate these developments on land leased or purchased from the Company.
The Company employed approximately 220,000 people as of October 1, 2022, of which approximately 166,000 were employed in the U.S. and approximately 54,000 were employed internationally. Our global workforce is comprised of approximately 78% full time and 15% part time employees, with another 7% being seasonal employees.
The Company employed approximately 225,000 people as of September 30, 2023, of which approximately 167,000 were employed in the U.S. and approximately 58,000 were employed outside the U.S. Our global workforce is comprised of approximately 77% full time and 16% part time employees, with another 7% being seasonal employees.
ESPN branded channels primarily operate in Latin America, Asia Pacific and Europe. In the Netherlands, the ESPN branded channels are operated by Eredivisie Media & Marketing CV (EMM), which has the media and sponsorship rights of the Dutch Premier League for soccer. The Company owns 51% of EMM.
In the Netherlands, the ESPN branded channels are operated by Eredivisie Media & Marketing CV (EMM) (owned 51% by the Company), which has the media and sponsorship rights of the Dutch Premier League for soccer. Rights include various soccer leagues (including English Premier League, LaLiga, Bundesliga and multiple UEFA leagues).
Environmental and Sustainability The Company has developed measurable environmental and sustainability goals for 2030, grounded in science and an assessment of where the Company’s operations have the most significant impact on the environment, as well as the areas where it can most effectively mitigate that impact.
Environmental Sustainability The Company has developed measurable environmental sustainability goals for 2030, based on our assessment of where the Company’s operations have the most significant environmental impacts and where we can most effectively mitigate those impacts.
Our DE&I initiatives and programs include: ◦ The Company’s Reimagine Tomorrow efforts, which build on Disney’s longstanding commitment to diversity, equity and inclusion, and features a website, Disney’s first large-scale platform for amplifying underrepresented voices ◦ Executive Incubator, Creative Talent Development and Inclusion, and the Disney Launchpad: Shorts Incubator, which are designed to create a pipeline of next-generation creative executives from underrepresented backgrounds ◦ Development programs, which target underrepresented talent ◦ Innovative learning opportunities, which spark dialogue among employees, leaders, Disney talent and external experts ◦ Over 100 employee-led Business Employee Resource Groups (BERGs), which represent and support the diverse communities that make up our workforce ◦ The Disney Look appearance guidelines, which were updated to cultivate a more inclusive environment that encourages and celebrates authentic expressions of belonging among employees 2 TABLE OF CONTENTS • Health, wellness, family resources, and other benefits: Disney’s benefit offerings are designed to meet the varied and evolving needs of a diverse workforce across businesses and geographies while helping our employees care for themselves and their families.
Our DE&I initiatives and programs include: ◦ Reimagine Tomorrow, which is the Company’s digital destination for amplifying underrepresented voices and features some of Disney’s DE&I commitments and actions ◦ Executive Incubator, Creative Talent Development and Inclusion, and the Disney Launchpad: Shorts Incubator, which are designed to create a pipeline of next-generation creative executives from underrepresented backgrounds ◦ Employee development programs and fellowships for underrepresented talent ◦ Innovative learning opportunities, which spark dialogue among employees, leaders, Disney talent and external experts 2 TABLE OF CONTENTS ◦ Over 100 employee-led groups, which represent and support the diverse communities that make up our global workforce ◦ The Disney Look appearance guidelines, which were updated to cultivate a more inclusive environment that encourages and celebrates authentic expressions of belonging among employees • Disney Aspire: We support the long-term career aspirations of our hourly employees and further our commitment to strengthening the communities in which we work through our education investment program, Disney Aspire.
TV/SVOD Distribution Although we generally intend to use our film and television content on our DTC services and linear networks in TV/SVOD windows, we also license our content to third-party television networks, television stations and other video service providers for distribution to viewers on television or a variety of internet-connected devices, including through other DTC services.
TV/VOD Distribution We license our content to third-party television networks, television stations and other video service providers for distribution to viewers on television or a variety of internet-connected devices, including through other DTC services. Theatrical Distribution The Company licenses full-length live-action and animated films to theaters globally.
EPCOT — EPCOT consists of four major themed areas: World Showcase, World Celebration, World Nature and World Discovery. All areas feature themed attractions, restaurants, merchandise shops and entertainment experiences. Countries represented with pavilions include Canada, China, France, Germany, Italy, Japan, Mexico, Morocco, Norway, the United Kingdom and the U.S.
All areas feature themed attractions, restaurants, merchandise shops and entertainment experiences. Countries represented with pavilions include Canada, China, France, Germany, Italy, Japan, Mexico, Morocco, Norway, the United Kingdom and the U.S. The Journey of Water, inspired by Moana, opened in October 2023 as part of a multi-year transformation at EPCOT.
We provide: ◦ Healthcare options aimed at improving quality of care while limiting out-of-pocket costs ◦ Family care resources, such as childcare programs for employees, including access to onsite/community centers, enhanced back-up care choices to include personal caregivers, childcare referral assistance and center discounts, homework help, a variety of parenting educational resources and a family building benefit supporting fertility treatments, adoptions or surrogacy ◦ Free mental and behavioral health resources, including on-demand access to the Employee Assistance Program for employees and their dependents ◦ Two Centers for Living Well that offer convenient, on-demand access to board-certified physicians and counselors ◦ A multi-layered response to COVID-19, including testing and treatment under all Company medical plans at no cost to employees and dependents ◦ Global Well-Being Week (introduced in 2022), a dedicated week for employees around the world to celebrate, learn and engage in well-being through in-person and virtual events and activities focused on physical, emotional, financial, and social well-being • Disney Aspire: We support the long-term career aspirations of our hourly employees and further our commitment to strengthening the communities in which we work through our education investment program, Disney Aspire.
We provide: ◦ Healthcare options aimed at improving quality of care while limiting out-of-pocket costs ◦ Family care resources, such as childcare and senior care programs for employees, including access to onsite/community centers, enhanced back-up care choices to include personal caregivers, childcare referral assistance and center discounts, homework help, college preparation, support for students with special needs, a variety of parenting educational resources, long-term care coverage and a family building benefit supporting fertility treatments, adoptions or surrogacy ◦ Free mental health and well-being resources, including onsite and virtual on-demand access to the Employee Assistance Program for employees and their dependents and access to digital applications to manage stress and encourage movement ◦ Two Centers for Living Well facilities that offer convenient, on-demand access to board-certified physicians and counselors ◦ Global Well-Being Week (introduced in 2022), a dedicated week for employees around the world to celebrate, learn and engage in well-being through in-person and virtual events and activities focused on physical, emotional, financial and social well-being ◦ Access to a variety of well-being focused apps and platforms including our newest offering, Thrive Global, which is an innovative app that helps employees create long-term healthy habits and behaviors while improving their overall well-being and productivity • Diversity, Equity and Inclusion (DE&I): Our DE&I objectives are to build teams that reflect the life experiences of our audiences, while employing and supporting a diverse array of voices in our creative and production teams.
A significant number of companies produce and/or distribute theatrical and television content, distribute products in the home entertainment market, provide pay television and SVOD services, and produce music and live theater. The operating results of Content Sales/Licensing fluctuate due to the timing and performance of releases in the theatrical, home entertainment and television markets.
Content Sales/Licensing businesses compete with all forms of entertainment and a significant number of companies produce and/or distribute theatrical and episodic content, distribute products in the home entertainment market, provide pay TV/VOD services, and produce music and live theater.
The various investment plans discussed in the “Parks & Experiences” section are based on management’s current expectations. Actual investment may differ. Parks & Experiences Walt Disney World Resort The Walt Disney World Resort is located approximately 20 miles southwest of Orlando, Florida, on approximately 25,000 acres of land.
Parks & Experiences Walt Disney World Resort The Walt Disney World Resort is located approximately 20 miles southwest of Orlando, Florida, on approximately 25,000 acres of land.
Outside the U.S. and Latin America, Disney+ also includes a Star branded tile, which features general entertainment programming. 9 TABLE OF CONTENTS Disney+ Hotstar is a subscription-based DTC service available in India, Indonesia, Malaysia and Thailand. Programming includes television shows, movies, sports and original series in approximately ten languages, in addition to gaming and social features.
Disney+ Hotstar Disney+ Hotstar is a subscription-based DTC service available in India, Indonesia, Malaysia, Philippines and Thailand. Programming includes television shows, movies, sports and original series in approximately ten languages, in addition to gaming and social features. Disney+ Hotstar has exclusive streaming rights to certain cricket programming.
Pursuant to the most recent decision by the FCC as to how to calculate compliance with this limit, our eight stations reach approximately 20% of the national audience. ◦ FCC regulations in some cases impose restrictions on our ability to acquire additional radio or television stations in the markets in which we own radio stations.
Pursuant to the most recent decision by the FCC as to how to calculate compliance with this limit, our eight stations reach approximately 20% of the national audience. • Dual networks .
The Company is entitled to receive royalties and management fees based on the operating performance of Hong Kong Disneyland Resort. Hong Kong Disneyland — Hong Kong Disneyland consists of seven themed areas: Adventureland, Fantasyland, Grizzly Gulch, Main Street USA, Mystic Point, Tomorrowland and Toy Story Land. These areas feature themed attractions, restaurants, merchandise shops and entertainment experiences.
Hong Kong Disneyland — Hong Kong Disneyland consists of eight themed areas: Adventureland, Fantasyland, Grizzly Gulch, Main Street USA, Mystic Point, Tomorrowland, Toy Story Land and World of Frozen, which opened in November 2023. These areas feature themed attractions, restaurants, merchandise shops and entertainment experiences.
ESPN is owned 80% by the Company and 20% by Hearst Corporation (Hearst). Freeform Freeform is a channel targeted to viewers ages 18 to 34 that airs original, Company owned (“library”) and licensed television series, films and holiday programming events.
Disney XD - the Disney XD channel airs programming 24 hours a day targeted to kids ages 6 to 11. The channel features a mix of live-action and animated programming. Freeform Freeform is a channel targeted to viewers ages 18 to 34 that airs original, Company owned (“library”) and licensed television series, films and holiday programming events.
The ability to sell advertising time and the rates received are primarily dependent on the size and nature of the audience that the network can deliver to the advertiser as well as overall advertiser demand. Linear Networks consist of our domestic and international branded television channels.
The ability to sell advertising time and the rates received are primarily dependent on the size and nature of the audience that the network can deliver to the advertiser as well as overall advertiser demand. 4 TABLE OF CONTENTS Domestic Linear Networks ABC Network ABC Network distributes programming to approximately 240 local affiliated television stations and to our eight owned television stations, which collectively reach almost 100% of U.S. television households.
The resort is located on 310 acres on Lantau Island and is in close proximity to the Hong Kong International Airport and the Hong Kong-Zhuhai-Macau Bridge. Hong Kong Disneyland Resort includes one theme park and three themed resort hotels. A separate Hong Kong subsidiary of the Company is responsible for managing Hong Kong Disneyland Resort.
Hong Kong Disneyland Resort The Company owns a 48% interest in Hong Kong Disneyland Resort and the Government of the Hong Kong Special Administrative Region (HKSAR) owns a 52% interest. The resort is located on 310 acres on Lantau Island and is in close proximity to the Hong Kong International Airport and the Hong Kong-Zhuhai-Macau Bridge.
Magic Kingdom — The Magic Kingdom consists of six themed areas: Adventureland, Fantasyland, Frontierland, Liberty Square, Main Street USA and Tomorrowland. Each land provides a unique guest experience featuring themed attractions, restaurants, merchandise shops and entertainment experiences. Tomorrowland is currently undergoing an expansion including the Tron Lightcycle/Run, which is scheduled to open in Spring 2023.
Magic Kingdom — The Magic Kingdom consists of six themed areas: Adventureland, Fantasyland, Frontierland, Liberty Square, Main Street USA and Tomorrowland. Each land provides a unique guest experience featuring themed attractions, restaurants, merchandise shops and entertainment experiences. 12 TABLE OF CONTENTS EPCOT — EPCOT consists of four major themed areas: World Showcase, World Celebration, World Nature and World Discovery.
Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early winter and spring holiday periods.
Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early winter and spring holiday periods. In addition, theme park and resort revenues may be higher during significant celebrations such as theme park or character anniversaries and lower in the periods following such celebrations.
As of September 2022, the number of domestic subscribers (in millions) for A+E channels are as follows: Subscribers (1) A&E 69 HISTORY 70 Lifetime 69 LMN 52 FYI 42 (1) Based on Nielsen Media Research estimates as of September 2022. Estimates include traditional MVPD and the majority of digital OTT subscriber counts.
The number of subscribers (in millions) for the significant domestic branded channels are as follows: Subscribers ESPN (1) 71 ESPN2 (1) 71 ESPNU (1) 50 ESPNEWS (2) 53 SEC Network (2) 48 ACC Network (2) 46 (1) Based on Nielsen Media Research estimates as of September 2023. Estimates include traditional MVPD and the majority of digital OTT subscriber counts.
TV/SVOD distribution revenue is primarily reported in Content Sales/Licensing, except for pay-per-view and Premier Access revenues, which are reported in Direct-to-Consumer. • Theatrical distribution - Rentals from licensing our film productions to theaters • Home entertainment - Sales of our film and television content to retailers and distributors in home video formats • Other content sales/licensing revenue - Revenues from licensing our music, ticket sales from stage play performances and fees from licensing our intellectual properties (“IP”) for use in stage plays • Other revenue - Fees from sub-licensing of sports programming rights (reported in Linear Networks) and sales of post-production services (reported with Content Sales/Licensing) The significant expenses of DMED are as follows: • Operating expenses consist primarily of programming and production costs, technical support costs, operating labor, distribution costs and costs of sales.
Linear Networks also generates revenues from fees charged to television stations affiliated with ABC Network. • Subscription fees - Fees charged to customers/subscribers for our DTC streaming services • Advertising - Sales of advertising time/space • TV/VOD distribution - Licensing fees for the right to use our film and episodic content • Theatrical distribution - Rentals from licensing our films to theaters • Home entertainment distribution - Sales and rentals of our film and episodic content to retailers and through distributors • Other revenue - Revenues from licensing our music, ticket sales from stage play performances, fees from licensing our IP for use in stage plays, sales of post-production services and the allocation of consumer products merchandise licensing revenues The significant expenses of Entertainment are as follows: • Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor, distribution costs and costs of sales.
We have incurred and will continue to incur additional costs to address government regulations and the safety of our employees, guests and talent. Human Capital The Company’s key human capital management objectives are to attract, retain and develop the highest quality talent.
Human Capital The Company’s key human capital management objectives are to attract, retain and develop the highest quality talent.
More than 16,000 current employees have enrolled in or graduated from a Disney Aspire program, and more than two-thirds of our program graduates have earned an Associate, Bachelor’s or Master’s degree. • Talent Development: We prioritize and invest in creating opportunities to help employees grow and build their careers through a multitude of training and development programs.
More than 3,100 current students and graduates have been internally promoted across the Company. • Talent Development: We prioritize and invest in creating opportunities to help employees grow and build their careers through a multitude of training and development programs.
Equity Investments The Company has investments in media businesses that are accounted for under the equity method, the most significant of which are A+E and CTV Specialty Television, Inc. (CTV). The Company’s share of the financial results for these investments is reported as “Equity in the income (loss) of investees, net” in the Company’s Consolidated Statements of Operations.
The Company’s share of A+E’s financial results are reported as “Equity in the income (loss) of investees, net” in the Company’s Consolidated Statements of Operations. A+E is owned 50% by the Company and 50% by Hearst.
Direct-to-Consumer Our DTC businesses are subscription services that provide video streaming of general entertainment, family and sports programming (services are offered individually or in various bundles) that are offered to customers directly or through third-party distributors on mobile and internet connected devices.
The services are offered individually or in various bundles, which may include ESPN+ (see Sports segment discussion), to customers directly or through third-party distributors on mobile and internet connected devices. The majority of Direct-to-Consumer revenue is derived from subscription fees and advertising.
Release dates are determined by several factors, including competition and the timing of vacation and holiday periods.
The operating results of Content Sales/Licensing fluctuate due to the timing and performance of releases in the theatrical, home entertainment and television markets. Release dates are determined by several factors, including competition and the timing of vacation and holiday periods.
Hulu offers SVOD services with or without advertising in addition to a digital OTT MVPD (Live TV) service that is available with either of Hulu’s SVOD services and, since December 2021, includes the Disney+ and ESPN+ DTC services. Hulu’s Live TV service includes live linear streams of cable networks and the major broadcast networks.
The Live TV service is available with either of Hulu’s SVOD services and includes live linear streams of cable networks and the major broadcast networks. In addition, Hulu offers subscriptions to premium services such as Max, Cinemax, Starz and Showtime, which can be added to the Hulu service.
Productions include The Lion King , Frozen , Aladdin and Beauty and the Beast . Disney Theatrical Group also licenses the Company’s IP to Feld Entertainment, the producer of Disney On Ice and Marvel Universe Live! .
Disney Theatrical Group also licenses the Company’s IP to Feld Entertainment, the producer of Disney On Ice and Marvel Universe Live! . Disney Music Group The Disney Music Group encompasses all aspects of the Company’s music commercialization and marketing including: recorded music (Walt Disney Records and Hollywood Records); music publishing; and concerts.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, we increasingly face competition for advertising sales from internet and mobile delivered content, which offer advertising delivery technologies that are more targeted than can be achieved through traditional means. • Our television networks compete for carriage of their programming with other programming providers. • Our theme parks and resorts compete for guests with all other forms of entertainment, lodging, tourism and recreation activities. • Our content sales/licensing operations compete for customers with all other forms of entertainment. • Our consumer products business competes with other licensors and creators of IP. • Our DTC businesses compete for customers with an increasing number of competitors’ DTC offerings, all other forms of media and all other forms of entertainment, as well as for technology, creative, performing and business talent and for content.
Biggest changeFor example: • Our programming and production operations compete to obtain creative, performing, production and business talent, sports and other programming, story properties, advertiser support, production facilities and market share with traditional and new media platforms, including other studio operators, television networks, VOD providers and other sources of broadband delivered content. • Our television networks and stations and DTC offerings compete for the sale of advertising time with traditional and new media platforms, including other television and VOD services, as well as with newspapers, magazines, billboards and radio stations, and various forms of internet and mobile delivered content, which offer advertising delivery technologies that are more targeted than can be achieved through traditional means. • Our television networks compete for carriage of their programming with other programming providers. • Our theme parks and resorts compete for guests with all other forms of entertainment, lodging, tourism and recreation activities and compete for creative, performing and business talent, including with other theme park and resort operators. • Our content sales/licensing operations compete for customers with all other forms of entertainment. 21 TABLE OF CONTENTS • Our consumer products business competes with other licensors and creators of IP. • Our DTC streaming services compete for customers with an increasing number of competitors’ DTC offerings, all other forms of media and all other forms of entertainment, as well as for technology, creative, performing and business talent and for content.
As a result, our ability to generate revenue and our expenses in non-U.S. jurisdictions may differ from what would be expected if U.S. law alone governed these operations. Environmental, social and governance matters and any related reporting obligations may impact our businesses. U.S. and international regulators, investors and other stakeholders are increasingly focused on environmental, social, and governance (ESG) matters.
As a result, our ability to generate revenue and our expenses in non-U.S. jurisdictions may differ from what would be expected if U.S. law alone governed these operations. Environmental, social and governance matters and any related reporting obligations may impact our businesses. U.S. and international regulators, investors and other stakeholders are increasingly focused on environmental, social and governance matters.
In addition, actions to reduce inflation, including raising interest rates, increase our cost of borrowing, which in turn could make it more difficult to obtain financing for our operations or investments on favorable terms. Further, global economic conditions may impact foreign currency exchange rates against the U.S. dollar.
In addition, actions to reduce inflation, including raising interest rates, increase our cost of borrowing, which in turn make it more difficult to obtain financing for our operations or investments on favorable terms. Further, global economic conditions impact foreign currency exchange rates against the U.S. dollar.
Each of our businesses is normally subject to seasonal variations and variations in connection with the timing of our product offerings, including as follows: • Revenues at DPEP fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and leisure activities and seasonal consumer purchasing behavior, which generally results in increased revenues during the Company’s first and fourth fiscal quarters.
Each of our businesses is normally subject to seasonal variations and variations in connection with the timing of our product offerings, including as follows: • Revenues at the Experiences segment fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and leisure activities and seasonal consumer purchasing behavior, which generally results in increased revenues during the Company’s first and fourth fiscal quarters.
There can be no assurance that revenues from programming based on these rights will exceed the cost of the rights plus the other costs of producing and distributing the programming. Changes in regulations applicable to our businesses may impair the profitability of our businesses.
There can be no assurance that revenues from programming based on these rights will exceed the cost of the rights plus the other costs of producing and distributing the programming. Regulations applicable to our businesses may impair the profitability of our businesses.
Data maintained in digital form is subject to the risk of unauthorized access, modification, exfiltration, destruction or denial of access and our computer systems are subject to cyberattacks that may result in disruptions in service. We use many third-party systems and software, which are also subject to supply chain and other 21 TABLE OF CONTENTS cyberattacks.
Data maintained in digital form is subject to the risk of unauthorized access, modification, exfiltration, destruction or denial of access and our computer systems are subject to cyberattacks that may result in disruptions in service. We use many third-party systems and software, which are also subject to supply chain and other cyberattacks.
The exclusive forum provision in the Company’s amended and restated bylaws will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the federal securities laws including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or the respective rules and regulations promulgated thereunder. 27 TABLE OF CONTENTS
The exclusive forum provision in the Company’s amended and restated bylaws will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the federal securities laws including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or the respective rules and regulations promulgated thereunder.
A variety of uncontrollable events may reduce demand for or consumption of our products and services, impair our ability to provide our products and services or increase the cost or reduce the profitability of providing our products and services.
A variety of uncontrollable events may disrupt our businesses, reduce demand for or consumption of our products and services, impair our ability to provide our products and services or increase the cost or reduce the profitability of providing our products and services.
Accordingly, we may not achieve our forecasted outcomes. Increased competitive pressures may reduce our revenues or increase our costs. We face substantial competition in each of our businesses from alternative providers of the products and services we offer and from other forms of entertainment, lodging, tourism and recreational activities.
Accordingly, we may not achieve our forecasted outcomes. Increased competitive pressures impact our revenues and increase our costs. We face substantial competition in each of our businesses from alternative providers of the products and services we offer and from other forms of entertainment, lodging, tourism and recreational activities.
Moreover, our ability to renew these contracts on favorable terms may be affected by a number of factors, such as consolidation in the market for program distribution, the entrance of new participants in the market for distribution of content on digital platforms and the impacts of COVID-19.
Moreover, our ability to renew these contracts on favorable terms may be affected by a number of factors, such as consolidation in the market for program distribution and the entrance of new participants in the market for distribution of content on digital platforms.
We expect to forgo revenue from traditional sources, particularly as we expand our DTC offerings. To date we have experienced significant losses in our DTC businesses. There can be no assurance that the DTC model and other business models we may develop will ultimately be profitable or as profitable as our existing or historic business models.
We expect to forgo revenue from traditional sources, particularly as we expand our DTC offerings. To date our DTC streaming services have experienced significant losses. There can be no assurance that the DTC model and other business models we may develop will ultimately be profitable or as profitable as our existing or historic business models.
An incident that affected our property directly would have a direct impact on our ability to provide goods and services and could have an extended effect of discouraging consumers from attending our facilities. Moreover, the costs of protecting against such incidents, including the costs of protecting against the spread of COVID-19, reduces the profitability of our operations.
An incident that affected our property directly would have a direct impact on our ability to provide goods and services and could have an extended effect of discouraging consumers from attending our facilities. Moreover, the costs of protecting against such incidents reduces the profitability of our operations.
Economic conditions can also impair the ability of those with whom we do business to satisfy their obligations to us.
Unfavorable economic conditions also impair the ability of those with whom we do business to satisfy their obligations to us.
With respect to the acquisition of programming rights, particularly sports programming rights, the impact of these long-term contracts on our results over the term of the contracts depends on a number of factors, including the strength of advertising markets, subscription levels and rates for programming, effectiveness of marketing efforts and the size of viewer audiences.
With respect to the acquisition of programming rights, particularly sports programming rights, the impact of these long-term contracts on our results over the term of the contracts depends on a number of factors, including the strength of advertising markets, subscription levels and programming rights costs increases, effectiveness of marketing efforts and the size of viewer audiences.
In addition, the business and political climate in some jurisdictions may encourage corruption, which could reduce our ability to compete 24 TABLE OF CONTENTS successfully in those jurisdictions while remaining in compliance with local laws or U.S. anti-corruption laws applicable to our businesses.
In addition, the business and political climate in some jurisdictions may encourage corruption, which could reduce our ability to compete successfully in those jurisdictions while remaining in compliance with local laws or U.S. anti-corruption laws applicable to our businesses.
The highly competitive environment in which we operate puts pricing pressure on our DTC offerings and may require us to lower our prices or not take price increases to attract or retain customers or experience higher churn rates. These and other risks may impact the profitability and success of our DTC businesses.
The highly competitive environment in which we operate puts pricing pressure on our DTC offerings and may require us to lower our prices or not take price increases to attract or retain customers or lead to higher churn rates. These and other risks may impact the profitability and success of our DTC streaming services.
The success of our businesses depends on our ability to consistently create compelling content, which may be distributed, among other ways, through broadcast, cable, internet or cellular technology, theme park attractions, hotels and other resort facilities and travel experiences and consumer products.
The success of our businesses depends on our ability to consistently create compelling content, which may be distributed, among other ways, through broadcast, cable, theaters, internet or mobile technology, and used in theme park attractions, hotels and other resort facilities and travel experiences and consumer products.
Moreover, we must often invest substantial amounts in content production and acquisition, acquisition of sports rights, theme park attractions, cruise ships or hotels and other facilities or customer facing platforms before we know the extent to which these products will earn consumer acceptance, and these products may be introduced into a significantly different market or economic or social climate from the one we anticipated at the time of the investment decisions.
Moreover, we must often invest substantial amounts in content production and acquisition, acquisition of sports rights, launch of new sports-related studio programming, theme park attractions, cruise ships or hotels and other facilities or customer facing platforms before we 18 TABLE OF CONTENTS know the extent to which these products will earn consumer acceptance, and these products may be introduced into a significantly different market or economic or social climate from the one we anticipated at the time of the investment decisions.
Even if these contracts are renewed, the cost of obtaining certain programming rights has increased and may continue to increase (or increase at faster rates than our historical experience) and programming distributors, facing pressures resulting from increased subscription fees and alternative distribution challenges, have demanded and may continue to demand terms (including pricing and the breadth of distribution) that reduce our revenue from distribution of programs (or increase revenue at slower rates than our historical experience).
Even if these contracts are renewed, the cost of obtaining certain programming rights has increased and may continue to increase (or increase at faster rates than our historical experience) and programming distributors, facing pressures resulting from increased subscription fees and alternative distribution challenges, have demanded and may continue to demand terms (including with respect to the pricing for, and the nature and amount of, programming distributed) that reduce our revenue from distribution of programs (or increase revenue at slower rates than our historical experience).
See Item 1 — Business — Disney Media and Entertainment Distribution, Federal Regulation. • Federal, state and foreign privacy and data protection laws and regulations. • Regulation of the safety and supply chain of consumer products and theme park operations, including potential regulation regarding the sourcing, importation and the sale of goods. • Environmental protection regulations. • U.S. and international anti-corruption laws, sanction programs and trade restrictions, restrictions on the manner in which content is currently licensed and distributed, ownership restrictions, currency exchange controls or film or television content requirements, investment obligations or quotas. • Domestic and international labor laws, tax laws or currency controls.
See Item 1 — Federal Regulation - Entertainment and Sports. • Federal, state and foreign privacy and data protection laws and regulations. • Regulation of the safety and supply chain of consumer products and theme park operations, including regulation regarding the sourcing, importation and the sale of goods. • Environmental protection regulations. • U.S. and international anti-corruption laws, sanction programs, trade restrictions and anti-money laundering laws. • Restrictions on the manner in which content is currently licensed and distributed, ownership restrictions or film or television content requirements, investment obligations or quotas. • Domestic and international labor laws, tax laws or currency controls.
The environment for travel and tourism, as well as demand for and consumption of other entertainment products, can be significantly adversely affected in the U.S., globally or in specific regions as a result of a variety of factors beyond our control, including: health concerns (including as it has been by COVID-19 and could be by future health outbreaks and pandemics); adverse weather conditions arising from short-term weather patterns or long-term climate change, catastrophic events or natural disasters (such as excessive heat or rain, hurricanes, typhoons, floods, droughts, tsunamis and earthquakes); international, political or military developments (including social unrest); a decline in economic activity; and terrorist attacks.
The operation of our businesses and the environment for travel and tourism, as well as demand for and consumption of our other entertainment products, can be significantly adversely affected in the U.S., globally or in specific regions as a result of a variety of factors beyond our control, including: health concerns (including as it has been by COVID-19 and could be by future health outbreaks and pandemics); adverse weather conditions arising from short-term weather patterns or long-term climate change, including longer and more regular excessive heat conditions, catastrophic events or natural disasters (such as excessive heat or rain, hurricanes, typhoons, floods, droughts, tsunamis and earthquakes); international, political or military developments, including trade and other international disputes and social unrest; macroeconomic conditions, including a decline in economic activity, inflation and foreign exchange rates; and terrorist attacks.
Changes in technology and in consumer consumption patterns may affect demand for our entertainment products, the revenue we can generate from these products or the cost of producing or distributing products.
Changes in technology, in consumer consumption patterns and in how entertainment products are created affect demand for our entertainment products, the revenue we can generate from these products and the cost of producing or distributing these products.
Consumers may not be willing to pay for an expanding set of DTC streaming services at increasing prices, potentially exacerbated by an economic downturn. In addition, economic downturns negatively impact the purchase of and price for advertising on our DTC streaming services.
There are a number of competing DTC businesses. Consumers may not be willing to pay for an expanding set of DTC streaming services at increasing prices, potentially exacerbated by an economic downturn. In addition, economic downturns negatively impact the purchase of and price for advertising on our DTC streaming services.
Increased levels of indebtedness could also reduce funds available for investments, capital expenditures, share repurchases and dividends, and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels.
Debt repayment obligations could also reduce funds available for investments, capital expenditures, share repurchases and dividends, and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels.
There can be no assurance that our DTC offerings, next generation storytelling offerings and other efforts will successfully respond to these changes. In addition, declines in certain traditional forms of distribution may increase the cost of content allocable to our DTC offerings, negatively impacting the profitability of our DTC offerings.
There can be no assurance that our DTC offerings, new media offerings and other efforts will successfully respond to technological changes. In addition, declines in certain traditional forms of distribution may increase the cost of content allocable to our DTC offerings, negatively impacting the profitability of our DTC offerings.
As of October 1, 2022 Moody’s Investors Service’s long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, Standard and Poor’s long- and short-term debt ratings for the Company were BBB+ and A-2 (Positive), respectively, and Fitch’s long- and short-term debt ratings for the Company were A- and F2 (Stable), respectively.
As of September 30, 2023 Moody’s Investors Service’s long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, Standard and Poor’s long- and short-term debt ratings for the Company were A- and A-2 (Positive), respectively, and Fitch’s long- and short-term debt ratings for the Company were A- and F2 (Stable), respectively.
The current or continued strength in the value of the U.S. dollar has adversely impacted the U.S. dollar value of revenue we receive and expect to receive from other markets and may reduce international demand for our products and services. A decrease in the value of the U.S. dollar may increase our labor, supply or other costs in non-U.S. markets.
The current or continued strength in the value of the U.S. dollar has adversely impacted the U.S. dollar value of revenue we receive and expect to receive from other markets and may reduce international demand for our products and services.
Past declines in economic conditions reduced spending at our parks and resorts, purchases 19 TABLE OF CONTENTS of and prices for advertising on our broadcast and cable networks and owned stations, performance of our home entertainment releases, and purchases of Company-branded consumer products, and similar impacts can be expected as such conditions recur.
Past declines in economic conditions reduced guest spending at our parks and resorts, purchases of and prices for advertising on our broadcast and cable networks and owned stations, performance of our home entertainment releases, and purchases of Company-branded consumer products, and similar impacts can be expected as such conditions recur. Recent inflationary conditions increased certain of our costs.
COVID-19 and distribution innovation in response to COVID-19 has increased opportunities to access content in unauthorized ways. Additionally, negative economic conditions coupled with a shift in government priorities could lead to less enforcement.
Distribution innovations, including in response to COVID-19, have increased opportunities to access content in unauthorized ways. Additionally, negative economic conditions coupled with a shift in government priorities could lead to less enforcement.
In addition, our ability to implement some initiatives or achieve some goals is dependent on external factors. For example, our ability to meet certain sustainability goals or initiatives may depend in part on third-party collaboration, mitigation innovations and/or the availability of economically feasible solutions at scale.
In addition, our ability to implement some initiatives or achieve some goals is dependent on external factors. For example, our ability to meet certain environmental sustainability goals or initiatives will depend in part on third-party collaboration, the availability of suppliers that can satisfy new requirements, mitigation innovations and/or the availability of economically feasible solutions at scale.
The success of our DTC strategy and profitability of our DTC businesses will be impacted by the success of our efforts to reorganize DMED to advance our DTC strategies, drive subscriber additions and retention based on the attractiveness of our content, manage churn in reaction to price increases, achieve the desired financial impact of the Disney+ ad supported service, pricing model and price increases, our ability to execute on cost realignment and the effects of our determinations with regard to distribution for our creative content across windows.
The success of our DTC strategy and profitability of our DTC streaming services will be impacted by the success of the reorganization of our media and entertainment business and our ability to advance our DTC strategies, drive subscriber additions and retention based on the attractiveness of our content, 23 TABLE OF CONTENTS manage churn in reaction to price increases, achieve the desired financial impact of the Disney+ ad supported service, pricing model and price increases, our ability to execute on cost realignment and the effects of our determinations with regard to distribution for our creative content across windows.
If personal information of our customers or employees is misappropriated, our reputation with our customers and employees may be damaged resulting in loss of business or morale, and we may incur costs to remediate possible harm to our customers and employees or damages arising from litigation and/or to pay fines or take other action with respect to judicial or regulatory actions arising out of the incident.
If personal information of our customers or employees is misappropriated, our reputation with our customers and employees may be damaged resulting in loss of business or morale, and related remediation of harm to our customers and employees or damages arising from litigation and/or fines or other actions we take with respect to judicial or regulatory actions arising out of an incident create additional costs.
The current decline in economic conditions could also reduce attendance at our parks and resorts, prices that MVPDs pay for our cable programming, purchases of and prices for advertising on our DTC products or subscription levels for our cable programming or DTC products, while also increasing the prices we pay for goods, services and labor.
The current economic conditions could also have the effect of reducing attendance at our parks and resorts, prices that MVPDs pay for our cable programming, purchases of and prices for advertising on our DTC products or subscription levels for our cable programming or DTC products, while also continuing to increase the prices we pay for goods, services and labor.
This trend has impacted the business model for certain traditional forms of distribution, as evidenced by the industry-wide decline in ratings for broadcast television, the reduction in demand for home entertainment sales of theatrical content, the development of alternative distribution channels for broadcast and cable programming and declines in subscriber levels for traditional cable channels, including for a number of our networks.
These developments have impacted the business model for certain traditional forms of distribution, as evidenced by the industry-wide decline in ratings for broadcast and cable television, the reduction in demand for home entertainment sales of theatrical content, the development of alternative distribution channels for broadcast and cable programming and declines in subscriber levels for traditional cable channels.
Misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products could negatively impact demand for our entertainment offerings and products and adversely affect the profitability of any of our businesses. Our businesses create entertainment, travel and consumer products whose success depends substantially on consumer tastes and preferences that change in often unpredictable ways.
We face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products, which impact demand for our entertainment offerings and products and the profitability of any of our businesses. Our businesses create entertainment, travel and consumer products whose success depends substantially on consumer tastes and preferences that change in often unpredictable ways.
The media entertainment and internet businesses in which we participate increasingly depend on our ability to successfully adapt to shifting patterns of content consumption through the adoption and exploitation of new technologies.
The media entertainment and internet businesses in which we participate increasingly depend on our ability to successfully adapt to new technologies including shifting patterns of content consumption and how entertainment products are generated.
In addition, increases in interest rates have increased our cost of borrowing and volatility in U.S. and global financial markets could impact our access to, or further increase the cost of, financing. Past disruptions in the U.S. and global credit and equity markets made it more difficult for many businesses to obtain financing on acceptable terms.
Any future downgrades could increase our cost of borrowing and/or make it more difficult for us to obtain financing on acceptable terms. In addition, increases in interest rates have increased our cost of borrowing and volatility in U.S. and global financial markets could impact our access to, or further increase the cost of, financing.
When these changes or events occur, we have incurred and may continue to incur costs to change our business strategy and have needed and may in the future need to write-down the value of assets. For example, current conditions, including COVID-19 and our business decisions, have reduced the value of some of our assets.
When these changes or events occur, we have incurred and may continue to incur costs to change our business strategy and have needed and may in the future need to write-down the value of assets.
Broader supply chain delays, such as those currently impacting global distribution may further exacerbate current inflationary pressures and impact our ability to sell and deliver goods or otherwise disrupt our operations.
Broader or targeted supply chain delays, such as those that have impacted global distribution from time to time, may further exacerbate inflationary pressures and impact our ability to sell and deliver goods or otherwise disrupt our operations.
Laws in some jurisdictions differ in significant respects from those in the U.S. These differences can affect our ability to react to changes in our business, and our rights or ability to enforce rights may be different than would be expected under U.S. law.
These differences can affect our ability to react to changes in our business, and our rights or ability to enforce rights may be different than would be expected under U.S. law.
For example, in 2019 India implemented regulation and tariffs impacting certain bundling of channels; in 2022 the U.S. and other countries implemented a series of sanctions against Russia in response to events in Russia and Ukraine; U.S. agencies have enhanced trade restrictions and legislation is currently under consideration that would prohibit importation of goods from certain regions; U.S. state governments have become more active in passing legislation targeted at specific sectors and companies; and in many countries/regions around the world (including but not limited to the EU) regulators are requiring us to broadcast on our linear (or display on our DTC streaming services) programming produced in specific countries as well as invest specified amounts of our revenues in local content productions.
For example, in 2022 the U.S. and other countries implemented a series of sanctions against Russia in response to events in Russia and Ukraine; U.S. agencies have enhanced trade restrictions, including new prohibitions on the importation of goods from certain regions and other jurisdictions are considering similar measures; U.S. state governments have become more active in passing legislation targeted at specific sectors and companies and applying existing laws in novel ways to new technologies, including streaming and online commerce; and in many countries/regions around the world (including but not limited to the EU) regulators are requiring us to broadcast on our linear (or display on our DTC streaming services) programming produced in specific countries as well as invest specified amounts of our revenues in local content productions.
A decline in economic conditions, such as recession, economic downturn, and/or inflationary conditions in the U.S. and other regions of the world in which we do business can adversely affect demand and/or expenses for any of our businesses, thus reducing our revenue and earnings.
Declines in economic conditions, such as recession, economic downturn, and/or inflationary conditions in the U.S. and other regions of the world in which we do business, or a failure of conditions to improve as anticipated typically adversely affect demand and/or expenses for one or more of our businesses, reducing our revenue and earnings.
Release dates and methods are determined by a number of factors, including, among others, competition, the timing of vacation and holiday periods and impacts of COVID-19 to various distribution markets. • DTC revenues fluctuate based on changes in the number of subscribers and subscriber fee or revenue mix; viewership levels on our digital platforms; and the demand for sports and film and television content.
Release dates and methods are determined by a number of factors, including, among others, competition, and the timing of vacation and holiday periods. • DTC revenues fluctuate based on: changes in the number of subscribers, mix of subscribers to different offerings and subscriber fees; viewership levels; and the demand for sports and film and television content.
In any of these events, our costs may increase, we may have significant charges associated with the write-down of assets or returns on new investments may be negative or lower than prior to the change in strategy or restructuring.
In addition, our costs may increase, we may have significant charges associated with the write-down of assets, as occurred in connection with the closure of Star Wars: Galactic Starcruiser or returns on new investments may be negative or lower than prior to the change in strategy or restructuring.
Increased competition may increase the cost of programming and other products and divert consumers from our creative or other products, or to other products or other forms of entertainment, which could reduce our revenue or increase our marketing costs.
Increased competition has increased, and may continue to increase, the cost of programming, including sports and other products and diverts consumers from, or delays their consumption of, our creative or other products, or to other products or other forms of entertainment and experiences, which could reduce our revenue or increase our marketing costs.
In addition, at DMED we delayed, or in some cases, shortened or canceled theatrical releases and experienced disruptions in the production and availability of content. Collectively, our impacted businesses have historically been the source of the majority of our revenue.
In addition, we delayed, or in some cases, shortened or canceled theatrical releases and experienced disruptions in the production and availability of content. Collectively, our impacted businesses historically have been the source of the majority of our revenue. In addition, hurricanes have impacted the profitability of Walt Disney World Resort and may do so in the future.
In addition, many of our businesses increasingly depend on acceptance of our offerings and products by consumers outside the U.S. The success of our businesses therefore depends on our ability to successfully predict and adapt to changing consumer tastes and preferences outside as well as inside the U.S.
The success of our businesses therefore depends on our ability to successfully predict and adapt to changing consumer tastes and preferences outside as well as inside the U.S.
In addition, an increase in price levels generally, or in price levels in a particular sector such as current inflation in the domestic and global energy sector and other pronounced price increases generally and in certain other sectors, could result in a shift in consumer demand away from the entertainment and consumer products we offer, which could also adversely affect our revenues and, at the same time, increase our costs.
In addition, an increase in price levels generally, or in price levels in a particular sector, could result in a shift in consumer demand away from the entertainment and experiences we offer, which could also adversely affect our revenues and, at the same time, increase our costs.
We have impaired goodwill and intangible assets at our International Channels businesses and impaired the value of certain of our retail store assets. We may write-down other assets as our strategy evolves to account for the current business environment.
In addition to the content impairment noted above, among other assets, we have impaired goodwill and intangible assets at our linear networks and impaired the value of certain of our retail store assets. We may write down other assets as our strategy evolves to account for the current business environment.
In addition, licensing revenues fluctuate with the timing and performance of our theatrical releases and cable programming broadcasts, many of which have been delayed, canceled or modified. • Revenues from television networks and stations are subject to seasonal advertising patterns and changes in viewership levels.
In addition, licensing revenues fluctuate with the timing and performance of our theatrical releases and cable programming broadcasts. • Revenues from television networks and stations are subject to seasonal advertising patterns and changes in viewership levels, including related to certain sporting events.
The Company has paused certain operations in certain regions and the profitability of certain operations has been impacted as a result of events in the corresponding regions.
The Company has paused certain operations in certain regions, including in response to sanctions, trade restrictions and related developments and the profitability of certain operations has been impacted as a result of events in the corresponding regions.
Our broadcast networks and television stations are highly regulated, and each of our other businesses is subject to a variety of U.S. and overseas regulations. Some of these regulations include: • U.S. FCC regulation of our television and radio networks, our national programming networks and our owned television stations.
Each of our businesses, including our broadcast networks and television stations, is subject to a variety of U.S. and international regulations, which impact the operations and profitability of our businesses. Some of these regulations include: • U.S. FCC regulation of our television and radio networks, our national programming networks and our owned television stations.
Competition for the acquisition of resources can further increase the cost of producing our products and services, deprive us of talent necessary to produce high quality creative material or increase the cost of compensation for our employees.
Competition for the acquisition of resources can further increase the cost of producing our products and services; change the composition of our offerings, including sports; deprive us of talent needed for our entertainment and experiences businesses, including the talent necessary to produce high quality creative material; increase employee turnover and staffing instability; or increase the cost of compensation for our employees.
Costs of employee health, welfare and pension benefits, including postretirement medical benefits for some employees and retirees, may reduce our profitability.
Our operations are impacted by our ability to attract and retain employees and costs of employee wages and health, welfare and pension benefits, including postretirement medical benefits for some employees and retirees, may reduce our profitability.
In addition, theater-going to watch movies currently is, and may continue to be, below pre-COVID-19 levels. Declines in linear viewership have resulted in decreased advertising revenue.
These trends have decreased advertising and affiliate revenue at some of our linear networks. In addition, theater-going to watch movies currently is, and may continue to be, below pre-COVID-19 levels.
Some of these investments have returns that are negative or low, the ultimate business prospects of the businesses related to these investments are uncertain, these investments may impact the profitability of our other businesses, and these risks are exacerbated by COVID-19.
Some of these and future investments may ultimately result in returns that are negative or low, the ultimate business prospects of the businesses related to these investments are uncertain, and these investments may impact the resources available to, and the profitability of, our other businesses.
Such costs, including the Company’s obligations under the Hulu put/call agreement with NBCU, could negatively impact the Company’s free cash flow and result in the Company incurring additional indebtedness. GENERAL RISKS The price of our common stock has been, and may continue to be, volatile.
The cost to purchase NBCU’s equity interest in Hulu and related obligations to NBCU and any such other costs could negatively impact the Company’s cash position and result in the Company incurring additional indebtedness. GENERAL RISKS The price of our common stock has been, and may continue to be, volatile.
The adverse impact on our businesses of the decline in economic conditions will depend, in part, on its severity and duration and our ability to mitigate the impacts of this decline on our businesses will be limited.
The adverse impact on our businesses of declines in economic conditions or a failure of conditions to improve as anticipated will depend, in part, on the severity and duration of such economic conditions and our ability to mitigate the impacts of economic conditions on our businesses may be limited.
Significant negative claims or publicity regarding the Company or its operations, products, management, employees, practices, business partners, business decisions, social responsibility and culture may materially damage our brands or reputation, even if such claims are untrue. Damage to our reputation or brands could impact our sales, business opportunities, profitability, recruiting and valuation of our securities.
Significant negative claims or publicity regarding the Company or its operations, products, management, employees, practices, business partners, business decisions, social responsibility and culture, which may be amplified by social media, adversely impact our brands or reputation, even if such claims are untrue.
In order to respond to these developments, we regularly consider, and from time to time implement changes to our business models, most recently by developing, investing in and acquiring DTC products, initiating plans to again reorganize our media and entertainment businesses to advance our DTC strategies, and developing next generation storytelling offerings.
In order to respond to the impact of new technologies on our businesses, we regularly consider, and from time to time implement changes to our business models, most recently by developing, investing in and acquiring DTC products, reorganizing our media and entertainment businesses to advance our DTC strategies, and developing new media offerings.
Since early 2020, the world has been and continues to be impacted by COVID-19 and its variants. COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at DPEP where our theme parks and resorts were closed and cruise ship sailings and guided tours were suspended.
For example, COVID-19 and measures to prevent its spread impacted our businesses in a number of ways, most significantly at the Experiences segment where our theme parks and resorts were closed and cruise ship sailings and guided tours were suspended.
Such competition may also reduce, or limit growth in, prices for our products and services, including advertising rates and subscription fees at our media networks and DTC offerings, parks and resorts admissions and room rates and prices for consumer products from which we derive license revenues. 23 TABLE OF CONTENTS Our results may be adversely affected if long-term programming or carriage contracts are not renewed on sufficiently favorable terms.
Such competition may also reduce, or limit growth in, prices for our products and services, including advertising rates and subscription fees at our media networks and DTC offerings, parks and resorts admissions and room rates and prices for consumer products from which we derive license revenues.
In addition, we have announced a number of ESG initiatives and goals, which will require ongoing investment, and there is no assurance that we will achieve any of these goals or that our initiatives will achieve their intended outcomes. Consumers’ perceptions of our efforts to achieve these goals often differ widely and present risks to our reputation and brands.
There is no assurance that our initiatives will achieve their intended outcomes or that we will achieve any of these goals. Consumer, government and other stakeholder perceptions of our efforts to achieve these objectives often differ widely and present risks to our reputation and brands.
Further, the employees of licensees who manufacture and retailers who sell our consumer products, and employees of providers of programming content (such as sports leagues) may be covered by labor agreements with their employers.
In addition, some of our employees outside the U.S. are represented by works councils, trade unions or other employee associations. Further, the employees of licensees who manufacture and retailers who sell our licensed consumer products, and employees of providers of programming content (such as sports leagues) may be covered by labor agreements with their employers.
We also make investments in existing or new businesses, including investments in international expansion of our business and in new business lines. In recent years, such investments have included expansion and renovation of certain of our theme parks, expansion of our fleet of cruise ships, the acquisition of TFCF and investments related to DTC offerings.
In addition, in recent years, other investments have included expansion and renovation of certain of our theme parks, expansion of our fleet of cruise ships, the acquisition of TFCF Corporation (TFCF) and investments related to DTC offerings.
The types and levels of coverage we obtain vary from time to time depending on our view of the likelihood of specific types and levels of loss in relation to the cost of obtaining coverage for such types and levels of loss and we may experience material losses not covered by our insurance.
The types and levels of coverage we obtain vary from time to time depending on our view of the likelihood of specific types and levels of loss in relation to the cost of obtaining coverage for such types and levels of loss and we may experience material losses not covered by our insurance. 20 TABLE OF CONTENTS We face risks related to changes in our business strategy or restructuring of our businesses, which have affected and may continue to affect our cost structure, the profitability of our businesses or the value of our assets.
For example, new domestic and international laws and regulations relating to ESG matters, including human capital, diversity, sustainability, climate change and cybersecurity, are under consideration or being adopted, which may include specific, target-driven disclosure requirements or obligations. Our response will require additional investments and implementation of new practices and reporting processes, all entailing additional compliance risk.
For example, new domestic and international laws and regulations relating to environmental, social and governance matters, including environmental sustainability and climate change, human capital management and cybersecurity, are under consideration or being adopted, which may include specific, target-driven disclosure requirements or obligations.
In general, advertising revenues are somewhat higher during the fall and somewhat lower during the summer months. • Revenues from content sales/licensing fluctuate due to the timing of content releases across various distribution markets.
In general, domestic general entertainment linear networks advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months, and sports advertising revenues are impacted by the timing of sports seasons and events, which varies throughout the year or may take place periodically. • Revenues from content sales/licensing fluctuate due to the timing of content releases across various distribution markets.
A decline in economic conditions could impact implementation of our business plans, such as our plans to realign our cost structure and for the new DTC ad-supported service, pricing structure and price increases.
A decline in economic conditions or a failure of conditions to improve as anticipated could impact 17 TABLE OF CONTENTS implementation or success of our business plans, such as our plans to increase investment in our Experiences segment, the realignment of our cost structure and plans for our DTC ad-supported services, enhancements, pricing structure and price increases.
Each of these may depend on the availability of content, which varies from time to time throughout the year based on, among other things, sports seasons, content production schedules and league shut downs. Because our DTC business is relatively new, we have limited data on which to base our understanding of DTC seasonality.
Each of these may depend on the availability of content, which varies from time to time throughout the year based on, among other things, sports seasons, content production schedules and sports league work stoppages.
With respect to IP developed by the Company and rights acquired by the Company from others, the Company is subject to the risk of challenges to our copyright, trademark and patent rights by third parties.
With respect to IP developed by the Company and rights acquired by the Company from others, the Company is subject to the risk of challenges to our copyright, trademark and patent rights by third parties. In addition, the availability of copyright protection and other legal protections for IP generated by certain new technologies, such as generative AI, is uncertain.
Revenues generated from this intellectual property could be negatively impacted. The unauthorized use of our IP may increase the cost of protecting rights in our IP or reduce our revenues.
As copyrights expire, we expect that revenues generated from such IP will be negatively impacted to some extent. The unauthorized use of our IP may increase the cost of protecting rights in our IP or reduce our revenues.
In addition, we provide some confidential, proprietary and personal information to third parties in certain cases, which may also be compromised.
In 19 TABLE OF CONTENTS addition, we provide confidential, proprietary and personal information to third parties in certain cases, which information is also subject to risk of compromise.
Insurance we obtain may not cover losses or damages associated with such attacks or events. Our systems and users and those of third parties with whom we engage are continually attacked, sometimes successfully.
Insurance we obtain does not cover all potential losses or damages associated with such attacks or events. Our systems and users and those of third parties with whom we engage are continually attacked, sometimes successfully, and there can be no assurance that future incidents will not have material adverse effects on our operations or financial results.
In addition, with the recent change in leadership, there may be additional adjustments to our business strategies. Our new organization and strategies are, among other things, subject to execution risk and may not produce the anticipated benefits, such as supporting our growth strategies and enhancing shareholder value.
Changes in strategy, such as was the case with the most recent reorganization of our media and entertainment operations, can lead to workforce disruptions. Our new organization and strategies are, among other things, subject to execution risk and may not produce the anticipated benefits, such as supporting our growth strategies and enhancing shareholder value.
Such distribution must meet the changing preferences of the broad consumer market and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of content.
Such distribution must meet the changing preferences of the broad consumer market and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of content. The success of our theme parks, resorts, cruise ships and experiences, as well as our theatrical releases, depends on demand for public or out-of-home entertainment experiences.
Demand for and consumption of our products and services, particularly our theme parks and resorts, is highly dependent on the general environment for travel and tourism.
The operation and profitability of our businesses and demand for and consumption of our products and services, particularly our parks and experiences businesses, are highly dependent on the general environment for travel and tourism, including in the specific regions in which our parks and experiences businesses operate.
These conditions tended to increase the cost of borrowing and if they recur, our cost of borrowing could increase and it may be more difficult to obtain financing for our operations or investments. Labor disputes may disrupt our operations and adversely affect the profitability of any of our businesses.
Past disruptions in the U.S. and global credit and equity markets made it more difficult for many businesses to obtain financing on acceptable terms. These conditions tended to increase the cost of borrowing and if they recur, our cost of borrowing could increase and it may be more difficult to obtain financing for our operations or investments.
We may also incur accounting and other costs that were not anticipated at the time of the TFCF acquisition, including costs for which we have established reserves or which may lead to reserves in the future.
In addition, we may incur significant costs and expenses in connection with the TFCF acquisition, including costs for which we have established reserves or which may lead to reserves in the future.
A significant number of employees in various parts of our businesses, including employees of our theme parks and writers, directors, actors, and production personnel for our productions are covered by collective bargaining agreements. In addition, some of our employees outside the U.S. are represented by works councils, trade unions or other employee associations.
Labor disputes disrupt our operations and may adversely affect the profitability of one or more of our businesses. A significant number of employees in various parts of our businesses, including employees of our theme parks, and writers, directors, actors and production personnel for our productions are covered by collective bargaining agreements.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties Our parks and resorts locations and other properties of the Company and its subsidiaries are described in Item 1 under the caption Disney Parks, Experiences and Products . Film and television library properties and television stations owned by the Company are described in Item 1 under the caption Disney Media and Entertainment Distribution .
Biggest changeITEM 2. Properties Our parks and resorts locations and other properties of the Company and its subsidiaries are described in Item 1 under the caption Experiences .
Location Property / Approximate Size Use Business Segment Burbank, CA & surrounding cities (1) Land (201 acres) & Buildings (4,695,000 ft 2 ) Owned Office/Production/Warehouse (includes 240,000 ft 2 sublet to third-party tenants) Corporate/DMED/DPEP Burbank, CA & surrounding cities (1) Buildings (1,821,000 ft 2 ) Leased Office/Warehouse Corporate/DMED/DPEP Los Angeles, CA Land (22 acres) & Buildings (600,000 ft 2 ) Owned Office/Production/Technical Warehouse Corporate/DMED Los Angeles, CA Buildings (3,051,000 ft 2 ) Leased Office/Production/Technical/Theater Corporate/DMED/DPEP New York, NY Buildings (51,000 ft 2 ) Owned Office Corporate/DMED New York, NY Land (2 acres) & Buildings (2,186,000 ft 2 ) Leased Office/Production/Theater/Warehouse (includes 679,000 ft 2 sublet to third-party tenants) Corporate/DMED/DPEP Bristol, CT Land (117 acres) & Buildings (1,174,000 ft 2 ) Owned Office/Production/Technical DMED Bristol, CT Buildings (512,000 ft 2 ) Leased Office/Warehouse/Technical DMED Emeryville, CA Land (20 acres) & Buildings (430,000 ft 2 ) Owned Office/Production/Technical DMED Emeryville, CA Buildings (80,000 ft 2 ) Leased Office/Storage DMED San Francisco, CA Buildings (638,000 ft 2 ) Leased Office/Production/Technical/Theater (includes 47,000 ft 2 sublet to third-party tenants) Corporate/DMED USA & Canada Land and Buildings (Multiple sites and sizes) Owned and Leased Office/ Production/Transmitter/Theaters/Warehouse Corporate/DMED/DPEP Europe, Asia, Australia & Latin America Buildings (Multiple sites and sizes) Leased Office/Warehouse/Retail/Residential DMED/DPEP (1) Surrounding cities include Glendale, CA, North Hollywood, CA and Sun Valley, CA
Location Property / Approximate Size Use Business Segment Burbank, CA & surrounding cities (1) Land (201 acres) & Buildings (4,694,000 ft 2 ) Owned Office/Production/Warehouse (includes 240,000 ft 2 leased to third-party tenants) Corporate/Entertainment/Experiences Burbank, CA & surrounding cities (1) Buildings (1,834,000 ft 2 ) Leased Office/Warehouse Corporate/Entertainment/Experiences Los Angeles, CA Land (22 acres) & Buildings (605,000 ft 2 ) Owned Office/Production/Technical Warehouse Corporate/Entertainment Los Angeles, CA Buildings (2,640,000 ft 2 ) Leased Office/Production/Technical/Theater Corporate/Entertainment/Experiences New York, NY Buildings (51,000 ft 2 ) Owned Office Corporate/Entertainment/Sports New York, NY Buildings (2,190,000 ft 2 ) Leased Office/Production/Theater/Warehouse (includes 679,000 ft 2 leased to third-party tenants) Corporate/Entertainment/Sports/Experiences Bristol, CT Land (117 acres) & Buildings (1,174,000 ft 2 ) Owned Office/Production/Technical Sports Bristol, CT Buildings (273,000 ft 2 ) Leased Office/Warehouse/Technical Sports Emeryville, CA Land (20 acres) & Buildings (430,000 ft 2 ) Owned Office/Production/Technical Entertainment Emeryville, CA Buildings (97,000 ft 2 ) Leased Office/Storage Entertainment San Francisco, CA Buildings (517,000 ft 2 ) Leased Office/Production/Technical/Theater (includes 47,000 ft 2 leased to third-party tenants) Corporate/Entertainment USA & Canada Land and Buildings (Multiple sites and sizes) Owned and Leased Office/ Production/Transmitter/Theaters/Warehouse Corporate/Entertainment/Experiences Europe, Asia, Australia & Latin America Buildings (Multiple sites and sizes) Leased Office/Warehouse/Retail/Residential Entertainment/Experiences (1) Surrounding cities include Glendale, CA, North Hollywood, CA and Sun Valley, CA
The Company and its subsidiaries own and lease properties throughout the world. In addition to the properties noted above, the table below provides a brief description of other significant properties and the related business segment.
In addition to the properties noted above, the table below provides a brief description of other significant properties and the related business segment.
Added
Film and television library properties and television stations owned by the Company are described in Item 1 under the caption Entertainment . 26 TABLE OF CONTENTS The Company and its subsidiaries own and lease properties throughout the world.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
The Company, together with, in some instances, certain of its directors and officers, is a defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not expect the Company to suffer any material liability by reason of these actions. 28 TABLE OF CONTENTS

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

8 edited+7 added−2 removed2 unchanged
Biggest changeHe served as Chairman of Disney Parks, Experiences and Products since the segment’s creation in 2018, and prior to that was the Chairman of Walt Disney Parks and Resorts from 2015. (3) Ms. McCarthy was appointed Senior Executive Vice President and Chief Financial Officer effective June 30, 2015.
Biggest changeHe was previously Executive Vice President and Chief Financial Officer of the Company’s Parks, Experiences and Products segment from March 2018 and Executive Vice President and Chief Financial Officer, Walt Disney Parks and Resorts from May 2017. Over his more than 35 years with the Company, Mr.
He previously served as Executive Chairman of the Company from February 2020 through December 2021 and as Chief Executive Officer of the Company from September 2005 to February 2020. (2) Mr. Chapek was appointed Chief Executive Officer effective February 24, 2020 and served as Chief Executive Officer until November 20, 2022.
Iger was appointed Chief Executive Officer effective November 20, 2022. He previously served as Executive Chairman of the Company from February 2020 through December 2021 and as Chief Executive Officer of the Company from September 2005 to February 2020. (2) Mr. Lansberry was appointed Interim Chief Financial Officer effective July 1, 2023.
Prior to that, she served as Global Communications Director for Instagram, a subsidiary of Meta Platforms, Inc., from March 2017 to March 2019, where she oversaw the communications teams in North America, Latin America, Europe, and Asia. 29 TABLE OF CONTENTS PART II
Prior to that, she served as Global Communications Director for Instagram, a product of Meta Platforms, Inc., from March 2017 to March 2019, where she oversaw the communications teams in North America, Latin America, Europe and Asia. On November 2, 2023, the Company appointed Hugh F.
He was previously Spotify’s General Counsel - Vice President, Business & Legal Affairs from April 2016 to November 2019. (5) Mr. Richardson was appointed Senior Executive Vice President and Chief Human Resources Officer effective July 1, 2021. He was previously Senior Vice President of Human Resources at ESPN from 2007. (6) Ms.
He was previously Spotify’s General Counsel - Vice President, Business & Legal Affairs from April 2016 to November 2019. (4) Ms. Coleman was appointed Senior Executive Vice President and Chief Human Resources Officer effective April 8, 2023. She was previously Senior Vice President, Human Resources at Disney General Entertainment and ESPN from August 2021. Ms.
Schake was appointed Senior Executive Vice President and Chief Communications Officer effective June 29, 2022. Previously, she served as Executive Vice President, Global Communications from April 2022. Prior to joining the Company, she was appointed by the President of the United States as Counselor for Strategic Communications to the Secretary of the U.S.
Previously, she served as Executive Vice President, Global Communications from April 2022. Prior to joining the Company, she was appointed by the President of the United States as Counselor for Strategic Communications to the Secretary of the U.S. Department of Health and Human Services, leading a nationwide public education campaign from March 2021 to December 2021.
Each of the executive officers has been employed by the Company in the position or positions indicated in the list and pertinent notes below. As of November 20, 2022, the following individuals have served as executive officers since the beginning of our last fiscal year: Name Age Title Executive Officer Since Robert A.
Each of the executive officers has been employed by the Company in the position or positions indicated in the list and pertinent notes below. 27 TABLE OF CONTENTS The executive officers of the Company are: Name Age Title Executive Officer Since Robert A. Iger 72 Chief Executive Officer (1) 2022 Kevin A.
She was previously Executive Vice President, Corporate Real Estate, Alliances and Treasurer of the Company from 2000 to 2015. (4) Mr. Gutierrez was appointed Senior Executive Vice President and General Counsel effective February 1, 2022. Prior to joining the Company, he served as Head of Global Affairs and Chief Legal Officer for Spotify Technology S.A.
Prior to joining the Company, he served as Head of Global Affairs and Chief Legal Officer for Spotify Technology S.A.
Richardson 57 Senior Executive Vice President and Chief Human Resources Officer (5) 2021 Kristina K. Schake 52 Senior Executive Vice President and Chief Communications Officer (6) 2022 (1) Mr. Iger was appointed Chief Executive Officer effective November 20, 2022.
Lansberry 60 Interim Chief Financial Officer (2) 2023 Horacio E. Gutierrez 58 Senior Executive Vice President, General Counsel and Chief Compliance Officer (3) 2022 Sonia L. Coleman 51 Senior Executive Vice President and Chief Human Resources Officer (4) 2023 Kristina K. Schake 53 Senior Executive Vice President and Chief Communications Officer (5) 2022 (1) Mr.
Removed
Iger 71 Chief Executive Officer (1) 11/20/2022 Robert A. Chapek 63 Chief Executive Officer (2) 2020 - 11/20/2022 Christine M. McCarthy 67 Senior Executive Vice President and Chief Financial Officer (3) 2005 Horacio E. Gutierrez 57 Senior Executive Vice President and General Counsel (4) 2022 Paul J.
Added
Lansberry has held a wide range of roles in the Company’s parks and experiences businesses, including in finance, business development, alliances and operations. (3) Mr. Gutierrez was appointed Senior Executive Vice President and General Counsel effective February 1, 2022 and appointed Chief Compliance Officer effective March 27, 2023.
Removed
Department of Health and Human Services, leading a nationwide public education campaign from March 2021 to December 2021.
Added
Coleman served as Senior Vice President, Human Resources for Disney General Entertainment from April 2017, Vice President, Human Resources for the Company from May 2016 and Vice President, Human Resources, Disney Consumer Products from May 2010. (5) Ms. Schake was appointed Senior Executive Vice President and Chief Communications Officer effective June 29, 2022.
Added
Johnston, 62, as Senior Executive Vice President and Chief Financial Officer commencing on December 4, 2023. Mr. Johnston currently serves as Executive Vice President and Chief Financial Officer, from 2010, and Vice Chairman, from 2015, of PepsiCo, Inc. (“PepsiCo”). In addition to providing strategic financial leadership for PepsiCo in these roles, Mr.
Added
Johnston’s portfolio has included a variety of responsibilities, including leadership of PepsiCo’s information technology function from 2015, PepsiCo’s global e-commerce business from 2015 to 2019, and the Quaker Foods North America division from 2014 to 2016.
Added
He also held a number of other leadership roles during his PepsiCo career, having served as Executive Vice President, Global Operations from 2009 to 2010, President of Pepsi-Cola North America from 2007 to 2009, Executive Vice President, Operations from 2006 to 2007 and Senior Vice President, Transformation from 2005 to 2006.
Added
Prior to that, he served as Senior Vice President and Chief Financial Officer of PepsiCo Beverages and Foods from 2002 through 2005, and as PepsiCo’s Senior Vice President of Mergers and Acquisitions in 2002. Mr.
Added
Johnston joined PepsiCo in 1987 as a Business Planner and held various finance positions until 1999 when he left to join Merck & Co., Inc. as Vice President, Retail, a position which he held until he rejoined PepsiCo in 2002. 28 TABLE OF CONTENTS PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol “DIS”. The Company paid a dividend of $1.6 billion in fiscal year 2020 related to operations in the second half of fiscal 2019.
Biggest changeITEM 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol “DIS”. As of September 30, 2023, the approximate number of common shareholders of record was 768,000.
Removed
The Company did not pay a dividend with respect to fiscal year 2020 nor fiscal year 2021 operations and has not declared or paid a dividend with respect to fiscal 2022 operations. As of October 1, 2022, the approximate number of common shareholders of record was 793,000.
Removed
The following table provides information about Company purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended October 1, 2022: Period Total Number of Shares Purchased (1) Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) July 3, 2022 – July 31, 2022 30,343 $ 100.81 — n/a August 1, 2022 – August 31, 2022 22,440 119.99 — n/a September 1, 2022 – October 1, 2022 23,058 107.38 — n/a Total 75,841 108.48 — n/a (1) 75,841 shares were purchased on the open market to provide shares to participants in the Walt Disney Investment Plan.
Removed
These purchases were not made pursuant to a publicly announced repurchase plan or program. (2) Not applicable as the Company no longer has a stock repurchase plan or program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table reconciles revenues to segment revenues: (in millions) 2022 2021 % Change Better (Worse) Revenues $ 82,722 $ 67,418 23 % Content License Early Termination 1,023 — nm Total segment revenues $ 83,745 $ 67,418 24 % The following table reconciles income from continuing operations before income taxes to total segment operating income: (in millions) 2022 2021 % Change Better (Worse) Income from continuing operations before income taxes $ 5,285 $ 2,561 >100 % Add (subtract): Content License Early Termination 1,023 — nm Corporate and unallocated shared expenses 1,159 928 (25) % Restructuring and impairment charges 237 654 64 % Other income (expense), net 667 (201) nm Interest expense, net 1,397 1,406 1 % TFCF and Hulu acquisition amortization 2,353 2,418 3 % Total segment operating income $ 12,121 $ 7,766 56 % The following is a summary of segment revenue and operating income: (in millions) 2022 2021 % Change Better (Worse) Segment Revenues: Disney Media and Entertainment Distribution $ 55,040 $ 50,866 8 % Disney Parks, Experiences and Products 28,705 16,552 73 % Total segment revenues $ 83,745 $ 67,418 24 % Segment operating income: Disney Media and Entertainment Distribution $ 4,216 $ 7,295 (42) % Disney Parks, Experiences and Products 7,905 471 >100 % Total segment operating income $ 12,121 $ 7,766 56 % 36 TABLE OF CONTENTS Disney Media and Entertainment Distribution Revenue and operating results for DMED are as follows: (in millions) 2022 2021 % Change Better (Worse) Revenues: Linear Networks $ 28,346 $ 28,093 1 % Direct-to-Consumer 19,558 16,319 20 % Content Sales/Licensing and Other 8,146 7,346 11 % Elimination of Intrasegment Revenue (1) (1,010) (892) (13) % $ 55,040 $ 50,866 8 % Segment operating income (loss): Linear Networks $ 8,518 $ 8,407 1 % Direct-to-Consumer (4,015) (1,679) >(100) % Content Sales/Licensing and Other (287) 567 nm $ 4,216 $ 7,295 (42) % (1) Reflects fees received by the Linear Networks from other DMED businesses for the right to air our Linear Networks and related services.
Biggest changeBUSINESS SEGMENT RESULTS - 2022 vs. 2021 The following table presents revenues from our operating segments and other components of revenues: ($ in millions) 2022 2021 % Change Better (Worse) Entertainment $ 39,569 $ 36,489 8 % Sports 17,270 15,960 8 % Experiences 28,085 15,961 76 % Eliminations (1,179) (992) (19) % Content License Early Termination (1,023) — nm Revenues $ 82,722 $ 67,418 23 % The following table presents income (loss) from our operating segments and other components of income from continuing operations before income taxes: ($ in millions) 2022 2021 % Change Better (Worse) Entertainment operating income $ 2,126 $ 5,196 (59) % Sports operating income 2,710 2,690 1 % Experiences operating income (loss) 7,285 (120) nm Content License Early Termination (1,023) — nm Corporate and unallocated shared expenses (1,159) (928) (25) % Restructuring and impairment charges (237) (654) 64 % Other income (expense), net (667) 201 nm Interest expense, net (1,397) (1,406) 1 % TFCF and Hulu acquisition amortization (2,353) (2,418) 3 % Income from continuing operations before income taxes $ 5,285 $ 2,561 >100 % Entertainment Revenue and operating results for Entertainment are as follows: ($ in millions) 2022 2021 % Change Better (Worse) Revenues: Linear Networks $ 12,828 $ 13,516 (5) % Direct-to-Consumer 17,975 15,036 20 % Content Sales/Licensing and Other 8,766 7,937 10 % $ 39,569 $ 36,489 8 % Operating income (loss): Linear Networks $ 5,198 $ 5,271 (1) % Direct-to-Consumer (3,424) (1,252) >(100) % Content Sales/Licensing and Other 352 1,177 (70) % $ 2,126 $ 5,196 (59) % 48 TABLE OF CONTENTS Linear Networks Operating results for Linear Networks are as follows: ($ in millions) 2022 2021 % Change Better (Worse) Revenues Affiliate fees $ 7,739 $ 8,043 (4) % Advertising 4,877 5,215 (6) % Other 212 258 (18) % Total revenues 12,828 13,516 (5) % Operating expenses (5,777) (6,250) 8 % Selling, general, administrative and other (2,571) (2,647) 3 % Depreciation and amortization (65) (78) 17 % Equity in the income of investees 783 730 7 % Operating Income $ 5,198 $ 5,271 (1) % Revenues Affiliate fees are as follows: ($ in millions) 2022 2021 % Change Better (Worse) Domestic $ 6,257 $ 6,045 4 % International 1,482 1,998 (26) % $ 7,739 $ 8,043 (4) % Growth in domestic affiliate fees was due to an increase of 7% from higher contractual rates, partially offset by a decrease of 3% from fewer subscribers.
Noncontrolling Interests (in millions) 2022 2021 % Change Better (Worse) Net income from continuing operations attributable to noncontrolling interests $ (360) $ (512) 30% The decrease in net income from continuing operations attributable to noncontrolling interests was primarily due to higher losses at Shanghai Disney Resort and higher losses at our DTC sports business, partially offset by higher results for ESPN.
Noncontrolling Interests ($ in millions) 2022 2021 % Change Better (Worse) Net income from continuing operations attributable to noncontrolling interests $ (360) $ (512) 30 % The decrease in net income from continuing operations attributable to noncontrolling interests was primarily due to higher losses at Shanghai Disney Resort and at our DTC sports business, partially offset by higher results for ESPN.
The revenue growth at merchandise licensing was primarily due to higher sales of merchandise based on Mickey and Friends, Star Wars, Encanto , Spider-Man and Disney Princesses, partially offset by a decrease in revenues from merchandise based on Frozen.
The revenue growth at licensing was primarily due to higher sales of merchandise based on Mickey and Friends, Star Wars, Encanto , Spider-Man and Disney Princesses, partially offset by a decrease in revenues from merchandise based on Frozen.
Certain Items Impacting Results in the Year Results for fiscal 2022 were impacted by the following: • TFCF and Hulu acquisition amortization of $2,353 million • A $1.0 billion reduction in revenue for the Content License Early Termination • Other expense of $667 million due to the DraftKings loss of $663 million • Restructuring and impairment charges of $237 million Results for fiscal 2021 were impacted by the following: • TFCF and Hulu acquisition amortization of $2,418 million • Restructuring and impairment charges of $654 million • Other income of $201 million due to the fuboTV gain of $186 million and the German FTA gain of $126 million, partially offset by the DraftKings loss of $111 million 34 TABLE OF CONTENTS A summary of the impact of these items on EPS is as follows: (in millions, except per share data) Pre-Tax Income (Loss) Tax Benefit (Expense) (1) After-Tax Income (Loss) EPS Favorable (Adverse) (2) Year Ended October 1, 2022: TFCF and Hulu acquisition amortization (3) $ (2,353) $ 549 $ (1,804) $ (0.97) Contract License Early Termination (1,023) 238 (785) (0.43) Other income (expense), net (667) 156 (511) (0.28) Restructuring and impairment charges (237) 55 (182) (0.10) Total $ (4,280) $ 998 $ (3,282) $ (1.78) Year Ended October 2, 2021: TFCF and Hulu acquisition amortization (3) $ (2,418) $ 562 $ (1,856) $ (1.00) Restructuring and impairment charges (654) 152 (502) (0.27) Other income (expense), net 201 (46) 155 0.08 Total $ (2,871) $ 668 $ (2,203) $ (1.18) (1) Tax benefit (expense) is determined using the tax rate applicable to the individual item.
Certain Items Impacting Results in the Year Results for fiscal 2022 were impacted by the following: • TFCF and Hulu acquisition amortization of $2,353 million • A $1.0 billion reduction in revenue for the Content License Early Termination • Other expense of $667 million due to the DraftKings loss of $663 million • Restructuring and impairment charges of $237 million Results for fiscal 2021 were impacted by the following: • TFCF and Hulu acquisition amortization of $2,418 million • Restructuring and impairment charges of $654 million • Other income of $201 million due to the fuboTV gain of $186 million and the German FTA gain of $126 million, partially offset by the DraftKings loss of $111 million 35 TABLE OF CONTENTS A summary of the impact of these items on EPS is as follows: ($ in millions, except per share data) Pre-Tax Income (Loss) Tax Benefit (Expense) (1) After-Tax Income (Loss) EPS Favorable (Adverse) (2) Year Ended October 1, 2022: TFCF and Hulu acquisition amortization (3) $ (2,353) $ 549 $ (1,804) $ (0.97) Contract License Early Termination (1,023) 238 (785) (0.43) Other income (expense), net (667) 156 (511) (0.28) Restructuring and impairment charges (237) 55 (182) (0.10) Total $ (4,280) $ 998 $ (3,282) $ (1.78) Year Ended October 2, 2021: TFCF and Hulu acquisition amortization (3) $ (2,418) $ 562 $ (1,856) $ (1.00) Restructuring and impairment charges (654) 152 (502) (0.27) Other income (expense), net 201 (46) 155 0.08 Total $ (2,871) $ 668 $ (2,203) $ (1.18) (1) Tax benefit (expense) is determined using the tax rate applicable to the individual item.
We believe that the Company’s financial condition is strong and that its cash balances, other liquid assets, operating cash flows, access to debt and equity capital markets and borrowing capacity under current bank facilities, taken together, provide adequate resources to fund ongoing operating requirements and upcoming debt maturities as well as future capital expenditures related to the expansion of existing businesses and development of new projects.
We believe that the Company’s financial condition is strong and that its cash balances, other liquid assets, operating cash flows, access to debt and equity capital markets and borrowing capacity under current bank facilities, taken together, provide adequate resources to fund ongoing operating requirements, contractual obligations, upcoming debt maturities as well as future capital expenditures related to the expansion of existing businesses and development of new projects.
In addition, contemporaneously with 49 TABLE OF CONTENTS the closing of the March 20, 2019 exchange offer, TWDC entered into a guarantee of the registered debt securities issued by Legacy Disney under the Indenture dated as of September 24, 2001 between Legacy Disney and Wells Fargo Bank, National Association, as trustee (the “2001 Trustee”) (as amended by the first supplemental indenture among Legacy Disney, as issuer, TWDC, as guarantor, and the 2001 Trustee, as trustee).
In addition, contemporaneously with the closing of the March 20, 2019 exchange offer, TWDC entered into a guarantee of the registered debt securities issued by Legacy Disney under the Indenture dated as of September 24, 2001 between Legacy Disney and Wells Fargo Bank, National Association, as trustee (the “2001 Trustee”) (as amended by the first supplemental indenture among Legacy Disney, as issuer, TWDC, as guarantor, and the 2001 Trustee, as trustee).
The tax benefits ultimately realized by the Company may differ from those recognized in our future financial statements based on a number of factors, including the Company’s decision to settle rather than litigate a matter, relevant legal precedent related to similar matters and the Company’s success in supporting its filing positions with taxing authorities.
The tax benefits ultimately realized by the Company may differ from those recognized in our future financial statements based on a number of factors, including the Company’s decision to 65 TABLE OF CONTENTS settle rather than litigate a matter, relevant legal precedent related to similar matters and the Company’s success in supporting its filing positions with taxing authorities.
The average monthly revenue per paid subscriber for Disney+ Hotstar increased from $0.68 to $0.88 driven by higher per-subscriber advertising revenue and increases in retail pricing, partially offset by a higher mix of wholesale subscribers.
Disney+ Hotstar average monthly revenue per paid subscriber increased from $0.68 to $0.88 driven by higher advertising revenue and increases in retail pricing, partially offset by a higher mix of wholesale subscribers.
Revenues are also generated from sponsorships and co-branding opportunities, real estate rent and sales, and royalties from Tokyo Disney Resort. 35 TABLE OF CONTENTS Significant expenses include operating labor, costs of goods sold, infrastructure costs, depreciation and other operating expenses. Infrastructure costs include technology support costs, repairs and maintenance, utilities and fuel, property taxes, retail occupancy costs, insurance and transportation.
Revenues are also generated from sponsorships and co-branding opportunities, real estate rent and sales, and royalties from Tokyo Disney Resort. Significant expenses include operating labor, costs of goods sold, infrastructure costs, depreciation and other operating expenses. Infrastructure costs include technology support costs, repairs and maintenance, utilities and fuel, property taxes, retail occupancy costs, insurance and transportation.
DPEP primarily generates revenue from the sale of admissions to theme parks, the sale of food, beverage and merchandise at our theme parks and resorts, charges for room nights at hotels, sales of cruise vacations, sales and rentals of vacation club properties, royalties from licensing our IP for use on consumer goods and the sale of branded merchandise.
The Experiences segment primarily generates revenue from the sale of admissions to theme parks, the sale of food, beverage and merchandise at our theme parks and resorts, charges for room nights at hotels, sales of cruise vacations, sales and rentals of vacation club properties, royalties from licensing our IP for use on consumer goods and the sale of branded merchandise.
The average monthly revenue per paid subscriber for the Hulu SVOD Only service decreased from $12.86 to $12.72 driven by lower per-subscriber advertising revenue, a higher mix of subscribers to multi-product offerings and, to a lesser extent, to promotional offerings, partially offset by an increase in retail pricing.
Hulu SVOD Only average monthly revenue per paid subscriber decreased from $12.86 to $12.72 driven by lower per-subscriber advertising revenue, a higher mix of subscribers to multi-product offerings and, to a lesser extent, to promotional offerings, partially offset by an increase in average retail pricing.
Growth in average per capita ticket revenue was due to the introduction of Genie+ and Lightning Lane at our domestic parks in the first quarter of the current fiscal year and higher average ticket prices at Walt Disney World Resort and Disneyland Paris, partially offset by lower average ticket prices at Disneyland Resort and Shanghai Disney Resort.
Growth in average per capita ticket revenue was due to the introduction of Genie+ and Lightning Lane at our domestic parks in the first quarter of fiscal 2022 and higher average ticket prices at Walt Disney World Resort and Disneyland Paris, partially offset by lower average ticket prices at Disneyland Resort and Shanghai Disney Resort.
Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of asset groups, estimates of future cash flows and the discount rate used to determine fair values. 52 TABLE OF CONTENTS The Company has investments in equity securities.
Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of asset groups, estimates of future cash flows and the discount rate used to determine fair values. The Company has investments in equity securities.
The increase in programming and production costs was due to higher costs at Direct-to-Consumer, increased sports programming costs and an increase in production cost amortization due to theatrical revenue growth. These increases were partially offset by lower programming and production costs as a result of international channel closures.
The increase in programming and production costs was due to higher costs at Entertainment Direct-to-Consumer, an increase in sports right costs and higher production cost amortization due to theatrical revenue growth. These increases were partially offset by lower programming and production costs as a result of international channel closures.
To test its other indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair value. If it is, a quantitative assessment is required.
To test other indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair 64 TABLE OF CONTENTS value. If it is, a quantitative assessment is required.
The effective income tax rate in the prior year was lower than the U.S. statutory rate due to favorable adjustments related to prior years and excess tax benefits on employee share-based awards, partially offset by higher effective tax rates on foreign earnings.
The effective income tax rate in fiscal 2021 was lower than the U.S. statutory rate due to favorable adjustments related to prior years and excess tax benefits on employee share-based awards, partially offset by higher effective tax rates on foreign earnings.
The following table summarizes the approximate number of weeks of operations in the current and prior year: Weeks of Operation 2022 2021 Walt Disney World Resort 52 52 Disneyland Resort 52 22 Disneyland Paris 52 19 Hong Kong Disneyland Resort 37 40 Shanghai Disney Resort 37 52 Revenues The increase in theme park admissions revenue was due to attendance growth and higher average per capita ticket revenue.
The following table summarizes the approximate number of weeks of operations in fiscal 2022 and fiscal 2021: Weeks of Operation 2022 2021 Walt Disney World Resort 52 52 Disneyland Resort 52 22 Disneyland Paris 52 19 Hong Kong Disneyland Resort 37 40 Shanghai Disney Resort 37 52 Revenues The increase in theme park admissions revenue was due to attendance growth and higher average per capita ticket revenue.
Production costs include spend on content internally produced at our studios such as live-action and animated films, episodic series, specials, shorts and theatrical stage plays. Production costs also include original content commissioned from third-party studios. Programming costs include content rights licensed from third parties for use on the Company’s Linear Networks and DTC streaming services.
Production costs include spend on content internally produced at our studios such as live-action and animated films, episodic series, specials, shorts and theatrical stage plays. Production costs also include original content commissioned from third-party studios. Programming costs include content rights licensed from third parties for use on the Company’s sports and general entertainment networks and DTC streaming services.
The increase in operating cash flow at DPEP was due to higher operating cash receipts driven by higher revenue, partially offset by an increase in operating cash disbursements due to higher operating expenses.
The increase in operating cash flow at Experiences was due to higher operating cash receipts driven by higher revenue, partially offset by an increase in operating cash disbursements due to higher operating expenses.
Effective Income Tax Rate 2022 2021 Income from continuing operations before income taxes $ 5,285 $ 2,561 Income tax expense on continuing operations 1,732 25 Effective income tax rate - continuing operations 32.8% 1.0% The effective income tax rate in the current year was higher than the U.S. statutory rate primarily due to higher effective tax rates on foreign earnings.
Effective Income Tax Rate ($ in millions) 2022 2021 Income from continuing operations before income taxes $ 5,285 $ 2,561 Income tax expense on continuing operations 1,732 25 Effective income tax rate - continuing operations 32.8% 1.0% The effective income tax rate in fiscal 2022 was higher than the U.S. statutory rate primarily due to higher effective tax rates on foreign earnings.
See Note 14 to the Consolidated Financial Statements for information regarding the Company’s contractual commitments to acquire sports and broadcast programming. 47 TABLE OF CONTENTS Commitments and guarantees The Company has various commitments and guarantees, such as long-term leases, purchase commitments and other executory contracts, that are disclosed in the footnotes to the financial statements.
See Note 14 to the Consolidated Financial Statements for information regarding the Company’s contractual commitments to acquire sports and broadcast programming. Commitments and guarantees The Company has various commitments and guarantees, such as long-term leases, purchase commitments and other executory contracts, that are disclosed in the footnotes to the financial statements.
With respect to capitalized television production costs that are classified as individual, the most sensitive factors affecting estimates of Ultimate Revenues are program ratings of the content on our licensees’ platforms.
With respect to capitalized television production costs that are classified as individual, the most sensitive factor affecting estimates of Ultimate Revenues is program ratings of the content on our licensees’ platforms.
Selling, general, administrative and other costs for fiscal 2022 increased 21%, or $2.9 billion, to $16.4 billion, primarily due to higher marketing costs at our DTC and, to a lesser extent, theatrical distribution and parks and experiences businesses.
Selling, general, administrative and other costs for fiscal 2022 increased 21%, or $2.9 billion, to $16.4 billion, primarily due to higher marketing costs at Entertainment Direct-to-Consumer and, to a lesser extent, our theatrical distribution and parks and experiences businesses.
The average monthly revenue per paid subscriber for international Disney+ (excluding Disney+ Hotstar) increased from $5.31 to $6.10 due to increases in retail pricing, partially offset by an unfavorable foreign exchange impact.
International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber increased from $5.31 to $6.10 due to an increase in average retail pricing, partially offset by an unfavorable Foreign Exchange Impact.
Costs and Expenses Operating expenses are as follows: (in millions) 2022 2021 % Change Better (Worse) Operating labor $ (6,577) $ (4,711) (40) % Infrastructure costs (2,766) (2,308) (20) % Cost of goods sold and distribution costs (2,938) (2,086) (41) % Other operating expenses (2,655) (1,694) (57) % $ (14,936) $ (10,799) (38) % The increases in operating labor, cost of goods sold and distribution costs and other operating expenses were due to higher volumes, while the increase in infrastructure costs was due to higher volumes and increased technology spending.
There is no impact to fiscal 2021 due to this change. 57 TABLE OF CONTENTS Costs and Expenses Operating expenses are as follows: ($ in millions) 2022 2021 % Change Better (Worse) Operating labor $ (6,577) $ (4,711) (40) % Infrastructure costs (2,766) (2,308) (20) % Cost of goods sold and distribution costs (2,938) (2,086) (41) % Other operating expenses (2,655) (1,694) (57) % $ (14,936) $ (10,799) (38) % The increases in operating labor, cost of goods sold and distribution costs and other operating expenses were due to higher volumes, while the increase in infrastructure costs was due to higher volumes and increased technology spending.
Lower MLB programming costs were due to airing 29 games of the 2022 regular season under our new contract and one 2021 season playoff game in the current year compared to 92 games of the 2021 regular season in the prior year.
Lower MLB programming costs were due to airing 29 games of the 2022 regular season under our new contract and one 2021 season playoff game in fiscal 2022 compared to 92 games of the 2021 regular season in fiscal 2021.
The Company’s bank facilities contain only one financial covenant, relating to interest coverage of three times earnings before interest, taxes, depreciation and amortization, including both intangible amortization and amortization of our film and television production and programming costs. On October 1, 2022, the Company met this covenant by a significant margin.
The Company’s bank facilities contain only one financial covenant, relating to interest coverage of three times earnings before interest, taxes, depreciation and amortization, including both intangible amortization and amortization of our film and television production and programming costs. On September 30, 2023, the Company met this covenant by a significant margin.
Costs and expenses Cost of services for fiscal 2022 increased 19%, or $7.8 billion, to $49.0 billion, due to higher programming and production costs, increased volumes at our theme parks and resorts and higher technical support costs at Direct-to-Consumer.
Costs and expenses Cost of services for fiscal 2022 increased 19%, or $7.8 billion, to $49.0 billion, due to higher programming and production costs, increased volumes at our theme parks and resorts and higher technology and distribution costs at Entertainment Direct-to-Consumer.
New Accounting Pronouncements See Note 19 to the Consolidated Financial Statements for information regarding new accounting pronouncements.
See Note 9 to the Consolidated Financial Statements for additional discussion. New Accounting Pronouncements See Note 19 to the Consolidated Financial Statements for information regarding new accounting pronouncements.
Higher effective tax rates on foreign earnings in both the current and prior year reflected the impact of foreign losses and, to a lesser extent, foreign tax credits for which we are unable to recognize a tax benefit.
Higher effective tax rates on foreign earnings in both fiscal 2022 and 2021 reflected the impact of foreign losses and, to a lesser extent, foreign tax credits for which we are unable to recognize a tax benefit.
As of October 1, 2022, Moody’s Investors Service’s long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, Standard and Poor’s long- and short-term debt ratings for the Company were BBB+ and A-2 (Positive), respectively, and Fitch’s long- and short-term debt ratings for the Company were A- and F2 (Stable), respectively.
As of September 30, 2023, Moody’s Investors Service’s long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, Standard and Poor’s long- and short-term debt ratings for the Company were A- and A-2 (Positive), respectively, and Fitch’s long- and short-term debt ratings for the Company were A- and F2 (Stable), respectively.
We increased our discount rate to 5.44% at the end of fiscal 2022 from 2.88% at the end of fiscal 2021 to reflect market interest rate conditions at our fiscal 2022 year-end measurement date.
We increased our discount rate to 5.94% at the end of fiscal 2023 from 5.44% at the end of fiscal 2022 to reflect market interest rate conditions at our fiscal 2023 year-end measurement date.
(fuboTV gain), a $126 million gain on the sale of our 50% interest in a German free-to-air (FTA) television network (German FTA gain) and a $111 million DraftKings loss. 33 TABLE OF CONTENTS Interest Expense, net (in millions) 2022 2021 % Change Better (Worse) Interest expense $ (1,549) $ (1,546) — % Interest income, investment income and other 152 140 9 % Interest expense, net $ (1,397) $ (1,406) 1 % Interest expense was comparable to the prior year as higher average interest rates were offset by lower average debt balances.
(fuboTV gain), a $126 million gain on the sale of our 50% interest in a German free-to-air (FTA) television network (German FTA gain) and a non-cash loss of $111 million from the adjustment of our investment in DraftKings to fair value. 34 TABLE OF CONTENTS Interest Expense, net ($ in millions) 2022 2021 % Change Better (Worse) Interest expense $ (1,549) $ (1,546) — % Interest income, investment income and other 152 140 9 % Interest expense, net $ (1,397) $ (1,406) 1 % Interest expense in fiscal 2022 was comparable to fiscal 2021 as the impact of higher average interest rates was offset by the impact of lower average debt balances.
Disney Parks, Experiences and Products Operating results for DPEP are as follows: (in millions) 2022 2021 % Change Better (Worse) Revenues Theme park admissions $ 8,602 $ 3,848 >100 % Parks & Experiences merchandise, food and beverage 6,579 3,299 99 % Resorts and vacations 6,410 2,701 >100 % Merchandise licensing and retail 5,229 5,241 — % Parks licensing and other 1,885 1,463 29 % Total revenues 28,705 16,552 73 % Operating expenses (14,936) (10,799) (38) % Selling, general, administrative and other (3,403) (2,886) (18) % Depreciation and amortization (2,451) (2,377) (3) % Equity in the loss of investees (10) (19) 47 % Operating Income $ 7,905 $ 471 >100 % 43 TABLE OF CONTENTS COVID-19 Revenues at DPEP benefited from fewer closures and operating capacity restrictions in fiscal 2022 compared to fiscal 2021 as a result of COVID-19.
Experiences Operating results for Experiences are as follows: ($ in millions) 2022 2021 % Change Better (Worse) Revenues Theme park admissions $ 8,602 $ 3,848 >100 % Resorts and vacations 6,410 2,701 >100 % Parks & Experiences merchandise, food and beverage 6,579 3,299 99 % Merchandise licensing and retail 4,609 4,650 (1) % Parks licensing and other 1,885 1,463 29 % Total revenues 28,085 15,961 76 % Operating expenses (14,936) (10,799) (38) % Selling, general, administrative and other (3,403) (2,886) (18) % Depreciation and amortization (2,451) (2,377) (3) % Equity in the loss of investees (10) (19) 47 % Operating Income (loss) $ 7,285 $ (120) nm 56 TABLE OF CONTENTS COVID-19 Revenues at Experiences benefited from fewer closures and operating capacity restrictions in fiscal 2022 compared to fiscal 2021 as a result of COVID-19.
Subscribers to the SVOD Bundle are counted as a paid subscriber for each service included in the SVOD Bundle and subscribers to the Hulu Live TV + SVOD offerings are counted as one paid subscriber for each of the Hulu Live TV + SVOD, Disney+ and ESPN+ offerings.
Subscribers to multi-product offerings in the U.S. are counted as a paid subscriber for each service included in the multi-product offering and subscribers to Hulu Live TV + SVOD are counted as one paid subscriber for each of the Hulu Live TV + SVOD, Disney+ and ESPN+ services.
(DraftKings) to fair value (DraftKings loss). In fiscal 2021, the Company recognized a $186 million gain from the sale of our investment in fuboTV Inc.
In fiscal 2021, the Company recognized a $186 million gain from the sale of our investment in fuboTV Inc.
The increase in other revenue was due to more stage play performances in the current year as productions were generally shut down in the prior year due to COVID-19.
The increase in other revenue was due to more stage play performances in fiscal 2022 as productions were generally shut down in fiscal 2021 due to COVID-19.
The decrease in operating cash flow at DMED was due to higher operating cash disbursements and higher spending on film and television productions, partially offset by higher operating cash receipts.
The decrease in operating cash flow at Entertainment was due to higher operating cash disbursements and higher spending on film and episodic content, partially offset by higher operating cash receipts.
If there are no plans to continue to use an individual film or television program that is part of a group, the unamortized cost of the individual title is written-off immediately. Licensed content is included as part of the group within which it is monetized for purposes of assessing recoverability.
If there are no plans to continue to use an individual film or television program that is part of a group, the unamortized cost of the individual title is written down to its estimated fair value. Licensed content is included as part of the group within which it is monetized for purposes of impairment testing.
Items Excluded from Segment Operating Income Related to Disney Media and Entertainment Distribution The following table presents supplemental information for items related to DMED that are excluded from segment operating income: (in millions) 2022 2021 % Change Better (Worse) TFCF and Hulu acquisition amortization (1) $ (2,345) $ (2,410) 3 % Content License Early Termination (1,023) — nm Restructuring and impairment charges (2) (229) (315) 27 % German FTA gain — 126 (100) % (1) In the current year, amortization of step-up on film and television costs was $634 million and amortization of intangible assets was $1,699 million.
Items Excluded from Segment Operating Income Related to Entertainment The following table presents supplemental information for items related to Entertainment that are excluded from segment operating income: ($ in millions) 2022 2021 % Change Better (Worse) TFCF and Hulu acquisition amortization (1) $ (1,946) $ (2,006) 3 % Content License Early Termination (1,023) — nm Restructuring and impairment charges (2) (228) (300) 24 % German FTA gain — 126 (100) % (1) In fiscal 2022, amortization of step-up on film and episodic costs was $634 million and amortization of intangible assets was $1,300 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations CONSOLIDATED RESULTS (in millions, except per share data) 2022 2021 % Change Better (Worse) Revenues: Services $ 74,200 $ 61,768 20 % Products 8,522 5,650 51 % Total revenues 82,722 67,418 23 % Costs and expenses: Cost of services (exclusive of depreciation and amortization) (48,962) (41,129) (19) % Cost of products (exclusive of depreciation and amortization) (5,439) (4,002) (36) % Selling, general, administrative and other (16,388) (13,517) (21) % Depreciation and amortization (5,163) (5,111) (1) % Total costs and expenses (75,952) (63,759) (19) % Restructuring and impairment charges (237) (654) 64 % Other income (expense), net (667) 201 nm Interest expense, net (1,397) (1,406) 1 % Equity in the income of investees, net 816 761 7 % Income from continuing operations before income taxes 5,285 2,561 >100 % Income taxes from continuing operations (1,732) (25) >(100) % Net income from continuing operations 3,553 2,536 40 % Loss from discontinued operations, net of income tax benefit of $14 and $9, respectively (48) (29) (66) % Net income 3,505 2,507 40 % Net income from continuing operations attributable to noncontrolling and redeemable noncontrolling interests (360) (512) 30 % Net income attributable to Disney $ 3,145 $ 1,995 58 % Earnings (loss) per share attributable to Disney: Diluted (1) Continuing operations $ 1.75 $ 1.11 58 % Discontinued operations (0.03) (0.02) (50) % $ 1.72 $ 1.09 58 % Basic (1) Continuing operations $ 1.75 $ 1.11 58 % Discontinued operations (0.03) (0.02) (50) % $ 1.73 $ 1.10 57 % Weighted average number of common and common equivalent shares outstanding: Diluted 1,827 1,828 Basic 1,822 1,816 (1) Total may not equal the sum of the column due to rounding. 31 TABLE OF CONTENTS Organization of Information Management’s Discussion and Analysis provides a narrative on the Company’s financial performance and condition that should be read in conjunction with the accompanying financial statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations CONSOLIDATED RESULTS ($ in millions, except per share data) % Change Better (Worse) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Revenues: Services $ 79,562 $ 74,200 $ 61,768 7 % 20 % Products 9,336 8,522 5,650 10 % 51 % Total revenues 88,898 82,722 67,418 7 % 23 % Costs and expenses: Cost of services (exclusive of depreciation and amortization) (53,139) (48,962) (41,129) (9) % (19) % Cost of products (exclusive of depreciation and amortization) (6,062) (5,439) (4,002) (11) % (36) % Selling, general, administrative and other (15,336) (16,388) (13,517) 6 % (21) % Depreciation and amortization (5,369) (5,163) (5,111) (4) % (1) % Total costs and expenses (79,906) (75,952) (63,759) (5) % (19) % Restructuring and impairment charges (3,892) (237) (654) >(100) % 64 % Other income (expense), net 96 (667) 201 nm nm Interest expense, net (1,209) (1,397) (1,406) 13 % 1 % Equity in the income of investees, net 782 816 761 (4) % 7 % Income from continuing operations before income taxes 4,769 5,285 2,561 (10) % >100 % Income taxes from continuing operations (1,379) (1,732) (25) 20 % >(100) % Net income from continuing operations 3,390 3,553 2,536 (5) % 40 % Loss from discontinued operations, net of income tax benefit of $0, $14 and $9, respectively — (48) (29) 100 % (66) % Net income 3,390 3,505 2,507 (3) % 40 % Net income from continuing operations attributable to noncontrolling and redeemable noncontrolling interests (1,036) (360) (512) >(100) % 30 % Net income attributable to Disney $ 2,354 $ 3,145 $ 1,995 (25) % 58 % Diluted earnings per share attributable to Disney $ 1.29 $ 1.75 $ 1.11 (26) % 58 % Organization of Information Management’s Discussion and Analysis provides a narrative on the Company’s financial performance and condition that should be read in conjunction with the accompanying financial statements.
A one percentage point decrease in the assumed discount rate would increase total benefit expense for fiscal 2023 by approximately $242 million and would increase the projected benefit obligation at October 1, 2022 by approximately $2.3 billion.
A one percentage point decrease in the assumed discount rate would increase total benefit expense for fiscal 2024 by approximately $200 million and would increase the projected benefit obligation at September 30, 2023 by approximately $2.0 billion.
The Company’s investments in parks, resorts and other property for fiscal 2022 and 2021 are as follows: (in millions) 2022 2021 Disney Media and Entertainment Distribution $ 810 $ 862 Disney Parks, Experiences and Products Domestic 2,680 1,597 International 767 675 Total Disney Parks, Experiences and Products 3,447 2,272 Corporate 686 444 $ 4,943 $ 3,578 Capital expenditures at DMED primarily reflect investments in technology and in facilities and equipment for expanding and upgrading broadcast centers, production facilities and television station facilities.
The Company’s investments in parks, resorts and other property for fiscal 2023, 2022 and 2021 are as follows: ($ in millions) 2023 2022 2021 Entertainment $ 1,032 $ 802 $ 838 Sports 15 8 24 Experiences Domestic 2,203 2,680 1,597 International 822 767 675 Total Experiences 3,025 3,447 2,272 Corporate 897 686 444 $ 4,969 $ 4,943 $ 3,578 Capital expenditures at Entertainment primarily reflect investments in technology and in facilities and equipment for expanding and upgrading broadcast centers, production facilities and television station facilities.
Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test. The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows of the reporting unit.
The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions and changes in projected future cash flows of the reporting unit.
(2) Attendance is used to analyze volume trends at our theme parks and is based on the number of unique daily entries, i.e. a person visiting multiple theme parks in a single day is counted only once.
(2) Attendance is used to analyze volume trends at our theme parks and is based on the number of unique daily entries, i.e. a person visiting multiple theme parks in a single day is counted only once. Our attendance count includes 46 TABLE OF CONTENTS complimentary entries but excludes entries by children under the age of three.
Equity in the Income of Investees Equity in the income of investees increased $55 million to $816 million in the current year due to higher income from A+E Television Networks (A+E) and the comparison to investment impairments in the prior year.
Equity in the Income of Investees Equity in the income of investees increased $55 million to $816 million in fiscal 2022 due to higher income from A+E and the comparison to investment impairments in fiscal 2021.
Advertising revenue growth reflected increases of 7% from higher rates due to an increase at Hulu, and to a lesser extent, at Disney+, and 4% from higher impressions due to increases at Disney+, ESPN+ and Hulu.
Advertising revenue growth reflected increases of 7% from higher rates due to increases at Hulu, and to a lesser extent, at Disney+, and 3% from higher impressions primarily attributable to Disney+ Hotstar.
The Company’s production and programming activity for fiscal 2022 and 2021 are as follows: (in millions) 2022 2021 Beginning balances: Production and programming assets $ 31,732 $ 27,193 Programming liabilities (4,113) (4,099) 27,619 23,094 Spending: Licensed programming and rights 13,316 12,412 Produced content 16,611 12,848 29,927 25,260 Amortization: Licensed programming and rights (13,432) (12,784) Produced content (10,224) (8,175) (23,656) (20,959) Change in production and programming costs 6,271 4,301 Other non-cash activity (163) 224 Ending balances: Production and programming assets 37,667 31,732 Programming liabilities (3,940) (4,113) $ 33,727 $ 27,619 The Company currently expects its fiscal 2023 spend on produced and licensed content, including sports rights, to be in the low $30 billion range.
The Company’s production and programming activity for fiscal 2023, 2022 and 2021 are as follows: ($ in millions) 2023 2022 2021 Beginning balances: Production and programming assets $ 37,667 $ 31,732 $ 27,193 Programming liabilities (3,940) (4,113) (4,099) 33,727 27,619 23,094 Spending: Licensed programming and rights 14,851 13,316 12,412 Produced content 12,323 16,611 12,848 27,174 29,927 25,260 Amortization: Licensed programming and rights (13,405) (13,432) (12,784) Produced content (11,861) (10,224) (8,175) (25,266) (23,656) (20,959) Change in production and programming costs 1,908 6,271 4,301 Content Impairment (2,266) — — Other non-cash activity (568) (163) 224 Ending balances: Production and programming assets 36,593 37,667 31,732 Programming liabilities (3,792) (3,940) (4,113) $ 32,801 $ 33,727 $ 27,619 60 TABLE OF CONTENTS The Company currently expects its fiscal 2024 spend on produced and licensed content to be approximately $25 billion, with sports rights expected to account for over 40% of spend.
The par value and carrying value of total outstanding and guaranteed registered debt securities of the Obligor Group at October 1, 2022 was as follows: TWDC Legacy Disney (in millions) Par Value Carrying Value Par Value Carrying Value Registered debt with unconditional guarantee $ 35,343 $ 35,736 $ 9,105 $ 8,851 The guarantees by TWDC and Legacy Disney are full and unconditional and cover all payment obligations arising under the guaranteed registered debt securities.
The par value and carrying value of total outstanding and guaranteed registered debt securities of the Obligor Group at September 30, 2023 was as follows: TWDC Legacy Disney ($ in millions) Par Value Carrying Value Par Value Carrying Value Registered debt with unconditional guarantee $ 35,163 $ 35,393 $ 8,121 $ 7,880 The guarantees by TWDC and Legacy Disney are full and unconditional and cover all payment obligations arising under the guaranteed registered debt securities.
The average monthly revenue per paid subscriber for the Hulu Live TV + SVOD service increased from $81.35 to $87.62 driven by an increase in retail pricing and higher per-subscriber advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.
Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $87.62 to $90.52 due to an increase in average retail pricing, partially offset by lower advertising revenue, a higher mix of subscribers to multi-product offerings and lower per-subscriber premium and feature add-on revenue.
The monthly average paid subscribers is calculated as the sum of the beginning of the month and end of the month paid subscriber count, divided by two. Disney+ average monthly revenue per paid subscriber is calculated using a daily average of paid subscribers for the period.
Average Monthly Revenue Per Paid Subscriber Hulu and ESPN+ average monthly revenue per paid subscriber is calculated based on the average of the monthly average paid subscribers for each month in the period. The monthly average paid subscribers is calculated as the sum of the beginning of the month and end of the month paid subscriber count, divided by two.
Segment Operating Income Segment operating income increased $7,434 million, to $7,905 million due to growth at our domestic parks and experiences and, to a lesser extent, at our international parks and resorts and consumer products business.
Segment Operating Income (loss) Segment operating results increased $7,405 million, to income of $7,285 million from a loss of $120 million due to growth at our domestic parks and experiences and, to a lesser extent, at our international parks and experiences and consumer products business.
Our attendance count includes complimentary entries but excludes entries by children under the age of three. 44 TABLE OF CONTENTS (3) Per capita guest spending is used to analyze guest spending trends and is defined as total revenue from ticket sales and sales of food, beverage and merchandise in our theme parks, divided by total theme park attendance.
(3) Per capita guest spending is used to analyze guest spending trends and is defined as total revenue from ticket sales and sales of food, beverage and merchandise in our theme parks, divided by total theme park attendance.
Higher operating cash disbursements were driven by increased operating expenses while higher operating cash receipts were due to revenue growth. 46 TABLE OF CONTENTS Depreciation expense is as follows: (in millions) 2022 2021 Disney Media and Entertainment Distribution $ 650 $ 613 Disney Parks, Experiences and Products Domestic 1,680 1,551 International 662 718 Total Disney Parks, Experiences and Products 2,342 2,269 Corporate 191 186 Total depreciation expense $ 3,183 $ 3,068 Amortization of intangible assets is as follows: (in millions) 2022 2021 Disney Media and Entertainment Distribution $ 164 $ 178 Disney Parks, Experiences and Products 109 108 TFCF and Hulu 1,707 1,757 Total amortization of intangible assets $ 1,980 $ 2,043 Produced and licensed content costs DMED incurs costs to produce and license film, episodic television and other content.
Higher operating cash disbursements were driven by increased operating expenses while higher operating cash receipts were due to revenue growth. 59 TABLE OF CONTENTS Depreciation expense is as follows: ($ in millions) 2023 2022 2021 Entertainment $ 669 $ 560 $ 513 Sports 73 90 100 Experiences Domestic 2,011 1,680 1,551 International 669 662 718 Total Experiences 2,680 2,342 2,269 Corporate 204 191 186 Total depreciation expense $ 3,626 $ 3,183 $ 3,068 Amortization of intangible assets is as follows: ($ in millions) 2023 2022 2021 Entertainment $ 87 $ 164 $ 174 Sports — — 4 Experiences 109 109 108 TFCF and Hulu 1,547 1,707 1,757 Total amortization of intangible assets $ 1,743 $ 1,980 $ 2,043 Produced and licensed content costs The Entertainment and Sports segments incur costs to produce and license film, episodic, sports and other content.
Theatrical performance varies primarily based upon the public interest and demand for a particular film, the popularity of competing films at the time of release and the level of marketing effort.
Revenues derived from other markets subsequent to the theatrical release are generally highly correlated with theatrical performance. Theatrical performance varies primarily based upon the public interest and demand for a particular film, the popularity of competing films at the time of release and the level of marketing effort.
(2) EPS is net of noncontrolling interest, where applicable. Total may not equal the sum of the column due to rounding. (3) Includes amortization of intangibles related to TFCF equity investees. BUSINESS SEGMENT RESULTS Below is a discussion of the major revenue and expense categories for our business segments.
(2) EPS is net of noncontrolling interest, where applicable. Total may not equal the sum of the column due to rounding. (3) Includes amortization of intangibles related to TFCF equity investees. BUSINESS SEGMENT RESULTS The Company evaluates the performance of its operating segments based on segment revenue and segment operating income.
The average monthly revenue per paid subscriber for ESPN+ increased from $4.57 to $4.80 primarily due to an increase in retail pricing, a lower mix of annual subscribers and higher per-subscriber advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.
(in millions) October 1, 2022 October 2, 2021 % Change Better (Worse) Paid subscribers at fiscal year end (in millions) 24.3 17.1 42 % Average Monthly Revenue per Paid Subscriber for the fiscal year $ 4.80 $ 4.57 5 % ESPN+ average monthly revenue per paid subscriber increased from $4.57 to $4.80 primarily due to an increase in retail pricing, a lower mix of annual subscribers and higher advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.
The increase in interest income, investment income and other was due to a favorable comparison of pension and postretirement benefit costs, other than service cost, which was a net benefit in the current year and an expense in the prior year.
The increase in interest income, investment income and other was due to a favorable comparison of pension and postretirement benefit costs, other than service cost, which was a net benefit in fiscal 2022 and an expense in fiscal 2021. This increase was partially offset by investment losses in fiscal 2022 compared to investment gains in fiscal 2021.
In addition, the Company could undertake other measures to ensure sufficient liquidity, such as continuing to not declare dividends (the Company did not pay a dividend with respect to fiscal 2021 operations and has not declared or paid a dividend with respect to fiscal 2022 operations); raising financing; suspending or reducing capital spending; reducing film and television content investments; or implementing furloughs or reductions in force.
In addition, the Company could undertake other measures to ensure sufficient liquidity, such as continuing to not declare dividends; raising financing; reducing capital spending; reducing film and episodic content investments; or implementing furloughs or reductions in force.
LIQUIDITY AND CAPITAL RESOURCES The change in cash, cash equivalents and restricted cash is as follows: (in millions) 2022 2021 Cash provided by operations - continuing operations $ 6,002 $ 5,566 Cash used in investing activities - continuing operations (5,008) (3,171) Cash used in financing activities - continuing operations (4,729) (4,385) Cash (used in) provided by discontinued operations (4) 9 Impact of exchange rates on cash, cash equivalents and restricted cash (603) 30 Change in cash, cash equivalents and restricted cash $ (4,342) $ (1,951) Operating Activities Continuing operations Cash provided by operating activities of $6.0 billion for fiscal 2022 increased 8% or $436 million compared to $5.6 billion in fiscal 2021 due to higher operating cash flow at DPEP and, to a lesser extent, lower income tax payments and pension contributions, partially offset by lower operating cash flow at DMED and, to a lesser extent, a partial payment for the Content License Early Termination.
LIQUIDITY AND CAPITAL RESOURCES The change in cash, cash equivalents and restricted cash is as follows: ($ in millions) 2023 2022 2021 Cash provided by operations - continuing operations $ 9,866 $ 6,002 $ 5,566 Cash used in investing activities - continuing operations (4,641) (5,008) (3,171) Cash used in financing activities - continuing operations (2,724) (4,729) (4,385) Cash (used in) provided by discontinued operations — (4) 9 Impact of exchange rates on cash, cash equivalents and restricted cash 73 (603) 30 Change in cash, cash equivalents and restricted cash $ 2,574 $ (4,342) $ (1,951) Operating Activities Cash provided by operating activities of $9.9 billion for fiscal 2023 increased 64% or $3.9 billion compared to $6.0 billion in fiscal 2022 due to lower spending on film and episodic content at Entertainment and higher operating cash flow at Experiences, partially offset by higher spending on sports content.
Content Sales/Licensing and Other Operating results for Content Sales/Licensing and Other are as follows: (in millions) 2022 2021 % Change Better (Worse) Revenues TV/SVOD distribution $ 3,781 $ 4,206 (10) % Theatrical distribution 1,875 920 >100 % Home entertainment 820 1,014 (19) % Other 1,670 1,206 38 % Total revenues 8,146 7,346 11 % Operating expenses (5,499) (4,536) (21) % Selling, general, administrative and other (2,638) (1,963) (34) % Depreciation and amortization (296) (294) (1) % Equity in the income of investees — 14 — % Operating Income (Loss) $ (287) $ 567 nm Revenues The decrease in TV/SVOD distribution revenue reflected lower sales volumes, which included the impact from the shift from licensing our content to third parties to distributing it on our DTC streaming services.
Content Sales/Licensing and Other Operating results for Content Sales/Licensing and Other are as follows: ($ in millions) 2022 2021 % Change Better (Worse) Revenues TV/VOD distribution $ 3,520 $ 3,925 (10) % Theatrical distribution 1,875 920 >100 % Home entertainment distribution 1,083 1,297 (16) % Other 2,288 1,795 27 % Total revenues 8,766 7,937 10 % Operating expenses (5,508) (4,536) (21) % Selling, general, administrative and other (2,610) (1,944) (34) % Depreciation and amortization (296) (294) (1) % Equity in the income of investees — 14 (100) % Operating Income $ 352 $ 1,177 (70) % Revenues The decrease in TV/VOD distribution revenue reflected lower sales volumes, which included the impact of the shift from licensing our content to third parties to distributing it on our Entertainment Direct-to-Consumer streaming services.
Goodwill is allocated to various reporting units, which are an operating segment or one level below the operating segment. To test goodwill for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of a reporting unit exceeds its fair value. If it is, a quantitative assessment is required.
To test goodwill for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of a reporting unit exceeds its fair value. If it is, a quantitative assessment is required. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test.
Operating Income from Content Sales/Licensing and Other Operating income from Content Sales/Licensing and Other decreased $854 million, to a loss of $287 million from income of $567 million, primarily due to lower TV/SVOD distribution results, higher film cost impairments and decreases in home entertainment and theatrical distribution results, partially offset by higher stage play results.
Operating Income from Content Sales/Licensing and Other Operating income from Content Sales/Licensing and Other decreased 70% to $352 million from $1,177 million, due to lower TV/VOD and home entertainment distribution results, higher film cost impairments and lower theatrical distribution results, partially offset by higher stage play results.
Restructuring and Impairment Charges Restructuring and impairment charges in fiscal 2022 were $0.2 billion primarily due to the impairment of an intangible and other assets related to our businesses in Russia. We may incur additional charges to exit these businesses, which are not anticipated to be material.
Restructuring and Impairment Charges Restructuring and impairment charges in fiscal 2022 were $0.2 billion primarily due to the impairment of an intangible and other assets related to exiting our businesses in Russia.
Merchandise licensing and retail revenue was comparable to the prior year, as a decrease of 7% from retail was offset by an increase of 7% from merchandise licensing. The decrease in retail revenues was due to the closure of a substantial number of Disney-branded retail stores in North America and Europe in the second half of fiscal 2021.
The decrease in retail revenues was due to the closure of a substantial number of Disney-branded retail stores in North America and Europe in the second half of fiscal 2021.
Higher NFL programming costs were due to airing four additional regular season games in the current year compared to the prior year and contractual rate increases. The increase in CFP rights costs was due to higher contractual rates.
These increases were partially offset by lower rights costs for MLB and NBA programming. Higher NFL programming costs were due to airing four additional regular season games in fiscal 2022 compared to fiscal 2021 and contractual rate increases. The increase in CFP rights costs was due to higher contractual rates.
Revenue includes subscription fees, advertising (excluding revenue earned from selling advertising spots to other Company businesses) and premium and feature add-on revenue but excludes Premier Access and Pay-Per-View revenue. The average revenue per paid subscriber is net of discounts on offerings that carry more than one service.
Disney+ average monthly revenue per paid subscriber is calculated using a daily average of paid subscribers for the period. Revenue includes subscription fees, advertising (excluding revenue earned from selling advertising spots to other Company businesses) and premium and feature add-on revenue but excludes Premier Access and Pay-Per-View revenue.
Paid subscribers (2) as of: (in millions) October 1, 2022 October 2, 2021 % Change Better (Worse) Disney+ Domestic (U.S. and Canada) 46.4 38.8 20 % International (excluding Disney+ Hotstar) (3) 56.5 36.0 57 % Disney+ Core (4) 102.9 74.8 38 % Disney+ Hotstar 61.3 43.3 42 % Total Disney+ (4) 164.2 118.1 39 % ESPN+ 24.3 17.1 42 % Hulu SVOD Only 42.8 39.7 8 % Live TV + SVOD 4.4 4.0 10 % Total Hulu (4) 47.2 43.8 8 % Average Monthly Revenue Per Paid Subscriber (5) for the fiscal year ended: 2022 2021 % Change Better (Worse) Disney+ Domestic (U.S. and Canada) $ 6.34 $ 6.33 — % International (excluding Disney+ Hotstar) (3) 6.10 5.31 15 % Disney+ Core 6.22 5.87 6 % Disney+ Hotstar 0.88 0.68 29 % Global Disney+ 4.24 4.08 4 % ESPN+ 4.80 4.57 5 % Hulu SVOD Only 12.72 12.86 (1) % Live TV + SVOD 87.62 81.35 8 % (1) In the U.S., Disney+, ESPN+ and Hulu SVOD Only are each offered as a standalone service or as a package that includes all three services (the SVOD Bundle).
Paid subscribers as of: (in millions) October 1, 2022 October 2, 2021 % Change Better (Worse) Disney+ Domestic (U.S. and Canada) 46.4 38.8 20 % International (excluding Disney+ Hotstar) 56.5 36.0 57 % Disney+ Core (1) 102.9 74.8 38 % Disney+ Hotstar 61.3 43.3 42 % Hulu SVOD Only 42.8 39.7 8 % Live TV + SVOD 4.4 4.0 10 % Total Hulu (1) 47.2 43.7 8 % Average Monthly Revenue Per Paid Subscriber for the fiscal year ended: 2022 2021 % Change Better (Worse) Disney+ Domestic (U.S. and Canada) $ 6.34 $ 6.33 — % International (excluding Disney+ Hotstar) 6.10 5.31 15 % Disney+ Core 6.22 5.87 6 % Disney+ Hotstar 0.88 0.68 29 % Hulu SVOD Only 12.72 12.86 (1) % Live TV + SVOD 87.62 81.35 8 % (1) Total may not equal the sum of the column due to rounding Domestic Disney+ average monthly revenue per paid subscriber was comparable to fiscal 2021, as an increase in retail pricing and a lower mix of wholesale subscribers was essentially offset by a higher mix of subscribers to multi-product offerings.
The increase at theme parks and resorts was due to higher volumes, which generally reflected the impact of operating with capacity restrictions in the prior year as a result of COVID-19, and higher average per capita ticket revenue. The increase in DTC subscription revenue was due to subscriber growth and higher average rates.
These increases were partially offset by the Content License Early Termination. The increase at theme parks and resorts was due to higher volumes, which generally reflected the impact of operating with capacity restrictions in fiscal 2021 as a result of COVID-19, and higher average per capita ticket revenue.
Net effective pricing was comparable to the prior year as lower unit pricing was offset by a higher mix of new release titles, which have a higher sales price than catalog titles.
The decrease in home entertainment distribution revenue was attributable to lower unit sales despite the benefit of more new release titles in fiscal 2022. Net effective pricing was comparable to fiscal 2021 as lower unit pricing was offset by a higher mix of new release titles, which have a higher sales price than catalog titles.
Operating expenses are as follows: (in millions) 2022 2021 % Change Better (Worse) Programming and production costs $ (4,215) $ (3,611) (17) % Distribution costs and cost of goods sold (1,284) (925) (39) % $ (5,499) $ (4,536) (21) % The increase in programming and production costs was due to higher production cost amortization, driven by more theatrical releases, and, to a lesser extent, higher film cost impairments.
Costs and Expenses Operating expenses are as follows: ($ in millions) 2022 2021 % Change Better (Worse) Programming and production costs $ (4,688) $ (3,770) (24) % Distribution costs and cost of goods sold (820) (766) (7) % $ (5,508) $ (4,536) (21) % The increase in programming and production costs was due to higher production cost amortization driven by more theatrical releases, the increased number of stage play performances in fiscal 2022 and higher film cost impairments.
Other Income (expense), net (in millions) 2022 2021 % Change Better (Worse) fuboTV gain $ — $ 186 (100) % German FTA gain — 126 (100) % DraftKings loss (663) (111) >(100) % Other, net (4) — nm Other income (expense), net $ (667) $ 201 nm In fiscal 2022, the Company recognized a non-cash loss of $663 million from the adjustment of its investment in DraftKings Inc.
Other Income (expense), net ($ in millions) 2023 2022 % Change Better (Worse) DraftKings gain (loss) $ 169 $ (663) nm Other, net (73) (4) >(100) % Other income (expense), net $ 96 $ (667) nm In fiscal 2023, the Company recognized a gain of $169 million on its investment in DraftKings, Inc.
These increases were partially offset by a reduction in revenue for amounts to early terminate certain license agreements with a customer for film and television content, which was delivered in previous years, in order for the Company to use the content primarily on our DTC services (Content License Early Termination).
In the prior year, the Company recorded a reduction in revenue of $1.0 billion for amounts to early terminate certain license agreements with a customer for film and television content, which was delivered in previous years, in order for the Company to use the content primarily at our Entertainment Direct-to-Consumer services (Content License Early Termination).
The current year included the International Cricket Council (ICC) T20 World Cup, more Board of Control for Cricket in India (BCCI) matches and the Asia Cricket Council (ACC) Asia Cup, partially offset by fewer Indian Premier League (IPL) matches in the current year compared to the prior year.
The increase in average viewership reflected the airing of more cricket matches in fiscal 2022. Fiscal 2022 included the ICC T20 World Cup, more Board of Control for Cricket in India (BCCI) matches and the ACC Asia Cup, partially offset by fewer IPL matches compared to fiscal 2021.
The decrease in affiliate revenue at the International Channels was due to decreases of 13% from fewer subscribers driven by channel closures, and 6% from an unfavorable foreign exchange impact.
The decline in international affiliate fees was due to decreases of 17% from fewer subscribers driven by channel closures, 5% from an unfavorable Foreign Exchange Impact and 2% from lower contractual rates.
In the prior year, amortization of step-up on film and television costs was $646 million and amortization of intangible assets was $1,749 million. (2) The current year includes impairments of assets related to our Russian businesses.
In fiscal 2021, amortization of step-up on film and episodic costs was $646 million and amortization of intangible assets was $1,345 million. (2) Fiscal 2022 includes impairments of assets related to exiting our businesses in Russia.
The increase in International Channels advertising revenue was due to increases of 8% from higher impressions and 7% from higher rates, partially offset by 7% from an unfavorable foreign exchange impact. The increase in impressions reflected higher average viewership, partially offset by the impact of channel closures.
The increase in international ESPN advertising revenue was due to an increase of 16% from higher impressions, partially offset by a decrease of 6% from an unfavorable Foreign Exchange Impact. The increase in impressions was attributable to higher average viewership.
The increase in theatrical distribution revenue was due to more titles released in the current year compared to the prior year and revenue in the current year from the co-production of Marvel’s Spider-Man: No Way Home .
The increase in theatrical distribution revenue was due to more titles released in fiscal 2022 compared to fiscal 2021 and revenue in fiscal 2022 from the co-production of Marvel’s Spider-Man: No Way Home . Although COVID-19 continued to impact our theatrical distribution business in certain markets in fiscal 2022, the impact in fiscal 2021 was more significant.
Parks & Experiences merchandise, food and beverage revenue growth was due to increases of 82% from higher volumes and 9% from higher average guest spending.
Parks & Experiences merchandise, food and beverage revenue growth was due to increases of 82% from higher volumes and 9% from higher average guest spending. Merchandise licensing and retail revenue was comparable to the prior year, as a decrease of 8% from retail was offset by an increase of 8% from licensing.
The Company recorded non-cash impairment charges of $0.2 billion and $0.3 billion in fiscal 2022 and 2021, respectively. The fiscal 2022 charges primarily related to our businesses in Russia. The fiscal 2021 charges primarily related to the closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe.
See Note 18 to the Consolidated Financial Statements for additional information. The fiscal 2022 charges primarily related to exiting our businesses in Russia. The fiscal 2021 charges primarily related to the closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−0 removed11 unchanged
Biggest changeThe VAR model is a risk analysis tool and does not purport to represent actual losses in fair value that will be incurred by the Company, nor does it consider the potential effect of favorable changes in market factors. VAR on a combined basis increased to $395 million at October 1, 2022 from $364 million at October 2, 2021.
Biggest changeForecasted transactions, firm commitments and accounts receivable and payable denominated in foreign currencies, which certain of these instruments are intended to hedge, were excluded from the model. 68 TABLE OF CONTENTS The VAR model is a risk analysis tool and does not purport to represent actual losses in fair value that will be incurred by the Company, nor does it consider the potential effect of favorable changes in market factors.
Cross- 53 TABLE OF CONTENTS currency swaps are used to effectively convert foreign currency denominated borrowings to U.S. dollar denominated borrowings. By policy, the Company maintains hedge coverage between minimum and maximum percentages of its forecasted foreign exchange exposures generally for periods not to exceed four years.
Cross-currency swaps are used to effectively convert foreign currency denominated borrowings to U.S. dollar denominated borrowings. By policy, the Company maintains hedge coverage between minimum and maximum percentages of its forecasted foreign exchange exposures generally for periods not to exceed four years.
ITEM 8. Financial Statements and Supplementary Data See Index to Financial Statements and Supplemental Data on page 63 . ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
ITEM 8. Financial Statements and Supplementary Data See Index to Financial Statements and Supplemental Data on page 77 . ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
It is the Company’s policy to enter into foreign currency and interest rate derivative transactions and other financial instruments only to the extent considered necessary to meet its objectives as stated above. The Company does not enter into these transactions or any other hedging transactions for speculative purposes.
It is the Company’s policy to enter into foreign currency and interest rate derivative transactions and other financial instruments only to the extent considered necessary to meet its objectives as stated above. The Company does not enter into these transactions or any other hedging transactions for speculative purposes. See Note 17 of the Consolidated Financial Statements for additional information.
The estimated maximum potential one-day loss in fair value, calculated using the VAR model, is as follows (unaudited, in millions): Fiscal 2022 Interest Rate Sensitive Financial Instruments Currency Sensitive Financial Instruments Equity Sensitive Financial Instruments Commodity Sensitive Financial Instruments Combined Portfolio Year end fiscal 2022 VAR $ 376 $ 71 $ 20 $ 4 $ 395 Average VAR 415 62 25 4 426 Highest VAR 455 72 32 7 479 Lowest VAR 376 46 20 2 394 Year end fiscal 2021 VAR 357 44 37 1 364 The VAR for Hong Kong Disneyland Resort and Shanghai Disney Resort is immaterial as of October 1, 2022 and has been excluded from the above table.
The estimated maximum potential one-day loss in fair value, calculated using the VAR model, is as follows (unaudited, in millions): Fiscal 2023 Interest Rate Sensitive Financial Instruments Currency Sensitive Financial Instruments Equity Sensitive Financial Instruments Commodity Sensitive Financial Instruments Combined Portfolio Year end fiscal 2023 VAR $ 258 $ 45 $ 4 $ 4 $ 284 Average VAR 336 58 13 4 360 Highest VAR 403 76 23 5 425 Lowest VAR 258 45 4 4 284 Year end fiscal 2022 VAR 376 71 20 4 395 The VAR for Hong Kong Disneyland Resort and Shanghai Disney Resort is immaterial as of September 30, 2023 and has been excluded from the above table.
The model includes all of the Company’s debt as well as all interest rate and foreign exchange derivative contracts, commodities and market sensitive equity investments. Forecasted transactions, firm commitments, and accounts receivable and payable denominated in foreign currencies, which certain of these instruments are intended to hedge, were excluded from the model.
The model includes all of the Company’s debt as well as all interest rate and foreign exchange derivative contracts, commodities and market sensitive equity investments.
Added
VAR on a combined basis decreased to $284 million at September 30, 2023 from $395 million at October 1, 2022 due to reduced interest rate volatility and lower sensitivity of our debt portfolio to movement of interest rates.

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