Welcome back, everyone. Thanks for being here. We've got 50 minutes. Before we get started, I'm in charge of giving The Walt Disney Company forward-looking statements. Certain statements today, including statements about the company's plans, expectations, strategy, or business prospects, and other statements that are not historical in nature, may constitute forward-looking statements under securities laws. The statements are made on the basis of management's current views and assumptions regarding the future, and management does not undertake any obligation to update them. Forward-looking statements are subject to a number of risks and uncertainties. Actual results may differ materially from results expressed or implied in light of a variety of factors, including macroeconomic and industry conditions and execution risks, and other factors contained in the company's Form 10-K, Form 10-Qs, and other filings with the SEC, as well as the legend you see here on the company's IR website. With that, I'll do that again later. Thank you. Okay. Christine, my first question is a big one. It could take a whole hour, but let's start here. What actions and decisions are you taking today to improve the Disney company's financial performance going forward? That is a very good question. Exactly. Noted. Okay. Settle in, everybody. Yeah. This is a great question, and I know we just had earnings last week, and I would like to clarify a few things. You know, there are things that we are doing as a management team that are very responsive to the current environment that we're all working in. Plus, facing some of the challenges we have as a company. Now, the things that we have firmly in our control are things like our structure, the way we are structured for managing the company, as well as the cost structure. As I said in our call, you know, we are well on our way to meeting or exceeding the two and a half billion of SG&A savings that we put out to the market previously and feel really, really good about, you know, what we've done to date and what will still be achieved in the balance of this fiscal year that you'll really see the benefits in 2024. So that's something that I just want to lean into a little bit. Bob Iger is really addressing the content spend. He's looking at not only what we're spending, but how we're spending and where we're investing those content dollars. Those are things that are firmly in control of the company, and I think, you know, the benefits of those, the more immediate one will be the SG&A achievements that we deliver. Content spend will be a little bit longer to really see because of the time it takes for projects to go into development, production, post-production, and then go on things, but it's all underway. When we look at our businesses, there's one thing I wanna clarify a bit, and that is our sub growth. We are looking at our sub growth, and I want to differentiate because Alexia Quadrani, many of you know Alexia, she's our head of investor relations, last year we talked about, you know, we were always announcing sub growth as one number, we broke out Disney+ Core subscribers versus Disney+ Hotstar subscribers. The reason we did that is because there's very different dynamics in terms of ARPU and the potential for revenue generation. We did that, and I think the headline number, and I know a lot of people in this room, you know, you've looked at the numbers, you've looked at our Q, you've gone through the press release, you've looked at the charts and you know that when we broke it down like that, you saw that there was a decline of $4.6 million subscribers in India, and collectively, we lost $4 million subscribers globally, which meant that Core plus, Disney+ Core subscribers were actually up. They were up less than $1 million. We wish it was a larger number. We hope to achieve that, but we did a price increase. You saw, you know, some attrition there. Rita will talk about, you know, what the prospects for our ad-supported tier look like going forward. Once again, we just started the ad-supported tier back in December and, you know, she's looking at that and things we can do. We are also looking at pricing overall and pricing for the ad-free, which is really a premium product, in comparison to the ad-supported product, which is at a much more accessible price for consumers if they choose to, you know, watch ads. We know from our research that, you know, a lot of people don't mind watching ads, so you know, it's a consumer proposition that people can avail themselves of. I just wanna focus on that core Disney+ Core subscribers that, you know, we believe that that is something that, especially the second half of the year, the latter part of this second half, just based on our really strong content that's coming on the service, both originals as well as some of our theatrical releases, which will then come on Disney+ in the Pay One window. When you look at what the our development teams and our content teams have done, led by Dana Walden and Alan Bergman, you know, we've got some really good content that's coming on. Once again, the timing of the content releases, we're still, you know. You know, we've been in this business for three and a half years. We've got content that's releasing latter in this fiscal year that we really think is going to drive subscriber growth and also be favorable to our churn metrics. Mm-hmm. That's on Disney+. Also, we're looking at optimizing, as Rita will talk about later, that ad tier. Also we've talked a lot, and Bob has articulated this, really looking at our pricing structure, and we don't feel at, you know, where we are today, we haven't optimized that pricing algorithm. When you think about the different levers, there are some different markets, but there's also the ad-free and the ad-supported, and looking at the consumer proposition and where you wanna lean into the differential there. I think there's some things we want to refine. When we look at the other elements of the business, you know, linear has gotten a lot of attention. I know that there's focus on subscriber growth or subscriber decline. That is something that's impacting the entire media sector. Advertising is cyclical. Once again, you know, I think everyone's pretty much down on advertising. I mean, every media company had, you know, had to report results that were lower year-over-year. The fact of the matter is, advertising will come back. Just like we did things during the pandemic related to some of our businesses, predominantly parks, because those businesses we had to really address some structural things there. On the ad side, Rita and her team, and Aaron LaBerge, who runs our technology, that team is looking at, once again, leaning into more refinements on our ad stack technology and data platforms. Rita can really address this in detail, but I think there's gonna be some really exciting developments and refinements that when the ad market does become more robust, we are very, very well positioned. Once again, we just had our upfront yesterday. I think the reception from the advertising community was very positive, and I feel really good about where we are in terms of what we can deliver and the platforms that Rita can sell into. Mm-hmm. I'd also like to address our parks business. You know, parks, I've said this before, this is a management team that has really delivered strong results. This is a management team that had to deal with businesses that were shut down for the better part of, call it two years. You know, Disneyland was closed for over 400 days. The parks in Asia were closed for significant periods of time. You know, we looked at the cost structure of that business, and that cost structure is one that has allowed us to really come back out of the pandemic very, very strongly. We've looked at our offerings. We continue to invest in our parks. We continue to look at the guest experience. We've had very, very strong results, and we continue to look at that as a growth business, and a business in which we will still continue to invest. Where we will be investing is gonna be very consistent with what really makes Disney a unique business in this industry, and that is that we have ways that we can use our intellectual property, our franchises, the ones that really resonate with our consumers. We have more data than we had before. We know when something previously, before we were in the direct-to-consumer business. Take, for instance, our theatrical films that we released. We could rely on box office to know whether it did well relative to, you know, a comparable film in that genre. We have much more rich data because we have box office for those films that do go theatrical, but we also have the consumer data that we get off of primarily Disney+ on how often are people watching it? When they go on, is this a movie that they, or a franchise that they're going into for the first time that they are on the service? Do they watch it multiple times? That better informs our creatives and our Imagineers to lean into things that we can really exploit in our theme park business. Where if we know something is truly resonating, something that we didn't have this advantage of that direct consumer data would be something like Frozen. Frozen was a few years ago, had tremendous box office performance. We knew it resonated. We had incredibly strong consumer products coming out of that franchise as well. You remember, we were always comping against Frozen for, I don't know, three or four years it seemed. We have Frozen now that's in Paris, it's coming to Paris. There's attractions in our domestic parks, and we also will have, you know, more Frozen attractions around the globe. We based that on what we had at the time, but now with new franchises and strong IP, we can also incorporate that consumer data to know how deep it is and in what parts of the world it's most significant in. Okay. Let me go to Parks. We'll go through some divisions. I think you found this interesting that investors are worried that the Parks business is over-earning, quote, "over-earning" at this point in time, mostly due to pricing actions. What examples can you offer that Parks segment is now on structurally stronger footing than maybe previously, and it's just not all about price right now? Yeah, there's been a lot of attention on our parks. That concept of over-earning, as a CFO, I've done this for many decades in this industry and others. Over-earning is a kind of odd concept, but I, I get it. I think one of the things I'd like to just point out is that, you know, we are in an inflationary environment, in the macroeconomic environment we are in, we're very aware of that. You know, as inflation impacts everybody's life, whether you live on a budget or don't, the inflationary impact of day-to-day living is something that we're very much aware of. When we look at things in our parks, the one that gets the most attention, Michael, is admission price. When you go back and look at the pricing increases that we have taken in our admission price, on a CAGR basis, they're pretty much around inflation. If there's a perception that there is when you look at our per cap growth, which has been extraordinarily strong the last two years, when you compare it to the last kind of base year, which we look at as fiscal 19. When we look at that, you know, the per cap growth was great. It still will be growing, but it's gonna be at a much smaller percentage because we're comping off of higher numbers. Where we've seen the real contributors to that per cap growth, sure, a little bit of it is in admissions, It's also in experiential things that people do in our parks, like experiential food. I know that sounds like a kinda weird concept. Mm-hmm. If you go to our parks, and you go to Galaxy's Edge, there's unique product offerings, you know, for food and beverage, and that'll be Star Wars related, or they may be Avengers related, in the Avengers Campuses. They're really things that people wanna Instagram and post, and they're very exciting to, you know. It's part of the experience overall. Merchandise is also something that has, I think we've really upped the game. Things like you can buy your T-shirts and your hats and things like that, you know, plush animals, but you can also do things like build lightsabers, you know, and that's part of an experience. It's not cheap. People spend the money. Whether it's food and beverage, whether it's merchandise, those are things that are consumer choice. As well as availing yourself of, if you wanna spend a little bit more to get more in a given day, so you can use things like Genie+. Yes, you pay for it. You know, some people, they have limited amount of time. They're not gonna be, you know, back, you know, for X amount of months or years. They want to get as much in as they can, so that's also driving those per caps up. That's consumer choice. Right. When they're in the gate, they're spending their money as they choose to. Genie+, you know, one of the questions is utilization of the parks, how it's changed 'cause you know, Genie+. Talk a bit about maybe previous times pre-Genie+. Yeah. A nd how maybe the park capacity utilization's been different. You really have to look at pre- and post-pandemic on this. Once again, when you're really looking at structural changes and how you're looking at the business, when you're running a park, you know, 365 days a year, which is what we do globally around the world, you know, you can't. You know, it's harder to make changes. When your parks are shut down. You have to, you know, look at the silver lining of COVID. For us in the parks business, it was taking the opportunity to look at things like addressing capacity. Because when we got back into allowing people into our theme parks around the world, we couldn't do it, just open the gates. We had to do it with a reservation system because we were limited, so you had 10%, 25%, 50% capacity, depending on what jurisdiction you were in. That allowed us to utilize, to develop a reservation system, but it also allowed us to more, I would say, adequately look at load and demand. It allowed us to balance labor. It allowed us to look at, you know, peak periods. We got a lot more information on what people were doing when they were there. As we were able to allow more and more of our guests into our parks, you know, that is something that, you know, we've been able to cut off those big peaks, the days when it was really crowded, when the parks had to, you know, not allow any more guests in. We know, we try to balance those periods and spread them around, you know, some days of the week and times of the year. We can do some of those things through promotional pricing and just sort of packaging. It's spreading that demand a little bit better and having it be a better guest experience when our guests are in the parks. Okay. Last parks question, then I'll get to networks for a sec, is the recovery of international parks and international visitation to Orlando has lagged domestic. Domestic's come back faster. You started to see some signs of life last quarter. Can you talk a bit about how those factors could be meaningful drivers of future growth for the parks? Sure. For the last few years, our parks results have largely been driven by strength in domestic parks. It was not our international locations were not contributors, for a few reasons, one of which was we have Shanghai, Hong Kong, and also Tokyo, which we have a royalty agreement with Oriental Land Company in Tokyo. Those parks were closed for significant time, much longer than our domestic parks. Paris also had, you know, on and off with COVID. You know, what was going on in Europe with COVID impacted, you know, their recovery. The recovery that we've now seen, as we're kind of looking in the rearview mirror for COVID, has been very rewarding to see it because consumers had the same pent-up desire to be in our parks as they did domestically. As we have been able to open the parks and keep them open, we have seen very strong visitation and spending and utilization of our hotels in all of the international parks. Paris, I'll just, like I love to say this because, before we restructured Paris several years ago to eliminate the third-party debt and the third-party equity owners, you know, we had a lot of constraints we had to operate under. We took care of that in the mid-2010s. Now we fully own that park, and we're operating it like we do our domestic parks. That park is doing incredibly well, and it is its 30th anniversary. It's really wonderful to see the performance there because it is significant in attendance, per caps and per caps across the board for merchandise and food and beverage. In the Asia parks, they're doing very, very well. Once again, we can look out at forward bookings, and those are very strong as well. We feel really good about our international park business being an additional contributor, not just relying on our domestic park performance. The other business that is incredibly has rebounded, and I will say, I admit, far better than I thought it would, just because it had been shuttered for so long, is our cruise business. Mm-hmm. As you know, Michael, we launched a 5th ship last fall, the Wish. With that, I think a lot of consumers looked at our cruise business again. Those who could, you know, get a booking on the Wish has been very significantly high occupancy, you know, since its launch. All of our other cruise ships have their utilization and their capacity is quite high. We're looking at that, and I would use the words snapped back this year. Mm-hmm. It's very, very strong, and that's a contributor to our parks business as well. Okay. If we're worried about parks overearning, we're going to switch to Linear Networks when there's concern about, hey, when is this. Mm-hmm. To stabilize? We've been struck by the margin compression at Linear Networks this year. What factors are driving that weakness? Can you differentiate between maybe the ESPN networks and the non-ESPN networks, right? It's just all. Mm-hmm. You know, put into one bundle right now. Right. In terms of the reporting bundle. Yeah. There's a couple things here, and there was one. You know, there's some nuances in our quarterly earnings. One of the things is some of the timing of sports rights this past quarter. We had a step up in some sports rights that had to do with... Those of you who are big college football fans know that when our quarter ends at the end of the year, and you probably hear this, and I it just flows off when I say it now in earnings calls, but the college football playoff season, sometimes we have more games in December, the December quarter. Other times, we have more games in the March quarter that starts on January. Because of the way that we close our quarters, sometimes those aren't on December 31st. It can be before or after, just because of the way we close our books. This year, there was some college football playoff timing that increased expenses, and there's also the new NFL contract that just had some shifts in some expenses. One of the things I would like to note is that Jimmy Pitaro and his team, when they renewed the NFL contract last year, you know, they structured it very well. Because of the ending of one contract, we're kind of at a bridge year. The ending of 1 contract, you know, going into the new contract, you're not gonna see a sharp step up in that. It's gonna be more gradual. Mm. You did see some of that, you know, in this first quarter. This was a weird year 'cause you were with. It's a weird year. Your one-year. Yes. Came in odd zone. Yes. Yes. Yeah. It's what we call a bridge year, and so there is some noise in that. You know, we try to, you know, break it out a little bit, but I just wanted to call out that. You know, because sports rights are a significant cost driver in Linear, which sits in ESPN. The other thing in Linear is advertising. You know, advertising, and Rita's gonna address it. That's a segue. as soon as I stop talking. she's gonna address it. you know, when we look at real strength in advertising, yes, addressable, programmatic, digital is a growth area. the other area that we are fortunate to have the sports rights we have and to have the brand that we have in ESPN, advertising for live sports is strong. Rita can address that. You know, fortunately, I'm from Boston, so I was thrilled to see, you know, the Celtics make it as far as they did. seven games, I like seven games better than six-game or five-game series. it's a little nail-biting. Yeah. That's okay. Yes. Anyway, I just think, you know, these long series are great for us in the short run, but it's really the strength of... You know, these are, you know, series can come and go. It's the strength and the demand for live sports that is something that Rita can really lean into with her sales team. Okay. Well, thank you, Christine. Yeah. Rita, segue to you. Great. Thanks for being here second year in a row. Thank you. Rita Ferro, for those that don't know. You had your upfront last night. I'm sorry I missed it. We had a conflict. Can you give us an update, as Christine was just laying it out, of the current landscape and the health of the ad business as you see it right now? Yeah. Well, Christine touched on it, right? We have leaned into sports and streaming for the last 12 months. It's where you see the marketplace moving. I'm still very bullish on our linear business, by the way. I think when advertisers come to The Walt Disney Company, and especially in a marketplace like this where you have such, you know, dynamic conditions, people are gonna do fewer, bigger things with the right partners. The Walt Disney Company has the best of broadcast, the best of cable, the best of sports, and the best of streaming, coupled with the best investments around data and technology that really enable advertisers to buy in as close as they want to make sure that they're spending the right money around the right KPIs that they're looking for. You're seeing that in the dynamic-ness of the marketplace right now. It really resonated yesterday when we talked about owning our tech stack and our data stack. Especially on the addressable side of the business, the dollars come in through the channels they want it to. Sometimes that's direct, and sometimes that's through the various DSP relationships that we have. Sometimes it's data-enabled. Sometimes it has audience guarantees. A lot of times it has targeting. We also rolled out targeting on Disney+ recently around audience and geo, and we plan to have full targeting like we do on Hulu. Those investments that have been years in the making really pay off in marketplaces like this. As Christine talked about, it is a dynamic marketplace. It will come back, and we've made the investments around the right portfolio of assets to make sure that we can come out the other side better and stronger. Okay. To that point, it's your second year with us. When you look back on the past 12 months, what have been your biggest accomplishments, and are there any meaningful changes to either the market structure. Yeah. Or how you've gone to market in the past 12 months? The biggest change, I would say, is without a doubt interoperability. We have made sure that we have leveraged that ID graph with every partner, every vendor, all of the DSP relationships, all the agencies to set themselves up to be able to transact with us and cum reach across linear and addressable. With the least amount of frequency possible and the most amount of reach possible. That has been really, really important in terms of how people consider where they're spending their dollars. Every dollar has to work harder for every marketer. Every CMO is under a tremendous amount of pressure to deliver on the sales results that they have. It's a quarterly watch, right? When they're committing these dollars in the upfront, they wanna make sure that they can execute on those dollars in the way they need to at the time that those dollars have to go to market. That's been really important. We haven't really changed. Right. That's more flexibility than there's been in the past, right? Absolutely. Absolutely. That's why visibility is harder. It's about. In any given quarter. Owning your own tech and data stack. Yeah. W hich not everyone does. Mm-hmm. When you don't own that, you don't have the flexibility to react in real time. Right. That's really, really critically important. It will be a differentiator as we think about the future. The other thing is we haven't really gone to market differently. We are still going to market as a full Walt Disney Company because the same marketers that were coming in through sports are also looking at streaming, are also looking at our linear businesses, and it's really important that we have that flexibility to talk to them on whatever they want in real time because everyone has change in their business. Right. They have cyclical things. They need adjustments. All of that's really important, and we're still hyper-focused on serving the customer. We talked about, a little bit about it last year when I was here. We have a team that focuses on industries, they're experts on financial services, CPG. Right Pharmaceuticals. We still do that because it's really important that clients understand the capabilities in everything that we're doing in that space. By the way, there's ad products that go across, so when you think of, you know, financial services and pharmaceutical for example, a lot of privacy concerns in those categories. We've developed ad products that work for one that you can take into other categories, so it really helps to connect those bridges. Then servicing the agencies in the way they expect to, right? Which is still a very high level, high service every day. Christine talks about the NBA and the excitement of having more games. I love having seven games. Trust me, my entire team does. That means we're in the market every single week. Every Monday, I call Jimmy, I'm like, "We gotta move 150 units this week. We gotta move 150," because we have more games. By the way, it happens. That's really exciting because you have the relationships to be able to do that. It couldn't happen necessarily everywhere, but it happens here because we're in the market every day. Okay. Something that's funny, on the last quarterly earnings that was kinda lost was we didn't talk a lot about the ad demand for the opening of Disney+ and has consumer adoption of the ad tier met expectations, right? There's something to talk about. Mm-hmm. That was a big initiative, but. Yeah Kind of was lost in the. Well, we saw a tremendous adoption by advertisers in last year's upfront. We're gonna see the same in this year. There's more demand than, you know, we've been able to take, candidly. Right. We're seeing growth in that every single day. We are seeing the subscribers coming in. It's a high percentage that are taking the ad tier, which is helpful for us. Supply is growing week over week. Now that we're rolling out targeting, we're gonna actually be able to do more. Yeah. With more advertisers in the marketplace. We're really excited about Disney+. On the consumer adoption side, maybe you wanna talk about what, you know, has met expectations, maybe the pricing strategies that you're talking about, how does that change the adoption possibly of the ad tier? I think from a consumer perspective, it's really interesting because the more that we can marry the backend technology to really take a look at our streaming services across the board, the more we can really do that. Aaron LaBerge has done an extraordinary job of really looking at the product as well. He runs product and ad tech, which is super valuable because then you're looking at how consumers come in, how do you wanna serve them? What are the right tools and environments that you can create within the app to actually maximize our opportunity to drive engagement, which is a core driver of the advertising time. Then to really roll out the right types of ad products that are the right for that experience, and it's not exactly the same as we talked about last year than on Hulu, right? The mix of content is different. The type of consumer is different, and so you wanna have native experiences on that app that really drive that, and so having that now together in one kind of team has really allowed us to accelerate that. Okay. Anything you'd share about the types of people who've taken the ad tier versus the ad-free tier? Anything you know, that you've seen notably on demographics or anything? I don't know that I've seen anything specific that would really call out anything different. Okay. Okay. We mentioned that you guys have teased on this already, is that the pivot of more and more live sports ratings taking over share of non-live. Is there demand for that? Is there incremental ad demand or is there just a more limited bucket of people who just wanna buy sports, right? We've always thought historically, oh, the NFL has a set number of advertisers. Tell me what you're seeing as sports ratings take a bigger part of, you know. Yeah. The impressions in the world. I think it's both, right? I do think that there are advertisers, we talk about it all the time, there's clear advertisers who associate themselves with certain leagues, and they, by the way, come in multi-year on those types of relationships. College football is a big driver of that. NFL, NBA, all the big ones. There are advertisers who are seeing the growth of sports and wanna be there. It's interesting what you talk about live. Live was a big part of what we talked about yesterday in our upfront because if you look across our broadcast network today, about 70% of our content is live when you look across all day parts. It's really important. It's a really important driver of audiences coming together and brands wanna be in moments, and live creates moments. It creates moments for integrations of brands. It creates moments for, you know, bigger scale of audiences, and so it's a really important strategy for us as well. Okay. Something we talked about last year, right? As the mix of dollars move more and more to SVOD and DTC, how are buyers viewing your overall inventory, right? Are they looking at that as a reach extension or is it more, you know, direct response programmatically bought? Just, you know, what is. This has been a debate we've all had with our clients, really a discussion. What does that open up? Is that just a reach extension or is that a different type of advertiser? Who's trying to bring more targeted, pinpointed advertising? It's both. It's both. It's both. We have advertisers, we talked about it at our upfront yesterday as well, because, you know, when you cum reach, nobody cums reach faster than The Walt Disney Company, and it's partially to do with the incredible platforms that we have when you think of the scale of sports and the scale. No one has the reach of ad-supported streaming that The Walt Disney Company has. Just, it's not available in the marketplace today. When you look across our platforms, you can cum reach with the least amount of frequency at the best price, no question. Yet, at the same time, what we're seeing in the scatter marketplace, we talk about it a lot as a team, there is no more scatter in streaming. It's really a programmatic. It's moving to a programmatic business because you buy in real-time with the data that we have across the platforms to be able to leverage the outcomes you want, target the audiences you want, and across our entire portfolio of streaming. That's ESPN+, Disney+, and Hulu, in addition to our owned and operated TV everywhere else, right? Which are a big piece of our business as well. Right. Then in terms of client mix, the growth of SMBs, we talked about this last year. Yeah. Television's always been national, it's always been Fortune 500. What's going on in terms of the mix shift of. Yeah. SMBs? We're seeing a lot more of that. Obviously, our stations is part of what we do, and so we combined our station business with our Hulu local business a couple of years ago. It's really proved to be really powerful and valuable in terms of how we talk to advertisers. We also talked last year about rolling out self-service. Our self-service platform is now moving to be the underpinning of our local business to drive that SMB growth. It's high volume, low deal size business, and so it was really important to create automation so that we can actually talk to and service the scale of advertisers that are looking to be on the platforms. You'll see more of that as we continue to evolve our business. It's a really core component of what we're doing to grow that. Something you've mentioned on the stage this year and last year is the investment you've made in capabilities. Mm-hmm. I know it's central to the competitiveness of where you stand. Spend a little time telling people, you know, what you've done, what you've invested in, and how long has that taken to get to where you've got, you know, at this point? Years. Years. It's taken. Listen, there are so many streaming platforms in the marketplace today, and you and I talked about it last year. When you come into this business, I think people underestimate the investment in technology that is required to service clients the way they expect to be serviced. There are so many technology platforms out there and competitors out there who have their own tech, and those have been able to move and innovate faster because it's in their wheelhouse. They don't have to get in a queue to be able to do that. They can make the changes in real-time, and the dynamic-ness and the velocity of change that is happening in our business, you have to own your own tech. On the data side, we have a data graph today that is 250 million identifiers, represents 112 million households, I can't even tell you the amount of signals that come from that allow advertisers to really take and hyper-target the segments they want on the platforms they want. That ID graph has been really an underpinning of all the relationships we have with all the vendors, the agencies. We've set up clean rooms to be able to do privacy compliant, because that's extraordinarily important as well. Privacy compliant matches in clean rooms where we can really use that for not only planning, but buying and then measuring the outcomes on the other side. Okay. You kind of led to my next question is, we all wonder what's the impact of new entrants, okay, you know some of the names. Mm-hmm Into this industry. Yeah. What has that been in terms of the impact on the market of people moving in either SVOD, new SVOD ad tiers or the AVOD tiers or the FAST channels? Yeah. How's it impacted the marketplace? Well, listen, I think it takes share of mind and share of conversation. Again, the winners will be the winners who can drive success in user experience, in quality of content, in capabilities and targeting. It's not one thing or the other. You have to have it all. We have best in class content. No company rivals us in that. We are making the investments in data and technology, we have been for years, to drive that. Ultimately, having the business partnerships and relationships to create the demand channels of which people wanna buy. If they wanna buy us direct, great. If they wanna buy us through a DSP, we're there too. We're gonna service clients the way they wanna come into the platform. if I offered you a three-year lease for someone else's ad tech stack, you would not take that? No, thank you. Okay. Just checking. I'm betting on Karen. Okay. With that said, we are back to Christine. now let's turn to direct to consumer, okay? Mm-hmm. I waited this long. How has the company strategy around DTC now changed with Bob Iger back as CEO? When will we see the benefits of that pivot filter into company financial results? Bob is back. That is great news. Let me just take a step back on I think it's directly related to direct to consumer, but it's also related to our businesses. Josh D'Amaro runs our DPEP business, which is our global parks, experiences, and products. That's a global business. When you look on what is now, Disney Entertainment and ESPN, those businesses, up until this recent restructuring, were not managed on a global basis. What they predominantly looked at was domestic U.S., and we were largely looking at it as an exporter of content, and rights for sports that were primarily domestic. There were some outside of the U.S., but primarily domestic. The other decisions on content, even in direct to consumer, had been made by, in the regions, as well as sports rights in the regions with, you know, oversight, but not direct responsibility. So now when you look at what Jimmy Pitaro's doing in sports, he's managing a global business. Which means, and once again, not to sound too geeky like a CFO, but when he is looking at the, you know, where is the best and highest use of the marginal $1 for sports rights, he's looking at it as a total global portfolio, not just domestic. Which is gonna allow him, you know, a bigger pie, but also to look at allocation. He may look at, is this better as something in the US, something that expands beyond the US, or something that is in a region? I think that is something that is definitely gonna impact our sports business to, you know, just be much more rational thinking of it as a global business because The Walt Disney Company is a global enterprise. Same thing on the entertainment side with Dana Walden and Alan Bergman. They're looking at spending inside of not only their linear or film businesses, but also in direct-to-consumer, where is the marginal dollar of content investment best spent? I know there's been some focus and, you know, once again, there's a lot going on when we release our earnings. There's a lot of information that goes into the market all at once. I think I've read some commentary of some concern over us, you know, cutting back on content and somehow that's gonna have a negative impact on our ability to attract or retain new subscribers and existing subscribers, and that's really not the case. It's really spending our content dollars to the highest and best use of where they will attract and retain those subscribers. I think that's a fundamental shift that, you know, once again, it may be viewed as a nuance, but when you put that, and once again, Bob has really talked about this, the accountability with a leader, we've seen it operate in parks in DPEP. You know, look at our parks business, how well it operates as a global business. That ladders up to Josh D'Amaro. Now we're looking at it and we're taking that same really, really successful model, applying it from a global perspective in sports up to Jimmy, and in our entertainment businesses which includes direct-to-consumer up to both Alan and Dana Walden. I think this is something I just want to emphasize that, you know, companies evolve. You know, you can always, you know, best practices is something, you know, it's usually talked about in, you know, kind of functional areas. You can look at best practices and take it on an enterprise level, you just have, once again, parks is global business. When we look at investing in new attractions, it's not done, you know, park by park by park. It's laddered up. Where is the best use of that marginal US dollar? That's a mind shift that is really embraced by Bob and it's embraced by, you know, the leadership team and I think that will... You talk about when you're gonna see it. Yeah. Does that happen snap overnight? No. You're gonna see. We're all motivated, we're all driven, we're all driving to the same, you know, goalpost. We're gonna get there, and when you have a highly motivated, really incredibly talented management team, we're gonna get there. That's just, once again, nuance, but I think it is, it really needs to be emphasized 'cause I don't think people have really focused on that change in the way we're managing the company. Well. I would add to that though too. Yeah. When you look at that coupled with we're doing the same around our technology stack. Yes. When you think of Disney+ is going to be rolling out in these international marketplaces, we have a head start. We know exactly how that's worked here. It allows us the agility and flexibility to be able to be responsive. The responsive nature in this rapidly dynamic marketplace is really important, and having those expertise structured in that way allows us to move quickly and decisively. Right. Another thing I'd just like to add on that, Rita now has global responsibility for how we are going to market in advertising. It's not just being done by region. She has oversight for how that's being done. The other thing is our ad tier, you know, we've launched it in the U.S. in December. It's only in the U.S. right now. She is gonna be involved in, and with the technology teams and the direct-to-consumer management teams, launching Disney+ ad supported outside the U.S. It's funny, we upgraded the stock on that nuanced idea. Mm-hmm. One of the questions we always get is when does the nuance become results financially? You say it's gonna come, you know, you don't wanna put. You know, it's all, it's putting the whole puzzle. This is like a big puzzle. This isn't a 300 piece puzzle. This is a 2,500 piece puzzle. Right? We put all the pieces of the puzzle together, Michael, and the things that you will see first that are gonna be evident in our results, you know, the fastest is gonna be things on the cost side. The plain old blocking and tackling SG&A. You know, we've addressed it on the labor front, on the technology front, dealing with vendors where we're consolidating vendor relationships. Those are the things that we're doing right now. There's a lot of focus and kudos to all the people in the company that are doing this 'cause it is, it is tough work. Mm-hmm. It's tough. It's emotionally draining. That is what you're gonna see first. Some of these other things you will see. It's gonna roll out. I don't wanna give a timeline. Once again, I think it's really important to understand, you know, when people are highly motivated, we like to think of ourselves as a company of winners. Yes, we know there are headwinds in this industry, there are challenges, but we look at the hand that we have to play, and it's a great hand. I mean, as Rita Ferro said, she doesn't want anyone else's ad stack technology. We don't want anyone else's hand they have to play on the content IP franchise side, the technology that we've developed to deliver direct-to-consumer. We certainly don't wanna change our hand with what we have to play, you know, in our Parks, Experiences and Products group. We're winners, and we are going to win. Okay. Cool. Another question we get a lot, thank you for that, is long-term margin potential let's say core Disney+ because I don't wanna include Hotstar. Mm-hmm. Given that Netflix has broken about 20% margins this year, can you talk a little bit about your give and takes, and what you think about long-term margin potential for Disney+? I know that's also in a bunch of change 'cause of pricing. Yeah, you know, I look at, I look at Netflix, and I see where they are. We have not put out a margin goal yet because we're still getting to breakeven, which we have firmly in our sights. We're gonna march towards that. We wouldn't be doing everything we're doing if we did not believe that this was a business that would deliver long-term sustainable returns to shareholders. That's the best way I could answer it, Mike. Okay. Two more. You announced on the call combining Hulu with Disney+, you know, for existing subscribers of both services. You're putting a Hulu tile there. What benefits do you see by bundling all of these Disney products together? Is that strategy working? Well, we haven't done it yet. Right. So. Well, yeah. Okay, let me do the Disney bundle first. Yeah. And then add the Disney. Okay. The Hulu tile to Disney+. The Disney bundle, you know, there's a two-part bundle and a three-part bundle. One is Disney+ and Hulu, and then you can also have Disney+ Hulu and ESPN+. What we've seen, the characteristic that we've seen on all of those bundle offerings is because it is a great consumer proposition, and it has multiple offerings, it is the characteristic that is most meaningful from a performance perspective is lower churn. So it means there's more for the consumer, so they stay in it and it just has lower characteristics. One is the value proposition, and the other is the content offering, how wide it is. In that answer then talk about what you're trying to achieve by creating a more unified app in terms of Hulu and Disney+. What Bob talked about on our earnings call last week was putting a Hulu tile on Disney+. It's not gonna have all of Hulu content on there. It'll have a lot of it. A consumer who has Disney+ with that tile when it launches doesn't have to get out of Disney+ and go into Hulu to find content. It can stay in the Disney+ platform, go into that tile, which is just like the, you know, the Marvel tile or the Disney tile or the Pixar tile. You go into that tile, and then you can search for the content without having to go in and out. I have a fundamental belief that when you present friction to a consumer, it's never the best experience. Eliminating this friction, it's just human nature. It's just, you're not asking someone to do an additional step. You just stay there. If you wanna pop in, pop out of what, whatever you're watching, you know, on one of our other tiles into Hulu, you just don't have that additional steps. Right. Rita, one of the talking points on the strategy change is better for advertising. You wanna talk a bit about. Yeah. How does that help you monetize advertising by unifying the tiles? Well, first of all, it drives engagement is a core component of how we think about ourselves as a streaming platform. It's really important as you think of, again, what Christine talked about, frictionless experience. The whole consumer journey from the time you step into the app to the environment that you experience within, moving from content to content, the recommendation engine of what comes after you've watched this, what's coming next, what that advertising experience, that's where we're gonna win. Right? That's where understanding all of those data points and signals that we're getting from how users come in and experience that product is really gonna drive how we think about the consumer journey, how we think about the advertising experience, ultimately how we deliver for brands in that experience. you know, it's gonna start within that, and hopefully over time, you know, having them all on one backend allows us to have richer data on the consumer, what they like to watch, what they don't like to watch, and better advertising because of that. Okay. Christine, in fiscal year 2018, Disney generated by our definition over $10 billion of free cash flow. Since then, we've had a global pandemic, massive shift to streaming and the acquisition of Fox. When you look out the next few years, how should investors frame Disney's ability to return to the great cash generating days of old? Little did we know how much fun we were gonna have over the last few years. Exactly, yeah. Yeah. Look, we've had some headwinds that we've had to contend with, whether it... You know, I mean, you just iterated all of them. As a CFO, free cash flow is near and dear to my heart. We look at our ability... You know, when you look at the parks business, you know, that generates a lot of free cash flow. You look at things like the resumption of theatrical distribution of feature films. That's also a very strong cash driver. Cash is something that we look at very keenly. Direct to consumer was also a new cash flow for us. I mean, we never had that cash flow direct from consumers before. It was incremental to us. You know, given the investment phase that we've been in, our cash flow has been muted. It is something that we look at with, you know, a very, you know, keen eye towards improving, and we're driving towards it. You know, our cash flow is up year-over-year. This is not the end. We are moving forward. We're going to continue to make progress on that. I'm not going to give an estimate, but we are going to keep free cash flow in mind. At some point, as you know, we've talked about resuming a dividend in not too distant future. It's not going to be where we left off, but we're going to get back in the game, and that's something I think that is... Returning capital to shareholders is something that we also think about in addition to growing our businesses and investing in our businesses. Right. You know, I asked you on the call about trying to frame peak cash content spending at sports. Mm-hmm. At some point, will you give us a waterfall like where you see... It feels like this year's peak based on this year's flat versus last year, right? Yeah. This year's flat versus last year, you know, we said it's around that $30 billion. You know, we have a writers' strike if anyone hasn't noticed yet. That may impact cash spend for the balance of this fiscal year. Mm-hmm. You know, we'll update that, you know, if it's appropriate, when we, you know, speak publicly the next time. Yeah, you know, we'll continue to invest in content, but we're looking at, you know, once again, where the content dollars are best spent to drive, you know, the consumer engagement and attraction of subs and retention of subs. Okay. In my last couple minutes, I have last one for both of you. I'll start with you, Rita. If we have the benefit of coming back next year and doing this again, what you think will be the biggest surprise you share on stage with us a year from now? Wow, that's a good one. The biggest surprise I think will be just how the market evolves. I think this notion of where the market is going and how quickly it's evolving, it's hard to even know really, like, where the biggest opportunities will be, but I fully believe that they're still gonna be in the sports and streaming marketplace in the near term. But I think the amount of data that we're getting in and the amount of signals and how we transform our business into a much more automated data-enabled programmatic world will be far ahead where I actually think it is, and I'm pushing it there, but I actually think it's gonna actually be more the adoption will be far greater. Will put pressure on linear only models that don't have the tools. No, on the linear side, we actually do data-driven linear, and that's still an evolving business. Because we have this ID graph, we can actually take the learnings and really apply those audience segments on linear. It actually, having that ID graph for our addressable business has allowed us to really, you know, bring the linear businesses along. Okay. There's no question, the more dynamic, the more capabilities, the more robust that business becomes, you have to be a player there, and you have to really own the graph and own the tech to be able to deliver on it. Okay. After you, Christine. It's a great question. I don't know. What ad recession were we talking about in 2023? Yeah. It's, once again, it's cyclical. It's gonna come back. You know, the economy is gonna, you know, move on. I think we have better days ahead, and we'll be looking at, you know, some of the headwinds and challenges and forgetting that, you know, we were worried about it. Right. Okay. Okay. With that, very optimistic. Thank you. I have to be optimistic. Exactly. Yes. Thanks for being here. We'll start again in 10 minutes. Thank you, all. Thank you.