Again, I'm John Hodulik, Media and Telecom Analyst here at UBS, and I'm very happy to introduce Hugh Johnston, the Senior Executive Vice President and CFO of Disney. Hugh, thanks for joining us.
Happy to be here.
And in the four minutes that we have time left for questions, so just up to stage, Hugh. Actually last week was your one-year anniversary as the CFO of Disney. And just given all the change and learning a new industry and everything going on in media, it must feel like 10 years.
Well, I don't know if I can go quite to that, but it's been an exciting year to say the least.
So to start us off and set the table for the rest of the conversation, can you talk a little bit about the changes you've made at the company thus far? What changes you feel you still have to make and the financial position of Disney as we sit here looking out into 2025?
Yeah, happy to talk a little bit about that. As you might imagine, for those of you who don't know, I was with PepsiCo prior to coming to Disney for 35 years, so it was not an insignificant decision to come over to Disney. I had a hypothesis, as you do, in terms of joining a new company because you want to go in with some sense as to where you think the company is, and that was mostly around the notion that the company was emerging from a period of industry disruption that had gone on for at least the last five to seven years, maybe as many as 10 years. The good news is that hypothesis has actually played out better than I would have expected. The company clearly is emerging from that disruptive period as a winner, which is kind of what I was assuming going in.
I thought there were a couple of places that I could probably add to that sort of improved performance of the company. Number one was I thought there was probably an opportunity on the cost side, so to be able to reduce costs in certain areas and then take that money, deliver some to investors, and plow some back into the business in terms of reinvestment. Number two, I thought maybe while Disney has always been a well-managed company financially, I thought in terms of the planning and forecasting processes, there might be an opportunity to make that a little bit tighter, which enables you to do two things. One, use your assets more effectively, and number two, communicate better with investors. And I think there's still opportunities to do that even more.
But those are probably the couple of initial things I came in with, and it's playing out pretty well that way.
Got it. And are there any sort of major sort of tentpole things that you're still hoping to drive through as we look out into 2025?
Yeah. I mean, we need to continue to focus on eliminating unnecessary costs to put money back into the big bets that we're making as a company, right? And you all are familiar with the big bets, of course. The streaming bet, which is working out very well, and then the capital bet with the parks and the cruise lines and all of that. The more we can do to give ourselves breathing space by managing costs tightly, I think the better off we're going to be as a company. And we spent a lot of time, I mentioned the forecasting and planning processes, we spent a lot of time during the course of the spring into the summer doing a long-range plan, then an AOP, then we went back and revisited the long-range plan.
And that led us to the guidance that we provided to all of you, which candidly, I thought was quite important. If you sort of take a big step back from it, which is relatively easy to do in your first year, we were asking you all to fund two big bets for us. Number one, operating losses in streaming, which you had done for four or five years to the tune of many billions of dollars. And number two, capital into the parks and into the cruise lines because we thought there were great returns in that business. And given the size of the bets, as soon as we could reasonably give you a sense as to what you should expect in terms of the returns on those bets, I thought it was important for us to do that.
So I and the management team spent a lot of time and a lot of detailed planning, getting ourselves aligned around it such that we could give you that guidance so that you knew what the payback would look like roughly on the bets that we were making on your and our behalf.
That's great. And that's a great framework. Why don't we start with experiences and maybe sort of touch on cruises first? Obviously, it's not a huge piece of your business, but it's actually growing very rapidly, right? With the launch of the Treasure, you now have six ships with seven more in development. How should we think of the cruise business as a driver of that segment?
Yeah, it's going to be a significant contributor. As you noted, we're going to double the size of the fleet over the course of the next several years. It's funny. Cruises is a wonderful business. If you could own it for your family, you'd really want to because it's got high margins, it's got good returns. Consumers absolutely love the product. It's the highest-reviewed product of any of the products that we have. And I mean, really, really exceptionally well-reviewed from a consumer perspective. It's got lots of layers of competitive advantage because of all the IP that we put into the ships in terms of sort of all the Disney characters and the Disney service model into the ships where you have a captive audience and they really respond to the Disney service model as well.
In addition to that, there's lots of untapped global growth potential on the cruise ships. You put all of that together and you say, "Yeah, if you're ever going to look at an investment and say, 'Does it have layers of advantage? Does it have attractive financials? Does it have a consumer proposition?'" This is the one that does. As a result, it will become a bigger and bigger piece of the line of business over time.
And how should we think of the, you don't have to give us a number, but how should we think of the margins in that business, especially compared to, say, domestic parks? It's meaningfully better, correct?
Yeah. I'll just call them. They don't detract from the business by any stretch of the imagination. We'll leave it at that.
Okay. You mentioned the big investment cycle going on at the company, especially at the parks, which includes the largest-ever expansion of Magic Kingdom, new Monsters, Inc. land at Disney's Hollywood Studios, Indiana Jones and Encanto at Disney's Animal Kingdom, and many, many more. Can you give us those sort of broad outlines as to the financial impact that the upgrades and expansions will have in the parks business?
Yeah, happy to talk about that. I mean, you all know that the parks business is, it's basically an asset of one. It doesn't really have any material competition. Obviously, there's Universal and there's other parks out there, but a Disney theme park is pretty unique in terms of the amount of IP in it, the scale of the parks. The service, again, is a fairly unique asset. And you all see the financials on that. They're quite attractive, right? The return profile is terrific. The growth profile is terrific. And we've obviously had tons and tons of success there and expect to continue to have tons of success. So as we looked at it, we still have a lot of untapped land within the existing footprint of the parks. So expanding attractions and expanding capacity allows us to expand attendance without deteriorating the service model.
So people feel good about that. In addition to that, the opportunity to leverage technology to make the guest experience so much better by virtue of getting people through lines quickly. If you've been to a Disney park, the number one challenge, obviously, is how do you get through the lines and all of that. To the degree we can use technology to make that experience even better, we're going to do that. And then, frankly, we're investing in the cast because ultimately, they are the front line. They are the delivery of the service. Each one of those interactions matters a lot. So as we sort of look forward, we're basically creating new lands, new attractions, really across just about all of the parks.
And given the level of demand that's out there for it, we're expecting to be able to both get increased attendance, get higher pricing because, again, we're delivering more value. Value is what you get as a consumer. Price is what you pay. People feel good about the value they're getting, so we ought to be able to take more pricing in that. And as a result, we'll drive good financial results out of it in line with the guidance that we all shared with you of 6%-8% OI growth this year and high single-digit growth in the subsequent couple of years.
Yeah. So you mentioned pricing. Is that something—is that a comment more domestic or international as well? And is it sort of—I think you guys have in the past, you've talked about raising some prices on some peripheral areas, but not really the base sort of low-end.
Yeah. We have to be smart about pricing, particularly being sensitive to the consumer and the consumer who's sort of more focused on the value end of the offering. We want to be able to tap into those families and build the habit of coming to Disneyland or Disney World, not one time, but multiple times. And as a result of it, when we tend to take pricing or add to per caps, it tends to happen in a couple of areas. Number one, it tends to happen more at the premium end. So the value end, which is the value pricing is available, I believe, about 100 days a year. Those prices haven't moved up much in recent years. It's the premium end that's moved up. And then the value-added services that we have, like Lightning Lane and those types of things.
That's where, again, we're delivering more value, we feel comfortable taking more price. Other than that, we're trying to, at the value end, keep people coming to the parks early in their family's lives, trying to keep those prices in a place where it's accessible to them.
That makes sense. And then the international parks. Are the international parks all the way, how do you think of the growth in that sort of sliver of the experiences segment? And are they all the way back from COVID at this point?
I have to say, I don't know that because I wasn't here for it. But I know they're doing very well. And if I had to guess, I would guess they're probably all the way back, but it's probably worth checking, looking at the numbers. Look, we're optimistic about where the international parks are right now. Last year, broadly, was a pretty good year for the international parks. As we mentioned on the most recent call, China was a little bit soft. And Paris was soft because of the Olympics, which, by the way, we have history on. And we know when the Olympics shows up, the park that is in that city tends to lose some attendance. I will tell you, I was in Paris during that time frame, and I went and visited the park. You could see it.
People were coming to Paris for the Olympics, or they weren't coming to Paris. So there were some crowds in Paris, but not nearly to the degree you would expect. The good news is the month the Olympics were over, the attendance came right back. So we certainly feel good about that.
You were able to get on all the rides with no lines?
It was relatively easy. Yeah.
Yeah. So lastly, on parks, as you said, you gave guidance for the 6%-8% operating income growth this year. We've gotten a lot of pushback, especially given maybe a little bit of a softer consumer and then new competition from the Epic Universe in Orlando. So sort of how should we think of that 6%-8% growth and the impact that the Epic may have?
Yeah, so there's a lot of pushes and pulls in that, but let me kind of go through it. First of all, we mentioned on the call, it was likely to be more in the second half than in the first half. Why is that? Number one, we had two hurricanes at Walt Disney World in what is our first quarter, the fourth quarter calendar-wise, so those obviously had an impact. We also had the pre-launch cost of the most recent ship, which is about $90 million, and that's not an insignificant number in the quarter. In addition to that, we actually see more of the business-building initiatives coming on through the course of the year, so the Treasure, the new ship, they typically make money in their first quarter where we start to put people on the ship. That happens basically at New Year's.
So that will be incremental operating income that'll be coming basically from the moment we start. Number two, we do have some vacation club properties coming on during the course of the year, and particularly in the latter half of the year. So that should be additional operating income support. And then last but not least, we have some negative overlaps that we'll be going over, which will be beneficial to the operating income growth rate as well. Number one, there was higher labor costs in the last half of the year, in the last half of 2023, 2024, sorry, in Disneyland Resort. And in addition to that, the Disneyland Paris overlap that we were just talking about. So you sort of add all that up, and it does tilt toward the back half. More broadly, as we look at things, the consumer is actually doing okay right now.
We obviously saw a little bit of a hiccup in the summer with the parks. Right now, the consumer seems to be doing fine. So from that perspective, we're quite confident, and we've got good visibility in terms of the guide. In terms of Epic, we actually have built some negative in for that. Whether it will be as significant as we've built into it remains to be seen, but we were pretty cautious and conservative on that. That said, the history is you tend to get higher attendance in Orlando when there's something big and new in the market. So it may be a factor of, okay, the Universal guys will gain a little bit of share, but we'll see more category growth than we see share loss. Net net, it sort of works out okay.
But we have built a hedge in for that just to make sure we were covered.
On the attendance side.
On the attendance side.
Got it. Makes sense.
Okay. Oh, by the way, one last thing on that. I mentioned this on the earnings call as well, but the early bookings that we see for next summer are actually good. They're up year over year. So now it's early. We've got a lot of time to go, but at least the data that we have suggests that it's positive, not negative.
That would incorporate Epic Universe as well, right?
Correct. People.
Starting tomorrow.
Absolutely.
Makes sense. Okay. Maybe shifting to D2C. As you pointed out, you've seen major improvements in profitability and are now targeting the 10% + margins in fiscal 2026, making it actually the biggest driver of growth in EBIT in 2026. Can you step back and sort of point to what the big drivers of that growth are?
Yeah. Yeah. Happy to talk. I mean, number one, the biggest driver of all, of course, is the content that we have on the service. That's what makes people want to go to the Disney+ service. And with the recent content that we've been producing, it's really having the desired impact, right? Whether it's Inside Out 2, which turned out to be the biggest animated movie, Deadpool, now Moana 2, we've got Mufasa, The Lion King coming next. That movie content, really, those big tentpoles do drive people into the service. And once they're in, they tend to stay. They also tend to drive viewership of the movies that we had before. So Moana 2 did terrifically well. The biggest movie watched on the services most recently was Moana. And this is across all the services.
It's doing incredibly well right now because people sort of like to refresh on what it is, the stories were, and all of that. Number two is actually the TV series that we have right now. You saw with Shogun and the like, we won 60 Emmys, did phenomenally well in terms of the creative side on TV as well. And that, again, plays its way into the streaming service as they move from linear over into the streaming side. So that's also super supportive. So number one, content by far. Number two, we're clearly going to take some pricing. We did in October. That's worked out very well as far as I certainly feel good about that. Number three, subscriber growth. In a lot of ways, you almost have to think about this business as a software-like business. Each incremental subscriber basically brings very little cost.
It's almost all sort of incremental margin that comes with it. And then the decision we have to make is how much of that margin do you deliver versus reinvest back in the product. So password sharing in particular is working out well for us in terms of subscriber growth, but that's going to be a big driver. Ad monetization is going to be a big one for us and continues to be a big one for us. And this is something where, relative to our streaming competitors, we've got an awful lot of experience with advertising monetization. We've built our own ad engines, and we've got a tech stack that basically is second to none. And as a result, we're able to deliver audience like basically nobody else can. And then you'll see G&A leverage as well.
G&A, whether it's on the tech side or whether it's on the operating side, even marketing will provide us with some leverage. So you add all of those things up, you can see a pathway very easily to getting to the margins that we've talked about. And again, that's 2026. Our intent certainly isn't to stop at 10% margins in 2026, not by any stretch of the imagination.
In terms of just a quick follow-up on the password sharing, is that something we should see gain momentum, the benefit as we move through 2024, 2025?
Yeah. Yeah. You'll get a little bit of it at the beginning, and then each quarter should be incrementally stronger in terms of the benefit.
Okay. Okay. Great. Bigger picture, we can see your D2C businesses converging. And Bob has talked about Disney+ as ultimately being the home of all things Disney. Can you help frame the long-term product vision for Disney+?
Yeah. Happy to talk about that. It's funny. I actually view Disney+ as the most strategic asset that we have in the company right now for a couple of reasons. Number one, it takes Disney from being more of a business-to-business company into being a direct-to-consumer company where you have relationships with right now 175 million households. And over time, I expect that number to continue to grow. When you're able to build that level of insight around how consumers are consuming entertainment, that's an enormously valuable asset for the entire rest of the company because all of a sudden, you can actually market to people in a much more targeted way. As I think about what Disney+ can be, I really think about it as it can be the place you get up in the morning and you go to Disney+, right? You want to get the news? Great.
You can find the news on Disney+. At noon, do you want to check in on sports? Great. With the ESPN tile, you can check in on Disney+. In the evening, do you want to watch some entertainment? Great. Whether it's the Hulu side or whether it's the Disney side, phenomenal amount of entertainment that sits on that asset. On the weekend, you want to sit down and watch a ball game? ESPN's a place. That brand portfolio inside of Disney+ is basically second to none. No one else has news plus sports plus general entertainment plus all family entertainment. I mean, there's just so many potential elements of where we can take this thing. It has the potential to be truly the portal not only into all things Disney, but over time, obviously, we may license some other things to be on the platform as well.
But I think it can be the go-to entertainment asset.
That makes sense. So ESPN, you talked about sports being on the platform, and the ESPN tile now is on the Disney+ home screen. Probably too early to talk about what you've seen so far, but what do you hope to sort of drive?
Yeah. It's only been a handful of days, so it is a bit early on that front. In many ways, it's a little bit of what I was just talking about, but then to sort of zero in on what it is that ESPN+ can do for the Disney+ asset. It creates in many ways an obstacle to churn, right? And when you think about what drives churn, and somebody said, "Well, you know what? There's not that much I need right now, and it's easy for me to get out of it, so let me churn out, and then I'll come back in later." What you really need in the household is one obstacle, somebody to say, "No, no, no. We can't turn it off because of," right? And it may be someone who likes general entertainment.
It may be the Disney+, the kids' movies and things like that, the all-family types of things. It may be sports. "Oh, no, we can't turn it off because we've got ESPN right now. I'm in season for my team." It may be news, somebody who's just a news junkie and says, "What? No, there's no way I'm going to give up that asset." And by virtue of putting in all of these assets, you see the churn go down. I mean, we've already proven that. So in terms of what it does for ESPN, you think right now what we're essentially doing is getting people used to the idea of finding ESPN on Disney+ as opposed to finding it elsewhere.
Now, when we finally launch ESPN Flagship, which is going to be a much more sophisticated product sometime in early fall of next year, that product is going to be about much more interaction. It's really not going to be just an analog product delivered digitally, but it will be a true digital native type of product. So if you want to do betting through ESPN Bet, you'll be able to do it on the app. If you want to do fantasy tracking, you'll be able to do it through ESPN+. If you want to do e-commerce connected to sports, the opportunities will be there to do that. And there's a whole variety of other product features that we're working on right now that you'll see in a few months. I don't want to give the whole thing away at this point. Jimmy Pitaro, kill me.
But the reality of it is this is really going to be an extremely interactive sports product, and sports fans love to be interacting with sports, right? It's part of what motivates them to be sports fans. So I think by virtue of putting it on Disney+, there's huge benefit to the service of having ESPN, and there's huge benefit to ESPN of being on the service. It really works both ways.
Makes sense. And lastly, before we move off D2C, news, I think, is a new category. I don't believe it's on there now.
No, it's on there. You can find it. Yeah. We need to probably make it a little more prominent, but more to come on that sometime too.
Okay. Sounds good. Maybe turning to linear real quick. As you manage through the changing linear landscape, how do you think about the structure of affiliate renewals going forward and other levers you have to manage the business?
Yeah. So a couple of things on linear. Number one, in terms of the deals that we've done most recently, they're really kind of bespoke deals to the individual that we're negotiating with, right? In terms of the Charter deal, it was sort of a hybrid deal. It gave us some level of DTC access. So from that standpoint, worked out very well for them, worked out very well for us. With DirecTV, basically, the deal allowed us to keep our entire broad array of channels available on DirecTV. So we were certainly happy with that outcome. So you really do have to approach each of them with the, "Okay. What is the person on the other side of the table looking to do? What are we looking to do?" And then be very smart about cutting a deal on that.
In terms of linear more broadly, this is one of the beauties of being one of the three really big streaming services in the United States. When consumers choose to cut the cord, and they're going to choose that at their own rate based on their own individual circumstances, we're there to catch them, and when they come over to the streaming side, we're perfectly happy with that. To the degree that they stay on the linear side, we're perfectly fine with that as well. We've really built in a lot of ways a natural hedge.
Makes sense. Now, turning to sports, and you talked about the flagship launch and all the capabilities there. How should we think about expenses associated with the flagship launch? For instance, I would imagine that there's likely to be a big sort of promotional push once you launch next year.
Yeah. The expenses will mostly be marketing. What will sort of come through incrementally. There'll be some money in technology, but we've already built so much of that. The technology piece of it will be relatively less. So as you might imagine, in the couple of months leading up to the launch and in a couple of months post the launch, you'll see an uptick in marketing expenses. Obviously, we've incorporated all that into the guide. But you've got to go create awareness with these products. And the ESPN team is pretty good about reaching out to sports fans. So I'm pretty optimistic they'll be able to spend the money efficiently.
Do you foresee the launch of Flagship and the sale of that product helping to lower the churn at Disney+ and Hulu?
Yeah. No, I think.
Gets back to your one objector issue. Yeah.
Exactly. It just sort of creates that incremental objector. Yeah. I mean, the more things you can put into the service, and ESPN Sports is obviously an immense asset in this country. The more things we can put into the service that are value-add without creating too much clutter and confusion, the better off it will be for Disney+. And the better off for ESPN, it'll get them more viewers.
Makes sense. Going back to your guidance, there was some surprise on the guide for sports growth in EBIT, operating income in 2026. I think for 2025, you have sort of the organic is sort of down 10%. Then you have a nice growth in 2026 despite the fact that you have NBA, potentially UFC. Maybe talk about sort of your sports portfolio and sort of how you see that evolving over time. And do you need to bulk up for the launch? Or do you need more assets as we go into the launch?
No. No, we really don't. We feel good about the portfolio of rights, deals, and assets that we have. I mean, if you look at how we try to run ESPN, and ESPN has somewhere in the 30s to maybe low 40s in terms of market share of sports viewership. We don't need to have everything. What we need to have is the critical mass of the right things, and if you look at what we have right now between the NFL and college football and the NBA, all of the things that we have are really sort of tentpole types of sports, and then we fill around them with other sports. With the tentpoles, we've pretty well got our deals in place well into the next decade, so we've got phenomenal predictability.
I mean, in terms of predicting sort of outcomes on the cost side, ESPN's pretty straightforward in that regard. So we have some escalators built into these deals, and these are things that are easy to model and easy to build in. But we don't feel like we need to go out and do something dramatically different in terms of the portfolio of assets we have. And we feel like we've got really strong visibility into the future on that front. In terms of what happens beyond those tentpoles, we'll sort of see and play it out as it goes. In a lot of ways, one of the things that's beneficial to ESPN is we actually, to some degree, have the ability through the storytelling and through our reach to sort of build a sport, an emerging sport or a nascent sport into something bigger.
If you look at how women's basketball went over the last couple of years, obviously, Caitlin Clark was a big story and sort of all the things that were happening inside of women's college basketball. But ESPN also took it and really blew out those stories and made them much more visible and much more notable. In fact, the women's college basketball championships were some of the highest-rated programs we had across any sport this year. It was truly amazing. And I think ESPN was a contributor to it. Obviously, the players are the story, but our ability to do the storytelling kind of basically amplifies it, which makes us attractive from a rights deal perspective. If you're the owner of the right, you want somebody who can make your sport look really, really good.
Hey, last on sports is Venu. We talked about it with Steve Tomsic at Fox. I mean, how important would you say it is to the overall sports distribution strategy or your distribution of your sports rights? And if it doesn't sort of move forward, does that change your approach at all, or?
No. We're fine either way. I mean, obviously, we thought it was a good idea. We still think if you go back, ESPN's strategy is to sort of meet the fan where they want to be met. And for a subset of sports fans, they don't necessarily need to have 100% of sports, but they'd like to have something more than just ESPN. That was the concept behind Venu, was to give that sports fan the consumer access that they want at a price point that they found attractive. If it happens, I think it's great for sports fans. If it doesn't happen, I think it'd be a shame for sports fans, but we'll see where it goes.
Yeah. I agree. Actually, one last question. ESPN+ versus the ESPN flagship product, I think I remember reading that they get folded in. Is that from day one?
Yeah. We haven't declared at all specifically what the naming conventions are going to be, but I would think of ESPN+ Premium being what Flagship is going to be. Flagship's just an internal name. We're not going to go with that as a public name.
Okay. Two more topics. Turning to content. As you pointed out, the studio has had a string of recent successes, and it looks like the creative output is back on track. What should we attribute this sort of pretty dramatic, I would say, improvement in the output and the sort of resonance that you're seeing behind your content over the last year, year and a half?
Yeah. It's funny. When I came to Disney, part of the conversation was around output of the creative side and the studios and what is that should be expected. And the team was firmly committed to the notion of, "Look, when we launch streaming, we tried to get too much out of the studios." And the creative talent isn't infinitely expandable, right? I mean, there's a limited number of human beings who can do this stuff. And when they pushed them to go faster to create more content for the streaming service, candidly, quality suffered. And you could see it. And consumers could see it. And you saw it in the box office. And you saw it in terms of the TV ratings as well. When Bob came back, one of the things he realized very quickly is we need to raise the bar on quality.
And one of the ways we're going to do that is we're going to slow down a bit on quantity. Now, I started saying that when I started visiting all of you back in January or February this year. Maybe I didn't have a lot of credibility at that point. I was like, "What does this soda guy know about making movies?" But I was really representing the team message on that one. And I think what you've seen played out this year is exactly that. Again, I'll go back to whether it's Inside Out 2 or whether it's Deadpool or whether it's the way Moana 2 has taken off or all of the Emmys on the TV side. By contracting a bit on output, the quality of the output has gone up dramatically.
And I've sat in lots of meetings now watching them give notes on movies and things like that. You can see the level of detail that people get into to take those movies from good to great. It's a lot of grinding, painstaking work. It's impressive to watch. But the result of it is you're seeing, frankly, much, much higher quality output. And as we look towards 2025, whether it's Captain America or Lilo & Stitch, I've got a lot of optimism on that front as well. And Mufasa coming up, which I've seen, I think it's going to be a phenomenal movie. I think people are absolutely going to love this movie. So from that standpoint, very, very optimistic that this creative turn is not a so-called lottery ticket, right? This is actually there's a process here, and that process is going to sustain itself over time.
The best proof point of it is before the push on quantity came, kind of 2015 to 2019, Disney was producing multiple billion-dollar hits every year. Looks like we're back to that. I think the proof point is not just me theorizing or just showing a short period of evidence. I think there's a longer period of evidence that really supports that. As you know, and I believe many of you know as well, that the ability to monetize creative inside of Disney right now is probably greater than it's ever been, partly because of the streaming service, partly because now when we do attraction, whether it's an attraction in the parks or an attraction on the ships, everything is connected to Disney IP. It used to be there were things in the parks that were just sort of these random attractions.
And they were perfectly fine, but they weren't part of the Disney ecosystem. And the stuff that's within the Disney ecosystem really monetizes tremendously well.
Got it. So again, when you provided your guidance, you sort of laid out a content spend of about $26 billion, which is up only slightly compared to the fiscal 2024 numbers. And I think within that, obviously, you have some sports rights inflation. So.
billion or $24 billion?
Was it 26? I might have a typo here.
Okay.
So, clarification on the content spend. And then, is that the right number? And how should we think of that? Maybe just the entertainment spend piece going forward.
Yeah. I think for the most part that that's a good number. The one place you might see it escalate a little bit, not in the near term, but over the course of the next couple of years, is international streaming. Because there's an opportunity, I think, to create some local programming that would help grow the subscriber base in that business even more so. That to me may be the one opportunity. But again, it's not going to be disruptive to the guidance. It's not going to be disruptive to anything that we've shared with all of you. But I look at international on the streaming side as a good incremental opportunity for us at relatively high margins. But aside from that, I think that number, whether it's 26 or 24, is a good number.
It's one that we ought to be able to run with for a few years.
From an international standpoint, you're talking about local content in the DTC business that can help drive the subscriber growth outside of the U.S.
Yeah. Things like telenovelas in Latin America or in Korea or in Asia, we've had a lot of success with some Korean dramas and things like that. Same thing will be true, I believe, in Europe. But it's important to remember that there is no international, right? There are segments of the world. You target that segment. If you believe you can drive good returns out of it, it's an incremental business proposition that'll do nothing but make us more profitable in streaming.
Great. Okay. Wrapping up, obviously, a lot of moving parts at Disney that we've addressed here today and a number of big projects that you have moving forward. How would you describe the visibility into the financial growth that you've laid out at this stage in the process?
Yeah. I think it's actually quite good. I mean, I've talked a lot about the notion of Disney being an earnings compounder, right? Because the brands are so strong and the IP is so strong. And our ability to take price is consistent. And our ability to manage costs is fairly good. There's a good opportunity there as well. So as I sort of sit and look at all of the work that we did in the long-range planning process, this was very detailed, painstaking work to make sure we really understood what was happening on the cost side, what our expectations were on the return side, lots of in-depth analysis. So I do feel like we've got pretty good visibility, number one.
Number two, because you can't predict everything perfectly, we've got levers to manage so that if we do get surprised, whether it's in the parks or whether we get surprised elsewhere in the portfolio, we have the ability to pull those levers and to deliver the guidance regardless of what's dealt to us in most scenarios.
Sounds good. It's a great way to wrap up. Thanks, Hugh.
Thank you. Appreciate the time.
Thanks.