What changed in this filing

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Item 1A. Risk Factors

2023-05-10 compared with 2023-02-08 · 49 added, 6 removed, 52 unchanged (51% of the section changed)

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BUSINESS, ECONOMIC, MARKET and OPERATING CONDITION RISKS

Changes in technology, in consumer consumption patterns and in how entertainment products are created may affect demand for our entertainment products, the revenue we can generate from these products or the cost of producing or distributing products.

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.

New technologies affect the demand for our products, the manner in which our products are distributed to consumers, ways we charge for and receive revenue for our entertainment products and the stability of those revenue streams, the sources and nature of competing content offerings, the time and manner in which consumers acquire and view some of our entertainment products and the options available to advertisers for reaching their desired audiences.

These developments have 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.

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.

Rules governing new technological developments, such as developments in generative AI, remain unsettled, and these developments may affect aspects of our existing business model, including revenue streams for the use of our IP and how we create our entertainment products.

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, initiating plans to again reorganize our media and entertainment businesses to advance our DTC strategies, and developing new media 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.

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.

The success of our businesses is highly dependent on the existence and maintenance of intellectual property rights in the entertainment products and services we create.

The value to us of our IP is dependent on the scope and duration of our rights as defined by applicable laws in the U.S.

and abroad and the manner in which those laws are construed.

If those laws are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from our IP may decrease, or the cost of obtaining and maintaining rights may increase.

The terms of some copyrights for IP related to some of our products and services have expired and other copyrights will expire in the future.

For example, in the United States and countries that look to the United States copyright term when shorter than their own, the copyright term for early works such as the short film Steamboat Willie (1928), and the specific early versions of characters depicted in those works, expires at the end of the 95th calendar year after the date the copyright was originally secured in the United States.

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.

The convergence of computing, communication and entertainment devices, increased broadband internet speed and penetration, increased availability and speed of mobile data transmission and increasingly sophisticated attempts to obtain unauthorized access to data systems have made the unauthorized digital copying and distribution of our films, television productions and other creative works easier and faster and protection and enforcement of IP rights more challenging.

The unauthorized distribution and access to entertainment content generally continues to be a significant challenge for IP rights holders.

Inadequate laws or weak enforcement mechanisms to protect entertainment industry IP in one country can adversely affect the results of the Company’s operations worldwide, despite the Company’s efforts to protect its IP rights.

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.

These developments require us to devote substantial resources to protecting our IP against unlicensed use and present the risk of increased losses of revenue as a result of unlicensed distribution of our content and other commercial misuses of our IP.

The legal landscape for some new technologies, including some generative AI, remains uncertain, and development of the law in this area could impact our ability to protect against infringing uses.

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.

Successful challenges to our rights in IP may result in increased costs for obtaining rights or the loss of the opportunity to earn revenue from or utilize the IP that is the subject of challenged rights.

From time to time, the Company has been notified that it may be infringing certain IP rights of third parties.

Technological changes in industries in which the Company operates and extensive patent coverage in those areas may increase the risk of such claims being brought and prevailing.

Regulations applicable to our businesses may impair the profitability of our businesses.

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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.

Public health and other regional, national, state and local regulations and policies are impacting our ability to operate our businesses or operate in accordance with historic practice.

In addition to the government requirements that have impacted most of our businesses as a result of COVID-19, government requirements may continue to be extended and new government requirements may be imposed to address COVID-19 or future health outbreaks or pandemics.

In Florida, steps directed at the Company (including the passage of legislation) have been taken and future actions have been threatened, which collectively could negatively impact (and may have already impacted) our ability to execute on our business strategy, our costs and the profitability of our operations in Florida.

Public health and other regional, national, state and local regulations and policies impacted most of our businesses as a result of COVID-19.

Government requirements may continue to be extended or be reinstated and new government requirements may be imposed to address COVID-19 or future health outbreaks or pandemics.

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.

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.

In addition, we have extensive international operations, including our international theme parks and resorts, which are dependent on domestic and international regulations consistent with trade and investment in those regions.

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:

addition, we have extensive international operations, including our international theme parks and resorts, which are dependent on domestic and international regulations consistent with trade and investment in those regions.

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);

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For example, many losses related to impacts of COVID-19 have not been covered by insurance.

Environmental, social and governance matters and any related reporting obligations may impact our businesses.

and international regulators, investors and other stakeholders are increasingly focused on environmental, social and governance matters.

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.

Our response will require additional investments and implementation of new practices and reporting processes, all entailing additional compliance risk.

In addition, we have announced a number of related 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’, government and other stakeholders’ perceptions of our efforts to achieve these goals often differ widely and present risks to our reputation and brands.

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 may depend in part on third-party collaboration, mitigation innovations and/or the availability of economically feasible solutions at scale.

Labor disputes may disrupt our operations and adversely affect the profitability of one or more of our businesses.

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persons employed on our productions;

or the employees of our licensees or retailers who sell our licensed consumer products or providers of programming content may disrupt our operations and reduce our revenues.

the employees of our licensees or retailers who sell our licensed consumer products or providers of programming content may disrupt our operations and reduce our revenues.

For example, on May 2, 2023, members of the Writers Guild of America commenced a work stoppage.

If this or another work stoppage by unions involved in production is prolonged, we may be unable to produce, distribute or license programming and theatrical releases, which could result in reduced revenue and have an adverse effect on our profitability.

Resolution of disputes or negotiation of new agreements, including rate increases and other changes to employee benefits, has in the past increased our costs and may increase our costs in the future.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors