What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-11-13 compared with 2024-11-14 · 240 added, 279 removed, 702 unchanged (43% of the section changed)

14 unchanged sentences

Restructuring and impairment charges ( 819 ) ( 3,595 ) 77 %

Other income (expense), net ( 65 ) 96 nm

Other expense — ( 65 ) 100 %

Interest expense, net ( 1,305 ) ( 1,260 ) (4) %

2 unchanged sentences

12,003 7,569 59 %

( 1,796 ) ( 1,379 ) (30) %

1,428 ( 1,796 ) nm

Net income 13,431 5,773 >100 %

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• Liquidity and Capital Resources

• Developments and Trends

• Trends and Uncertainties

• Critical Accounting Policies and Estimates

• DTC Product Descriptions, Key Definitions and Supplemental Information

• Entertainment DTC Product Descriptions and Key Definitions

• Supplemental Guarantor Financial Information

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Discussions of fiscal 2023 results and comparisons of fiscal 2024 results to fiscal 2023 results can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2024.

On November 14, 2024, the Company and RIL completed the Star India Transaction (see Note 4 to the Consolidated Financial Statements).

The Company recognizes its 37% share of the India joint venture’s results in “Equity in the income of investees.” Star India results through November 14, 2024 were consolidated in the Company’s financial results and reported in the Entertainment and Sports segments.

CONSOLIDATED RESULTS AND NON-SEGMENT ITEMS

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and diluted earnings per share (EPS) from continuing operations attributable to Disney increased to $6.85 compared to $2.72 in the prior year.

The EPS increase was due to higher operating income at Entertainment.

Service revenues for fiscal 2024 increased 3%, or $2.3 billion, to $81.8 billion, due to higher subscription revenue, growth at our parks and experiences businesses, and, to a lesser extent, higher advertising revenue.

These increases were partially offset

by lower theatrical distribution revenue, a decrease in TV/VOD distribution sales and lower affiliate revenue.

Service revenues reflected an approximate 1 percentage point decrease due to an unfavorable movement of the U.S.

dollar against major currencies including the impact of our hedging program (Foreign Exchange Impact).

The net income and EPS increases were due to a lower effective tax rate in the current year compared to the prior year and the comparison to impairments related to the Star India Transaction and goodwill in the prior year.

In addition, the increases in net income and EPS were due to higher operating income at Entertainment and Experiences.

The lower effective tax rate was due to a non-cash tax benefit recognized in the current year upon a change in Hulu’s U.S.

income tax classification (see Note 9 to the Consolidated Financial Statements).

Service revenues for fiscal 2025 increased 3%, or $2.7 billion, to $84.6 billion, which included an approximate 3 percentage point decrease from the Star India Transaction.

Aside from this impact, service revenues increased due to higher subscription revenue, growth at our parks and experiences businesses and an increase in content sales.

Product revenues for fiscal 2025 increased 3%, or $0.3 billion, to $9.8 billion, driven by growth at our parks and experiences businesses, partially offset by lower physical home entertainment distribution revenue due to a shift to licensing of physical distribution rights to third parties.

Costs and expenses

Cost of services for fiscal 2024 decreased 1%, or $0.6 billion, to $52.5 billion, primarily due to lower non-sports programming and production costs, partially offset by higher sports programming and production costs and the impact of inflation and increased volumes at our parks and experiences businesses.

Costs of services reflected an approximate 1 percentage point decrease due to a favorable Foreign Exchange Impact.

Depreciation and amortization decreased 7%, or $0.4 billion, to $5.0 billion due to lower depreciation at our domestic parks and resorts and lower TFCF and Hulu acquisition amortization.

Cost of services for fiscal 2025 increased $0.2 billion to $52.7 billion, which included an approximate 4 percentage point decrease from the Star India Transaction.

Aside from this impact, cost of services increased due to higher programming and production costs and, to a lesser extent, the impact of inflation at our parks and experiences businesses.

Cost of products for fiscal 2025 decreased 2%, or $0.1 billion to $6.1 billion, due to a shift to licensing of physical home entertainment distribution, partially offset by the impact of inflation at our theme parks and resorts.

Selling, general, administrative and other costs for fiscal 2025 increased 5%, or $0.7 billion, to $16.5 billion, which included approximately 2 percentage point decrease from the Star India Transaction.

Aside from this impact, selling, general, administrative and other costs increased driven by higher marketing costs.

Depreciation and amortization for fiscal 2025 increased 7%, or $0.3 billion, to $5.3 billion primarily due to higher depreciation at our parks and experiences businesses.

Restructuring and Impairment Charges

($ in millions) 2025 2024

Retail assets

Equity investments (1)

Retail assets

Severance — 83

Costs to exit our Russia businesses and other

$ 819 $ 3,595

(1) In the current year, goodwill impairments related to our general entertainment linear networks.

In the prior year, goodwill impairments related to our general entertainment and international sports linear networks.

(2) In the current and prior years, content impairments related to strategic changes in our approach to content curation.

Other Income (expense), net

($ in millions)

2024 2023 % Change

Better (Worse)

DraftKings gain

$ — $ 169 (100) %

Other, net (65) (73) 11 %

Other income (expense), net $ (65) $ 96 nm

In fiscal 2023, the Company recognized a gain of $ 169 million on its investment in DraftKings, Inc.

(DraftKings), which was sold in fiscal 2023.

(1) Primarily related to A+E (fiscal 2025 and 2024) and Tata Play Limited (fiscal 2025).

(2) Related to strategic changes in our approach to content curation.

(3) Related to general entertainment linear networks.

Other expense

In the prior year, the Company recorded a charge of $65 million related to a legal ruling.

Interest Expense, net

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Interest expense, net $ (1,305) $ (1,260) (4) %

The increase in interest expense was due to higher average rates, partially offset by lower average debt balances.

The increase in interest income, investment income and other was driven by a larger benefit from pension and postretirement benefit costs, other than service cost, and investments gains in the current year compared to losses in the prior year, partially offset by the impact of lower cash and cash equivalent balances.

The decrease in interest expense was due to lower average rates and debt balances, partially offset by a decrease in capitalized interest.

The decrease in interest income, investment income and other was driven by a lower benefit from pension and postretirement benefit costs, other than service cost, and the impact of lower average cash and cash equivalent balances and lower average rates.

Equity in the Income of Investees

Equity in the income of investees decreased $207 million to $ 575 million in the current year due to lower income from A+E.

Equity in the income of investees decreased $280 million to $ 295 million in the current year from $ 575 million in the prior year due to losses from the India joint venture in the current year and lower income from A+E.

Effective Income Tax Rate

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Income tax expense

(1,428) 1,796

Effective income tax rate

The decrease in the effective income tax rate in the current year compared to the prior year was due to the recognition of a $418 million benefit in the current year related to prior years’ tax matters (Income Tax Reserve Adjustments) and a lower foreign effective tax rate.

These decreases were partially offset by higher non-tax deductible impairments in the current year compared to the prior year.

We recognized $2.9 billion of impairments in the current year and $0.7 billion of impairments in the prior year that are not tax deductible.

(11.9) % 23.7%

The effective income tax rate was negative 11.9% in the current year compared to a positive effective income tax rate of 23.7% in the prior year.

Items impacting the effective income tax rate include the following:

• The current year included a non-cash tax benefit of approximately 26 percentage points due to a change in Hulu’s U.S.

income tax classification

• The prior year reflected an unfavorable impact of approximately 6 percentage points from impairments that are not tax deductible

• The current and prior year reflected favorable adjustments related to prior-year tax matters of 10 percentage points and 3 percentage points, respectively

• The current year included a non-cash tax expense of approximately 2 percentage points and the prior year included a non-cash tax benefit of approximately 1 percentage point in connection with the Star India Transaction

Noncontrolling Interests

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$ ( 1,027 ) $ ( 801 ) (28) %

The decrease in net income attributable to noncontrolling interests reflected the comparison to the accretion of NBCU’s interest in Hulu and Major League Baseball’s interest in BAMTech LLC as well as lower results at our National Geographic business.

These decreases were partially offset by improved results at Hong Kong Disneyland Resort.

We had accreted to the redemption value for BAMTech LLC by November 2022 and to the guaranteed floor payment for Hulu by December 2023.

The increase in net income attributable to noncontrolling interests was due to an incremental payment to acquire Hulu, partially offset by the accretion of NBC Universal’s interest in Hulu in the prior year.

Net income attributable to noncontrolling interests is determined on income after royalties and management fees, financing costs and income taxes, as applicable.

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Results for fiscal 2025 were impacted by the following:

• Restructuring and impairment charges of $3,595 million

• Hulu Transaction Impacts consisting of a $3,277 million benefit in “Income taxes” and a $462 million charge in “Net income attributable to noncontrolling interests”

• TFCF and Hulu acquisition amortization of $1,576 million

• Other expense of $65 million related to a legal ruling

• Income Tax Reserve Adjustments of $418 million

• Favorable resolution of a prior-year tax matter of $1,016 million

• Restructuring and impairment charges of $819 million ($748 million after tax) and a non-cash tax expense of $244 million related to the Star India Transaction

Results for fiscal 2024 were impacted by the following:

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• TFCF and Hulu acquisition amortization of $1,677 million

• Other income, net of $96 million, primarily due to the DraftKings gain ($169 million), partially offset by a charge related to a legal ruling ($101 million)

• Other expense of $65 million related to a legal ruling

• Favorable adjustments related to prior year tax matters of $418 million

A summary of the impact of these items on EPS is as follows:

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Year Ended September 27, 2025:

Restructuring and impairment charges

Hulu Transaction Impacts $ — $ 3,277 $ 3,277 $ 1.55

Resolution of a prior-year tax matter

— 1,016 1,016 0.56

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(1,576) 366 (1,210) (0.64)

Other expense

(65) 11 (54) (0.03)

Income Tax Reserve Adjustments

Restructuring and impairment charges

(819) (173) (992) (0.55)

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(1,677) 391 (1,286) (0.68)

Other income, net

Other expense

(65) 11 (54) (0.03)

Favorable adjustments related to prior-year tax matters

— 418 418 0.23

Total $ (5,337) $ 1,113 $ (4,224) $ (2.26)

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(3) Includes amortization of intangibles related to TFCF equity investees.

(4) Restructuring and impairment charges in the prior year include the impact of a content license agreement termination with A+E, which generated a gain at A+E.

The Company’s 50% interest in this gain was $56 million (A+E gain) and is included in Restructuring and impairment charges in this table.

BUSINESS SEGMENT RESULTS

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Entertainment

The Entertainment segment generates revenue from film, episodic and other content that is produced and distributed across three significant lines of business:

The Entertainment segment generates revenue from film, episodic and other content that is produced and distributed across three lines of business:

• Linear Networks, which primarily generates revenue from affiliate fees and advertising

• Direct-to-Consumer, which primarily generates revenue from subscription fees and advertising

• Content Sales/Licensing, which primarily generates revenue from the sale of film and episodic content in the TV/VOD and home entertainment markets, distribution of films in the theatrical market, licensing of our music rights, sales of tickets to stage play performances and licensing of our IP for use in stage plays.

• Content Sales/Licensing, which primarily generates revenue from the distribution of films in the theatrical market, sale of film and episodic content in the TV/VOD and home entertainment markets, licensing of our music rights, sales of tickets to stage play performances and licensing of our IP for use in stage plays.

Revenues also include an intersegment allocation of revenues from the Experiences segment, which is meant to reflect royalties on consumer products merchandise licensing revenues generated on IP created by the Entertainment segment.

Operating expenses at the Entertainment segment primarily consist of programming and production costs, technology support costs, operating labor and distribution costs.

Programming and production costs include the following:

• Amortization of capitalized production costs and licensed programming rights

• Subscriber-based fees for programming the Hulu Live service, including fees paid by Hulu to the Sports segment and other Entertainment segment businesses for the right to air their linear networks on Hulu Live

Operating expenses at the Entertainment segment consist of the following:

• Programming and production costs, which include:

• Amortization of capitalized production costs and the costs of licensed programming rights

• Subscriber-based fees for programming the Hulu Live TV service, including fees paid by Hulu to ESPN and the Entertainment linear networks business for the right to air their linear networks on Hulu Live TV

• Production costs related to live programming (primarily news)

• Participations and residual expenses

• Fees paid to the Sports segment to program ESPN on ABC and certain sports content on Disney+

Amortization of capitalized production costs and licensed programming rights is generally allocated across Entertainment’s businesses based on the estimated relative value of the distribution windows.

The initial costs of marketing

campaigns are generally recognized in the business of initial exploitation.

• Fees paid to ESPN to program certain sports content on ABC Network and Disney+

• Other operating expenses, which include technology support costs and distribution costs

Amortization of capitalized production costs and costs of licensed programming rights is generally allocated across Entertainment’s businesses based on the estimated relative value of the distribution windows.

The initial costs of marketing campaigns are generally recognized in the business of initial exploitation.

Certain other costs, such as technology, shared services and certain labor related costs, are allocated based on metrics designed to correlate with consumption.

The Sports segment primarily generates revenue from affiliate fees, advertising, subscription fees, pay-per-view fees and sub-licensing of sports rights.

Operating expenses consist primarily of programming and production costs, technology support costs, operating labor and distribution costs.

The Sports segment primarily generates revenue from affiliate and subscription fees, advertising, pay-per-view fees and sub-licensing of sports rights.

Operating expenses consist of programming and production costs and other operating expenses.

Programming and production costs include amortization of licensed sports rights and production costs related to live sports and other sports-related programming.

The Experiences segment primarily generates revenue from the sale of admissions to theme parks, the sale of food, beverage and merchandise at our theme parks and resorts, charges for room nights at hotels, sales of cruise vacations, sales and rentals of vacation club properties, royalties from licensing our IP for use on consumer goods and the sale of branded merchandise.

Revenues are also generated from sponsorships and co-branding opportunities, real estate rent and sales, and royalties from Tokyo Disney Resort.

Significant expenses include operating labor, infrastructure costs, costs of goods sold and distribution costs, depreciation and other operating expenses.

Other operating expenses include technology support costs and distribution costs.

The Experiences segment primarily generates revenue from the sale of tickets for admissions to theme parks, the sale of food, beverage and merchandise at our theme parks and resorts, charges for room nights at hotels, sales of cruise vacations, sales and rentals of vacation club properties, royalties from licensing our IP for use on consumer goods and the sale of branded merchandise.

Revenues are also generated from sponsorships and co-branding opportunities, real estate rent and sales, and royalties earned on Tokyo Disney Resort revenues.

Expenses consist of operating labor, infrastructure costs, costs of goods sold and distribution costs, depreciation and other operating expenses.

Infrastructure costs include technology support costs, repairs and maintenance, utilities and fuel, property taxes, retail occupancy costs, insurance and transportation.

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The following transactions are recognized in segment revenues and eliminated in total Company revenue:

• Fees paid by Hulu to ESPN and the Entertainment linear networks business for the right to air their networks on Hulu Live

• Fees paid by ABC Network and Disney+ to ESPN to program ESPN on ABC and certain sports content on Disney+, respectively

• Fees paid by Hulu to ESPN and the Entertainment linear networks business for the right to air their networks on Hulu Live TV

• Fees paid by ABC Network and Disney+ to ESPN to program certain sports content on ABC Network and Disney+, respectively

BUSINESS SEGMENT RESULTS - 2025 vs.

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$ 94,425 $ 91,361 3 %

The following table presents income from our operating segments and other components of income from continuing operations before income taxes:

The following table presents income from our operating segments and other components of income before income taxes:

($ in millions)

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Corporate and unallocated shared expenses ( 1,646 ) ( 1,435 ) (15) %

Equity in the loss of India joint venture ( 202 ) — nm

Restructuring and impairment charges

( 819 ) ( 3,595 ) 77 %

Other income (expense), net ( 65 ) 96 nm

Other expense — ( 65 ) 100 %

Interest expense, net

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TFCF and Hulu acquisition amortization ( 1,576 ) ( 1,677 ) 6 %

Income from continuing operations before income taxes $ 7,569 $ 4,769 59 %

(1) Restructuring and impairment charges in the prior year i nclude the A+E gain.

Income before income taxes

$ 12,003 $ 7,569 59 %

Entertainment

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$ 42,466 $ 41,186 3 %

Segment operating income (loss):

Segment operating income:

Linear Networks

$ 2,955 $ 3,452 (14) %

Direct-to-Consumer 143 (2,496) nm

Content Sales/Licensing and Other 328 (179) nm

Direct-to-Consumer 1,327 143 >100 %

Content Sales/Licensing and Other 392 328 20 %

$ 4,674 $ 3,923 19 %

The increase in Entertainment revenues was due to subscription revenue growth, partially offset by decreases in theatrical distribution, affiliate and TV/VOD distribution revenues.

The increase in Entertainment revenues was due to an increase in subscription fees and higher content sales.

These increases were partially offset by decreases in advertising revenue and affiliate fees due to the Star India Transaction.

Operating income

The increase in Entertainment operating income was due to improved results at Direct-to-Consumer and, to a lesser extent, Content Sales/Licensing and Other, partially offset by a decrease at Linear Networks.

The increase in Entertainment operating income was due to growth at Direct-to-Consumer and, to a lesser extent, Content Sales/Licensing and Other, partially offset by a decrease at Linear Networks.

Linear Networks

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$ 6,348 $ 6,872 (8) %

The decrease in domestic affiliate revenue was due to a decline of 11% from fewer subscribers, including the impact of the non-renewal of carriage of certain networks by an affiliate, partially offset by an increase of 6% from higher effective rates.

Lower international affiliate revenue was attributable to decreases of 8% from fewer subscribers driven by channel closures, 3% from lower effective rates and 3% from an unfavorable Foreign Exchange Impact.

The decrease in domestic affiliate revenue was due to a decline of 9% from fewer subscribers, partially offset by an increase of 7% from higher effective rates.

Lower international affiliate revenue was attributable to decreases of 29% from the Star India Transaction, 9% from lower effective rates and 4% from fewer subscribers.

Revenues - Advertising

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$ 2,856 $ 3,676 (22) %

The decrease in domestic advertising revenue was due to a decrease of 14% from fewer impressions and 2% from lower rates.

The decrease in impressions was due to lower average viewership.

Lower rates were driven by a decrease in political advertising at the owned television stations.

International advertising revenue decreased modestly compared to the prior year as decreases of 3% from an unfavorable Foreign Exchange Impact and 3% from fewer impressions were partially offset by an increase of 4% from higher rates.

The decrease in domestic advertising revenue was due to a decline of 8% from fewer impressions attributable to lower average viewership.

Lower international advertising revenue was attributable to a decrease of 55% from the Star India Transaction.

Operating Expenses

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$ (4,433) $ (5,083) 13 %

The decrease in domestic programming and production costs was due to a lower average cost mix of programming, including fewer hours of scripted programming, which reflected the impact of production delays as a result of guild strikes in the prior year.

International programming and production costs were comparable to the prior year as the impact of channel closures and a favorable Foreign Exchange Impact were largely offset by inflation.

The decrease in other operating expenses was due to lower technology and distribution costs including the impact of international channel closures.

The decrease in domestic programming and production costs was driven by lower average cost non-scripted programming, partially offset by higher fees paid to the Sports segment to program sports content.

Lower average cost non-scripted programming included the comparison to costs for airing of political news coverage and the Emmy Awards show in the prior year.

International programming and production costs decreased due to the Star India Transaction.

The decrease in other operating expenses was primarily due to lower technology costs and a decrease from the Star India Transaction.

Selling, general, administrative and other

Selling, general, administrative and other costs decreased $315 million to $2,329 million from $2,644 million, due to the Star India Transaction, lower marketing costs and a favorable Foreign Exchange Impact.

Depreciation and amortization

Depreciation and amortization increased $40 million from $52 million to $92 million due to new assets placed in service.

Equity in the Income of Investees

Income from equity investees decreased $151 million, to $539 million from $690 million, due to lower income from A+E attributable to decreases in advertising and affiliate revenue.

Income from equity investees decreased $94 million, to $445 million from $539 million, due to lower income from A+E attributable to decreases in affiliate and advertising revenue, partially offset by lower general and administrative and marketing costs.

Operating Income from Linear Networks

Operating income decreased 16%, to $3,452 million from $4,119 million due to decreases at our domestic and international businesses and lower income from equity investees.

Operating income decreased 14%, to $2,955 million from $3,452 million due to lower results at our international business as a result of the Star India Transaction and lower income from equity investees.

Supplemental revenue and operating income

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Advertising 3,684 3,707 (1) %

158 273 (42) %

Total revenues 24,614 22,776 8 %

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Depreciation and amortization (366) (311) (18) %

Operating Income (Loss)

$ 143 $ (2,496) nm

Operating Income

$ 1,327 $ 143 >100 %

Revenues - Subscription fees

Growth in subscription fees reflected increases of 10% attributable to higher effective rates due to increases in retail pricing and 6% from subscriber growth, partially offset by a decrease of 2% from an unfavorable Foreign Exchange Impact.

Growth in subscription fees was due to increases of 8% attributable to higher effective rates reflecting increases in pricing and 4% from more subscribers, partially offset by decreases of 1% from an unfavorable movement of the U.S.

dollar against major currencies (Foreign Exchange Impact) and 1% from the Star India Transaction.

Revenues - Advertising

Higher advertising revenue reflected an increase of 26% from higher impressions, partially offset by a decrease of 12% from lower rates.

The increase in impressions was due to Disney+ and Disney+ Hotstar growth, in part reflecting the launches of the ad-supported Disney+ service domestically in December 2022 and internationally starting in November 2023 and airing more cricket programming on Disney+ Hotstar.

There were two significant International Cricket Council (ICC) tournaments in the current year compared to one in the prior year.

Advertising revenue was comparable to the prior year, as decreases of 9% from lower rates and 8% from the Star India Transaction were largely offset by an increase of 15% from higher impressions.

Revenues - Other

The increase in other revenue was due to a favorable Foreign Exchange Impact.

In addition to revenue, costs and operating income, management uses the following key metrics (1) to analyze trends and evaluate the overall performance of Disney+, Disney+ Hotstar and Hulu, and we believe these metrics are useful to investors in analyzing the business:

The decrease in other revenue was primarily due to lower recognition of minimum guarantee shortfalls from wholesale distributors and an unfavorable Foreign Exchange Impact.

Key Metrics (1)

Paid subscribers at:

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and Canada) (2)

International (excluding Disney+ Hotstar) (1)

59.3 56.0 6 %

Disney+ Core (2)

International (3)

72.4 69.3 4 %

Disney+ Hotstar 35.9 37.6 (5) %

Disney+ (3)(4)

131.6 125.3 5 %

SVOD Only 59.7 47.4 26 %

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and Canada) $ 8.06 $ 7.89 2 %

International (excluding Disney+ Hotstar) (1)

International (3)

7.59 6.38 19 %

7.81 7.04 11 %

Disney+ Hotstar 0.96 0.66 45 %

SVOD Only 12.36 12.35 — %

Live TV + SVOD 99.85 95.12 5 %

(1) See discussion on page 55 —DTC Product Descriptions, Key Definitions and Supplemental Information

(1) See discussion on page 55 —Entertainment DTC Product Descriptions and Key Definitions

(2) Includes 43.7 million and 27.1 million subscribers to bundles that have both Disney+ and Hulu as of September 27, 2025 and September 28, 2024, respectively.

(3) The prior year Paid Subscribers and Average Monthly Revenue per Paid Subscriber have been adjusted to include Disney+ subscribers in Southeast Asia.

These subscribers were previously reported with Disney+ Hotstar, which is no longer presented as this business was included in the Star India Transaction.

(4) Total may not equal the sum of the column due to rounding.

Domestic Disney+ average monthly revenue per paid subscriber increased from $6.97 to $7.89 due to higher retail pricing, partially offset by a higher mix of subscribers to wholesale offerings.

International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber increased from $5.93 to $6.60 due to increases in retail pricing, partially offset by a higher mix of subscribers to ad-supported and promotional offerings and an unfavorable Foreign Exchange Impact.

Disney+ Hotstar average monthly revenue per paid subscriber increased from $0.66 to $0.96 due to higher retail pricing and higher advertising revenue, partially offset by a higher mix of subscribers in lower-priced markets.

Hulu SVOD Only average monthly revenue per paid subscriber increased from $12.17 to $12.35 due to increases in retail pricing, partially offset by a lower mix of subscribers with premium add-ons and a higher mix of subscribers to multi-product and promotional offerings.

Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $90.52 to $95.12 due to higher retail pricing, partially offset by lower advertising, a lower mix of subscribers with premium add-ons and a higher mix of subscribers to promotional offerings.

Domestic Disney+ average monthly revenue per paid subscriber increased from $7.89 to $8.06 due to increases in pricing, partially offset by the impact of subscriber mix shifts.

International Disney+ average monthly revenue per paid subscriber increased from $6.38 to $7.59 due to increases in pricing, partially offset by the impact of subscriber mix shifts.

Hulu SVOD Only average monthly revenue per paid subscriber was comparable to the prior year as increases in pricing were offset by lower advertising revenue and the impact of subscriber mix shifts.

Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $95.12 to $99.85 due to increases in pricing, partially offset by the impact of subscriber mix shifts and lower advertising revenue.

Operating Expenses

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Hulu $ (9,018) $ (8,582) (5) %

Disney+ and other

(5,239) (5,499) 5 %

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$ (18,263) $ (17,748) (3) %

Higher programming and production costs at Hulu were due to an increase in subscriber-based fees for programming the Hulu Live TV service primarily attributable to rate increases.

The decrease in programming and production costs at Disney+ and other was attributable to lower costs for non-sports content available on Disney+, partially offset by higher costs for cricket programming at Disney+ Hotstar.

The increase in cricket programming costs reflected two significant ICC tournaments in the current year compared to one in the prior year.

Other operating expenses decreased due to lower distribution costs.

Higher programming and production costs at Hulu were due to higher subscriber-based license fees, which reflected rate increases for Hulu Live TV programming and more subscribers to bundles with third-party offerings.

The decrease in programming and production costs at Disney+ was due to the impact of the Star India Transaction, partially offset by more hours of content available.

Other operating expenses increased due to higher technology and distribution costs.

Selling, general, administrative and other

Selling, general, administrative and other costs increased $406 million, to $4,574 million from $4,168 million, primarily attributable to increases in marketing and labor costs.

Operating Income (Loss) from Direct-to-Consumer

Operating results from Direct-to-Consumer increased $2,639 million, to operating income of $143 million from an operating loss of $2,496 million due to improved results at Disney+.

Selling, general, administrative and other costs increased $84 million, to $4,658 million from $4,574 million, primarily attributable to increases in marketing and labor costs, partially offset by the impact of the Star India Transaction.

Depreciation and amortization

Depreciation and amortization increased $55 million, to $366 million from $311 million, due to increased investment in technology assets.

Operating Income from Direct-to-Consumer

Operating income from Direct-to-Consumer increased $1,184 million, to $1,327 million from $143 million due to increases at Disney+ and Hulu.

Content Sales/Licensing and Other

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Better (Worse)

TV/VOD distribution

TV/VOD and home entertainment distribution

$ 3,458 $ 3,008 15 %

Theatrical distribution 2,592 2,266 14 %

Home entertainment distribution

753 931 (19) %

Other 2,438 2,444 — %

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(6) (10) 40 %

Operating Income (Loss) $ 328 $ (179) nm

Revenues - TV/VOD distribution

The decrease in TV/VOD distribution revenue was due to lower sales of episodic and, to a lesser extent, film content.

Operating Income

$ 392 $ 328 20 %

Revenues - TV/VOD and home entertainment distribution

The increase in TV/VOD and home entertainment distribution revenue was primarily due to higher TV/VOD sales of episodic content and an increase in home entertainment distribution revenue.

The increase in home entertainment distribution revenue was due to higher electronic distribution revenue, partially offset by a decrease in physical distribution revenue attributable to a shift to licensing physical distribution rights.

Revenues - Theatrical distribution

The decrease in theatrical distribution revenue reflected fewer significant releases in the current year compared to the prior year.

The current year included Inside Out 2, Deadpool & Wolverine, Kingdom of the Planet of the Apes, Alien:

Romulus, Wish and The Marvels.

The prior year included Avatar:

The Way of Water, Black Panther:

Wakanda Forever, Guardians of the Galaxy Vol.

3, The Little Mermaid , Ant-Man and the Wasp:

Quantumania , Elemental and Indiana Jones and the Dial of Destiny.

Revenues - Home entertainment distribution

The decrease in home entertainment distribution revenue was due to lower unit sales.

The increase in theatrical distribution revenue was due to more releases in the current year compared to the prior year.

Titles in the current year included Moana 2 , Lilo & Stitch , Mufasa:

The Lion King , The Fantastic Four:

First Steps , Captain

Brave New World , Thunderbolts* and Snow White compared to Inside Out 2, Deadpool & Wolverine , Kingdom of the Planet of the Apes , Alien:

Romulus, Wish and The Marvels in the prior year.

Revenues - Other

Other revenue increased primarily due to higher revenue at Lucasfilm’s special effects business due to higher rates and more projects.

Other revenue was comparable to the prior year as lower revenue from stage plays as a result of fewer performances was partially offset by a favorable Foreign Exchange Impact, higher music revenue and increased revenue from Lucasfilm’s special effects business driven by more projects.

Operating expenses

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Programming and production costs $ (4,260) $ (4,135) (3) %

Distribution costs and cost of goods sold (766) (897) 15 %

Other operating expenses

(717) (766) 6 %

The decrease in programming and production costs was due to lower production cost amortization attributable to the decreases in theatrical and TV/VOD distribution revenues, partially offset by higher film cost impairments.

Lower distribution costs and cost of goods sold were driven by decreases in theatrical, home entertainment and TV/VOD distribution costs, partially offset by an increase at Lucasfilm’s special effects business due to more projects.

$ (4,977) $ (4,901) (2) %

The increase in programming and production costs was due to higher production cost amortization attributable to the increases in distribution revenues, partially offset by lower film cost impairments and fewer stage play performances.

The decrease in other operating expenses reflected lower distribution costs and costs of goods sold due to the shift to licensing physical home entertainment distribution rights.

Selling, general, administrative and other

Selling, general, administrative and other costs decreased $487 million, to $2,108 million from $2,595 million, driven by lower theatrical marketing costs reflecting fewer significant releases in the current year.

Operating Income (Loss) from Content Sales/Licensing and Other

Operating results from Content Sales/Licensing and Other increased $507 million, to income of $328 million from a loss of $179 million due to higher theatrical distribution results.

Selling, general, administrative and other costs increased $638 million, to $2,746 million from $2,108 million, primarily due to higher theatrical marketing costs.

Operating Income from Content Sales/Licensing and Other

Operating income increased $64 million, to $392 million from $328 million due to lower film cost impairments and higher TV/VOD and home entertainment distribution results, partially offset by a decrease in theatrical distribution results.

Items Excluded from Segment Operating Income Related to Entertainment

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2025 2024 % Change Better (Worse)

Restructuring and impairment charges (1)

$ (1,670) $ (3,431) 51 %

TFCF and Hulu acquisition amortization (1)

$ (1,273) $ (1,337) 5 %

Gain on sale of a business

(1) Fiscal 2024 includes $1,287 million for goodwill impairments related to our general entertainment linear networks, $187 million for content impairments, a $158 million impairment of an equity investment and $38 million of severance.

Fiscal 2023 includes $2,521 million for content impairments (net of the A+E gain), $425 million for a goodwill impairment related to our general entertainment linear networks, $248 million of severance, a $141 million impairment of an equity investment and $96 million of charges primarily related to exiting our businesses in Russia.

Restructuring and impairment charges (2)

(744) (1,670) 55 %

(1) In fiscal 2025, amortization of step-up on film and television costs was $260 million and amortization of intangible assets was $1,004 million.

In fiscal 2024, amortization of step-up on film and television costs was $271 million and amortization of intangible assets was $1,054 million.

(2) Fiscal 2025 includes $635 million for impairments of equity investments and $109 million for content impairments.

Fiscal 2024 includes $1,287 million for goodwill impairments related to our general entertainment linear networks, $187 million for content impairments, $158 million for impairment of an equity investment and $38 million of severance.

Operating results for the Sports segment are as follows:

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Better (Worse)

Affiliate fees $ 10,418 $ 10,590 (2) %

Affiliate and subscription fees

$ 11,944 $ 12,068 (1) %

Advertising 4,444 4,388 1 %

Subscription fees 1,650 1,517 9 %

1,284 1,163 10 %

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Operating Income $ 2,882 $ 2,406 20 %

Revenues - Affiliate fees

Revenues - Affiliate and subscription fees

($ in millions)

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$ 11,944 $ 12,068 (1) %

The decrease in domestic ESPN affiliate revenue was due to a decrease of 8% from fewer subscribers, partially offset by an increase of 7% from higher effective rates.

International ESPN affiliate revenue was comparable to the prior year, as decreases from an unfavorable Foreign Exchange Impact and fewer subscribers were largely offset by higher effective rates.

Lower Star India affiliate revenue was attributable to decreases of 7% from lower effective rates and 4% from fewer subscribers.

Domestic ESPN affiliate and subscription fees were comparable to the prior year as an increase of 7% from higher effective rates was offset by a decrease of 7% from fewer subscribers.

International ESPN affiliate fees reflected higher effective rates, partially offset by decreases from an unfavorable Foreign Exchange Impact and fewer subscribers.

The decrease in Star India affiliate fees was due to the Star India Transaction.

Revenues - Advertising

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$ 4,444 $ 4,388 1 %

The increase in domestic ESPN advertising revenue was due to increases of 8% from higher rates and 3% from sponsorship revenue growth, partially offset by a decrease of 2% from lower average viewership.

The decrease in international ESPN advertising revenue was due to a decrease of 11% from an unfavorable Foreign Exchange Impact, partially offset by increases of 5% from higher rates and 2% from higher average viewership.

Higher Star India advertising revenue was attributable to airing two significant ICC cricket tournaments in the current year compared to one in the prior year.

Revenues - Subscription fees

Subscription fees increased $133 million, to $1,650 million from $1,517 million, due to higher rates attributable to increases in retail pricing.

The increase in domestic ESPN advertising revenue was due to an increase of 13% from higher rates.

The increase in advertising revenue included the benefit of expanded college football programming including four additional College Football Playoff (CFP) games.

Revenues - Other

Other revenue increased $79 million, to $1,163 million from $1,084 million, due to higher fees received from the Entertainment segment to program sports and an increase in revenue from licensing the ESPN brand, partially offset by an unfavorable Foreign Exchange Impact.

In addition to revenue, costs and operating income, management uses the following key metrics (1) to analyze trends and evaluate the overall performance of ESPN+, and we believe these metrics are useful to investors in analyzing the business:

September 28, 2024 September 30, 2023 % Change

Better (Worse)

Paid subscribers at fiscal year end (in millions)

25.6 26.0 (2) %

Average Monthly Revenue per Paid Subscriber for the fiscal year

$ 6.14 $ 5.49 12 %

ESPN+ average monthly revenue per paid subscriber increased from $5.49 to $6.14 due to increases in retail pricing and higher advertising revenue.

(1) See discussion on page 55 —DTC Product Descriptions, Key Definitions and Supplemental Information

Other revenue increased $121 million, to $1,284 million from $1,163 million, due to higher fees received from the Entertainment segment to program sports content on Disney+ and ABC.

Sub-licensing fees were comparable to the prior year as the comparison to fees from Star India sub-licensing of ICC programming in the prior year was offset by fees from sub-licensing CFP programming rights for two games in the current year.

Operating expenses

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(12,475) (11,629) (7) %

(1,354) (1,025) (32) %

Star India (17) (1,354) 99 %

(12,492) (12,983) 4 %

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$ (13,478) $ (13,934) 3 %

Programming and production costs at domestic ESPN increased in the current year compared to the prior year due to contractual rate increases and higher production costs.

The increase in international ESPN programming and production costs was due to new soccer rights.

Higher Star India programming and production costs were attributable to an increase in cricket programming costs due to airing two significant ICC tournaments in the current year compared to one in the prior year.

This increase was partially offset by the comparison to costs for Board of Control for Cricket in India cricket programming in the prior year, which rights we did not renew for the current fiscal year.

Depreciation and amortization

Depreciation and amortization decreased $34 million, to $39 million from $73 million primarily due to technology assets that were fully depreciated in the prior year.

Domestic ESPN programming and production costs increased primarily due to expanded college football programming rights and contractual rate increases.

The increase in international ESPN programming and production costs was attributable to higher soccer rights costs.

The increase in other operating expense was attributable to higher technology costs.

Selling, general, administrative and other

Selling, general, administrative and other costs increased $33 million, to $1,331 million from $1,298 million, due to higher marketing costs and the write-off of an investment, partially offset by the Star India Transaction.

The increase in marketing costs was driven by the August 2025 launch of the ESPN DTC service.

Operating Income from Sports

Operating income decreased $59 million, to $2,406 million from $2,465 million due to higher operating losses at Star India and, to a lesser extent, international ESPN, partially offset by an increase at domestic ESPN.

Segment operating income increased $476 million, to $2,882 million from $2,406 million, due to the Star India Transaction and an improvement at international ESPN, partially offset by a decrease at domestic ESPN.

Supplemental revenue and operating income

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39 841 (95) %

$ 17,672 $ 17,619 — %

Supplemental operating income (loss) detail

Domestic $ 2,801 $ 3,056 (8) %

International (72) (39) (85) %

2,984 2,842 5 %

International 5 (72) nm

2,806 2,984 (6) %

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Restructuring and impairment charges

(12) (346) 97 %

(1) Represents amortization of intangible assets.

(2) Fiscal 2023 includes $296 million for a goodwill impairment and $50 million for severance.

Operating results for the Experiences segment are as follows:

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Depreciation and amortization (2,823) (2,579) (9) %

Equity in the loss of investees — (2) 100 %

Operating Income $ 9,995 $ 9,272 8 %

Revenues - Theme park admissions

The increase in theme park admissions revenue was due to increases of 5% from higher average per capita ticket revenue and 2% from attendance growth.

The increase in theme park admissions revenue was due to an increase of 4% from higher average per capita ticket revenue.

Revenues - Resorts and vacations

Growth in resorts and vacations revenue was primarily attributable to increases of 3% from higher average ticket prices for cruise line sailings, 1% from an increase in average daily hotel room rates and 1% from higher occupied hotel room nights, partially offset by a decrease of 1% from lower unit sales at Disney Vacation Club.

Growth in resorts and vacations revenue was primarily attributable to increases of 5% from additional passenger cruise days, 2% from higher occupied hotel room nights and 1% from increased unit sales at Disney Vacation Club.

The increase in passenger cruise days reflected the launch of the Disney Treasure in the first quarter of the current year.

Revenues - Parks & Experiences merchandise, food and beverage

Parks & Experiences merchandise, food and beverage revenue growth was due to increases of 2% from higher volumes and 2% from higher average guest spending.

Parks & Experiences merchandise, food and beverage revenue growth was primarily due to increases of 3% from higher average guest spending and 1% from volume growth.

Revenues - Merchandise licensing and retail

Lower merchandise licensing and retail revenue was due to decreases of 1% from an unfavorable Foreign Exchange Impact and 1% from retail, partially offset by an increase of 1% from merchandise licensing.

Lower retail revenue was due to a decrease in online sales.

Growth in licensing revenue was due to higher royalties from merchandise sales, partially offset by lower minimum guarantee shortfall recognition.

Higher merchandise licensing and retail revenue was due to an increase of 3% from merchandise licensing, partially offset by a decrease of 1% from an unfavorable Foreign Exchange Impact.

Revenues - Parks licensing and other

The increase in parks licensing and other revenue was attributable to higher sponsorship revenues, a favorable Foreign Exchange Impact and higher royalties from Tokyo Disney Resort.

The increase in parks licensing and other revenue was driven by sponsorship and co-branding revenue growth, higher real estate sales and an increase in royalties from Tokyo Disney Resort, partially offset by an unfavorable Foreign Exchange Impact.

In addition to revenue, costs and operating income, management uses the following key metrics to analyze trends and evaluate the overall performance of our theme parks and resorts, and we believe these metrics are useful to investors in analyzing the business :

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(6) Per room guest spending is used to analyze guest spending at our hotels and is defined as total revenue from room rentals and sales of food, beverage and merchandise at our hotels, divided by total occupied hotel room nights.

In the third quarter of the prior fiscal year, the Company revised its method of allocating revenue on the sales of Disneyland Paris vacation packages between hotel room revenue and admissions revenue.

The new method resulted in a decrease in the percentage of revenue allocated to hotel rooms.

If we had applied the new method in the first six months of the prior year, the impact would have been a decrease of approximatel y $30 million i n the prior year.

Operating expenses

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$ (19,224) $ (18,356) (5) %

The increase in operating labor was primarily due to inflation and higher volumes.

Higher infrastructure costs were primarily attributable to higher technology spending and an increase in operations support costs.

The increase in other operating expenses was primarily due to an unfavorable Foreign Exchange Impact, higher volumes and increased operations support costs.

The increase in operating labor was due to inflation, new guest offerings and higher volumes.

Higher infrastructure costs were primarily attributable to higher technology spending, new guest offerings and an increase in operations support costs, partially offset by cost management initiatives.

The increase in other operating expenses was primarily attributable to new guest offerings, higher volumes and increased operations support costs, partially offset by cost management initiatives.

Selling, general, administrative and other

Selling, general, administrative and other costs increased $269 million from $3,675 million to $3,944 million, driven by inflation and increased marketing costs for new guest offerings, partially offset by the comparison to a loss in the prior year on the disposal of our ownership interest in Villages Nature.

Selling, general, administrative and other costs increased $170 million from $3,944 million to $4,114 million, primarily due to higher marketing costs.

Depreciation and amortization

Depreciation and amortization decreased $210 million from $2,789 million to $2,579 million, due to the comparison to depreciation in the prior year related to the closure of Star Wars:

Galactic Starcruiser.

Depreciation and amortization increased $244 million from $2,579 million to $2,823 million, primarily due to higher depreciation at our domestic parks and experiences driven by an increase at Disney Cruise Line.

Operating Income from Experiences

Segment operating income increased $318 million, from $8,954 million to $9,272 million primarily due to growth at international parks and experiences.

Segment operating income increased $723 million, from $9,272 million to $9,995 million due to growth at domestic parks and experiences and, to a lesser extent, consumer products and international parks and experiences.

Supplemental revenue and operating income

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Better (Worse)

TFCF acquisition amortization

$ (7) $ (7) — %

Restructuring and impairment charges (1)

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Charge related to a legal ruling

(65) (101) 36 %

TFCF acquisition amortization

(1) Charges for the current year were due to an impairment of assets at our retail business.

(1) Charges for the prior year were due to an impairment of assets at our retail business.

CORPORATE AND UNALLOCATED SHARED EXPENSES

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Corporate and unallocated shared expenses $ (1,646) $ (1,435) (15) %

The increase in corporate and unallocated shared expenses was primarily due to higher labor costs, increases in professional services and costs related to our proxy solicitation.

The increase in corporate and unallocated shared expenses was primarily due to legal settlements, higher compensation and human resource-related costs, partially offset by a gain on a land sale.

LIQUIDITY AND CAPITAL RESOURCES

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Operating Activities

Cash provided by operating activities increased 42% or $4.1 billion to $14.0 billion in the current year compared to $9.9 billion in the prior year.

The increase was driven by lower film and television production spending and the timing of payments for sports rights.

The increase also reflected collateral receipts related to our hedging program in the current year compared to collateral payments in the prior year, higher operating cash flows at Entertainment and the comparison to a payment in the prior year related to the termination of content licenses in fiscal 2022.

The increase in operating cash flows at Entertainment was driven by lower cash disbursements due to a decrease in operating expenses.

These increases were partially offset by higher cash tax payments in the current year compared to the prior year.

Fiscal 2023 U.S.

federal and California state tax payments were deferred and paid in fiscal 2024 pursuant to relief provided by the Internal Revenue Service and California State Board of Equalization as a result of 2023 winter storms in California.

In addition, a portion of fiscal 2024 U.S.

federal and Florida state taxes was paid in fiscal 2024 and the remainder has been deferred to fiscal 2025 pursuant to relief provided by the Internal Revenue Service and Florida Department of Revenue as a result of 2024 hurricanes in Florida.

Cash provided by operations increased 30% or $4.1 billion to $18.1 billion in the current year compared to $14.0 billion in the prior year.

The increase was due to lower tax payments in the current year compared to the prior year and higher operating cash flows at Entertainment and, to a lesser extent, Experiences.

Tax payments in the prior year reflected the payment of fiscal 2023 U.S.

federal and California state income taxes that had been deferred pursuant to relief related to 2023 winter storms in California.

In addition, payments for fiscal 2025 U.S.

federal and California state income tax liabilities were deferred until October 2025 pursuant to relief related to the 2025 wildfires in California.

The increase in operating cash flows at Entertainment was primarily due to higher cash receipts, primarily attributable to higher revenue, and to a lesser extent, lower spending on content due to the impact of the Star India Transaction, partially offset by higher operating cash disbursements attributable to higher operating expenses.

The increase in operating cash flows at Experiences was due to higher cash receipts attributable to higher revenue, partially offset by higher operating cash disbursements primarily due to higher operating expenses.

Depreciation expense is as follows:

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The Entertainment and Sports segments incur costs to produce and license film, episodic, sports and other content.

Production costs include spend on content internally produced at our studios such as live-action and animated films, episodic series, specials, shorts and theatrical stage plays.

Production costs include spend on content internally produced at our studios such as live-action and animated films and

episodic series.

Production costs also include original content commissioned from third-party studios.

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Content impairment

(187) (2,266)

Produced and licensed content reclassified to assets held for sale

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$ 30,037 $ 30,717

The Company currently expects its fiscal 2025 spend on produced and licensed content to be approximately $24 billion including sports rights but excluding Star India.

The Company currently expects its fiscal 2026 spend on produced and licensed content to be approximately $24 billion including sports rights.

See Note 14 to the Consolidated Financial Statements for information regarding the Company’s contractual commitments to acquire sports and broadcast programming.

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Total Experiences

(6,429) (3,659)

Corporate (437) (766)

Total investments in parks, resorts and other property

Cash used in (provided by) other investing activities, net

(8,024) (5,412)

Cash used in other investing activities, net

Cash used in investing activities

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The Company currently expects its fiscal 2026 capital expenditures to total approximately $9 billion compared to fiscal 2025 capital expenditures of $8 billion.

The projected increase in capital expenditures is primarily due to higher spending at Experiences, attributable to continued investment in cruise ship fleet expansion and new guest offerings at our theme parks.

The projected increase in capital expenditures is primarily due to higher spending at Experiences, attributable to theme park and resort expansion and new attractions, partially offset by lower spending on cruise ship fleet expansion.

Other Investing Activities

Cash used in other investing activities was $1.5 billion in fiscal 2024 reflecting an investment in Epic Games, Inc.

Cash provided by other investing activities was $328 million for fiscal 2023 reflecting proceeds from the sale of investments.

Financing Activities

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$ (3,621) $ (1,400)

( 1,803 ) ( 1,366 )

Repurchases of common stock

( 3,500 ) ( 2,992 )

Activities related to noncontrolling and redeemable noncontrolling interests (1)

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$ (10,366) $ (15,288)

(1) Activities related to noncontrolling and redeemable noncontrolling interests in the current year were due to an $8.6 billion payment for Hulu’s redeemable noncontrolling interest and $0.5 billion of dividend payments to noncontrolling interest holders.

Activities in the prior year were due to a $0.9 billion payment for BAMTech LLC’s redeemable noncontrolling interest and $0.5 billion of dividend payments to noncontrolling interest holders, partially offset by a $0.7 billion contribution from Hearst to acquire a 20% interest in our DTC sports business.

(1) Activities related to noncontrolling and redeemable noncontrolling interests in the current year were due to $0.6 billion of dividend payments to noncontrolling interest holders and $0.4 billion related to an incremental amount paid by the Company for Hulu based on the final appraisal of Hulu’s fair value.

Activities in the prior year were due to an $8.6 billion payment for Hulu’s redeemable noncontrolling interest and $0.5 billion of dividend payments to noncontrolling interest holders (see Note 4 to the Consolidated Financial Statements for additional information on Hulu).

(2) Primarily consists of equity award activity.

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(3) See Note 6 to the Consolidated Financial Statements for information regarding commitments to fund the Asia Theme Parks.

(4) The other activity is due to market value adjustments for debt with qualifying hedges.

(4) The other activity is attributable to market value adjustments for debt with qualifying hedges.

See Note 8 to the Consolidated Financial Statements for a summary of the Company’s borrowing activities in fiscal 2025 and information regarding the Company’s bank facilities.

The Company may use cash balances, operating cash flows,

commercial paper borrowings up to the amount of its unused $12.25 billion bank facilities and incremental term debt issuances to retire or refinance other borrowings before or as they come due.

See Note 11 to the Consolidated Financial Statements for a summary of dividends and share repurchases in fiscal 2024.

There were no dividends paid or share repurchases in fiscal 2023.

The Company may use cash balances, operating cash flows, commercial paper borrowings up to the amount of its unused $12.25 billion bank facilities and incremental term debt issuances to retire or refinance other borrowings before or as they come due.

See Note 11 to the Consolidated Financial Statements for a summary of dividends and share repurchases in fiscal 2025 and 2024.

On November 13, 2025, the Company declared a dividend of $1.50 per share (or approximately $2.6 billion), payable in two semi-annual installments of $0.75 per share on January 15, 2026 and July 22, 2026.

The Company is targeting a total of $7 billion in share repurchases in fiscal 2026.

The Company may be required to pay an incremental amount for Hulu depending on a final determination of Hulu’s fair value.

See Note 2 to the Consolidated Financial Statements for further discussion of the transactions with noncontrolling interest holders.

The redeemable noncontrolling interest activity in the current and prior year was attributable to the acquisition of NBCU’s interest in Hulu.

In June 2025, the Company paid an incremental amount for Hulu based on a final appraisal of Hulu’s fair value (see Note 4 to the Consolidated Financial Statements).

The Company’s operating cash flow and access to the capital markets can be impacted by factors outside of its control.

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The Company’s borrowing costs can also be impacted by short- and long-term debt ratings assigned by nationally recognized rating agencies, which are based, in significant part, on the Company’s performance as measured by certain credit metrics such as leverage and interest coverage ratios.

As of September 28, 2024, Moody’s Ratings’ long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, S&P Global Ratings’ long- and short-term debt ratings for the Company were A- and A-2 (Positive), respectively, and Fitch Ratings’ long- and short-term debt ratings for the Company were A- and F2 (Stable), respectively.

As of September 27, 2025, Moody’s Ratings’ long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, and S&P Global Ratings’ long- and short-term debt ratings for the Company were A and A-1 (Stable).

On September 29, 2025, Fitch Ratings’ affirmed the long- and short-term debt ratings for the Company of A- and F2 (Stable), respectively, withdrew the debt ratings for commercial reasons and will no longer provide ratings for the Company.

The Company’s bank facilities contain only one financial covenant, relating to interest coverage of three times earnings before interest, taxes, depreciation and amortization, including both intangible amortization and amortization of our film and television production and programming costs.

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The Company’s bank facilities also specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants or events of default.

DEVELOPMENTS AND TRENDS

Star India Transaction

The Company and RIL plan to close a transaction on or about November 14, 2024, which will form a joint venture that combines our Star-branded and other general entertainment and sports television channels and Disney+ Hotstar service in India (Star India) and certain media and entertainment businesses of RIL (see Note 4 of the Consolidated Financial Statements for additional information).

The Company will have a 37% interest in the joint venture.

The Company has consolidated, and will continue to consolidate, the income statement and cash flow activities of Star India through the closing date, at which time the Company will recognize on its balance sheet the 37% investment at fair value.

In addition, the Company will begin recognizing its proportional share of the joint venture’s results in “Equity in the income of investees, net” in the Consolidated Statement of Income.

The equity earnings of the joint venture will not be reported in our segments’ operating results.

TRENDS AND UNCERTAINTIES

To drive growth at our sports and entertainment businesses, we are, among other things, making strategic investments in our DTC offerings.

Although there can be no assurances these investments will be successful, we expect that they will lead to growth in subscription fees and advertising revenues that will more than offset impacts on affiliate fees and advertising revenue from declines in linear network subscribers and the related decrease in average viewership, which we expect will continue.

In addition, the future effects of evolving macroeconomic, trade and travel conditions, including as a result of evolving international political developments, trade policies and consumer spending dynamics are unknown and, depending on how these conditions develop, could adversely affect demand for and availability of our products and services, increase our costs to provide products and services and have a negative impact on our results of operations.

See also Item 1A - Risk Factors.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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If projected usage changes we may need to accelerate or slow the recognition of amortization expense.

Cost of content that is predominantly monetized as a group is tested for impairment by comparing the present value of the discounted cash flows of the group to the aggregate unamortized costs of the group.

Cost of content that is predominantly monetized as a group is tested for impairment whenever events or changes in circumstances indicate that the fair value of the group may be less than its unamortized costs by comparing the present value of the discounted cash flows of the group to the aggregate unamortized costs of the group.

The group is established by identifying the lowest level for which cash flows are independent of the cash flows of other produced and licensed content.

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Projected revenues include advertising revenue and an allocation of affiliate revenue.

If the annual contractual payments related to each season approximate each season’s estimated relative value, we expense the related contractual payments during the applicable season.

If the annual contractual payments related to each season approximate each season’s estimated

relative value, we expense the related contractual payments during the applicable season.

If estimated relative values by year were to change significantly, amortization of our sports rights costs may be accelerated or slowed.

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The guideline for setting this rate is a high-quality long-term corporate bond rate.

We decreased our discount rate to 5.06 % at the end of fiscal 2024 from 5.94 % at the end of fiscal 2023 to reflect market interest rate conditions at our fiscal 2024 year-end measurement date.

We increased our discount rate to 5.45% at the end of fiscal 2025 from 5.06 % at the end of fiscal 2024 to reflect market interest rate conditions at our fiscal 2025 year-end measurement date.

The Company’s discount rate was determined by considering yield curves constructed of a large population of high-quality corporate bonds and reflects the matching of the plans’ liability cash flows to the yield curves.

A one percentage point decrease in the assumed discount rate would increase total benefit expense for fiscal 2026 by approximately $0.1 billion and would increase the projected benefit obligation at September 27, 2025 by approximately $2.1 billion.

percentage point increase in the assumed discount rate would decrease total benefit expense and the projected benefit obligation by approximately $0.2 billion and $2.1 billion, respectively.

A one percentage point increase in the assumed discount rate would have a negligible impact on total benefit expense and decrease the projected benefit obligation by approximately $1.9 billion.

To determine the expected long-term rate of return on the plan assets, we consider the current and expected asset allocation, as well as historical and expected returns on each plan asset class.

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The impairment test for goodwill requires judgment related to the identification of reporting units, determining whether reporting units should be aggregated, the assignment of assets and liabilities including goodwill to reporting units, and the determination of fair value of the reporting units.

In fiscal 2024, we determined that our entertainment businesses, including DTC services, linear networks, and content sales/licensing, should be aggregated into a single reporting unit due to their interdependencies, including shared operating costs such as content, marketing, and technology, the similarity of products and services delivered, customers served and distribution channels used, and projected long term financial performance (e.g., operating margins).

For our annual impairment test, we bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment.

To determine the fair value of our reporting units, we generally use a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate.

When performing a quantitative assessment, we generally use a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate to determine the fair value of our reporting units.

The discounted cash flow analyses are sensitive to our estimated projected future cash flows as well as the discount rates used to calculate their present value.

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Changes to these assumptions and shifts in market trends or macroeconomic events could impact test results in the future.

As discussed in Note 18 to the Consolidated Financial Statements, in the second and fourth quarters of fiscal 2024, the Company recorded non-cash goodwill impairment charges of $0.7 billion and $0.6 billion, respectively, related to our entertainment linear networks reporting unit prior to aggregating all of our entertainment reporting units into a single reporting unit in the fourth quarter of fiscal 2024.

The carrying amount of the aggregated entertainment reporting unit goodwill after these impairments is approximately $51 billion.

After the impairments, the fair value of the entertainment reporting unit exceeds its carrying amount by less than 10%.

An approximate 40 basis point increase in the discount rate or an approximate 6% reduction in projected annual cash flows used to determine the fair value of the entertainment reporting unit would effectively eliminate the excess fair value over carrying amount.

In fiscal 2025, the Company performed a qualitative assessment of goodwill for impairment.

Based on this assessment, we concluded that it was more likely than not that the estimated fair values of our reporting units were higher than their carrying values and that the performance of a quantitative impairment test was not required.

As discussed in Note 18 to the Consolidated Financial Statements, in fiscal 2024, the Company recorded non-cash goodwill impairment charges of $1.3 billion related to our entertainment linear networks reporting unit.

To test other indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair value.

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Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of asset groups, estimates of future cash flows and the discount rate used to determine fair values.

As discussed in Note 4 to the Consolidated Financial Statements, the Company recorded $1.5 billion of non-cash impairment charges related to the Star India Transaction in fiscal 2024 to reflect Star India at its estimated fair value less costs to sell.

As discussed in Note 4 to the Consolidated Financial Statements, the Company recorded non-cash impairment charges of $0.1 billion and $1.5 billion related to the Star India Transaction in fiscal 2025 and 2024, respectively, to reflect Star India at its estimated fair value less costs to sell.

The Company has investments in equity securities.

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The Company tested its indefinite-lived intangible assets, long-lived assets and investments for impairment and recorded non-cash impairment charges of $0.8 billion and $0.7 billion in fiscal 2025 and 2024, respectively.

The fiscal 2025 charges related to impairments of equity investments and content assets.

The fiscal 2024 charges related to impairments of retail assets, content assets and equity investments.

The fiscal 2023 charges primarily related to content impairments resulting from a strategic change in our approach to content curation.

See Note 18 to the Consolidated Financial Statements for additional information.

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From time to time, we are also involved in other contingent matters for which we accrue estimates for a probable and estimable loss.

It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to legal proceedings or our assumptions regarding other contingent matters.

assumptions regarding other contingent matters.

See Note 14 to the Consolidated Financial Statements for more information on litigation exposure.

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Our determinations regarding the recognition of income tax benefits are made in consultation with outside tax and legal counsel, where appropriate, and are based upon the technical merits of our tax positions in consideration of applicable tax statutes and related interpretations and precedents and upon the expected outcome of proceedings (or negotiations) with taxing and legal authorities.

The tax benefits ultimately realized by the Company may differ from those recognized in our future financial statements based on a number of factors, including the Company’s decision to

settle rather than litigate a matter, relevant legal precedent related to similar matters and the Company’s success in supporting its filing positions with taxing authorities.

The tax benefits ultimately realized by the Company may differ from those recognized in our future financial statements based on a number of factors, including the Company’s decision to settle rather than litigate a matter, relevant legal precedent related to similar matters and the Company’s success in supporting its filing positions with taxing authorities.

See Note 9 to the Consolidated Financial Statements for additional discussion.

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See Note 19 to the Consolidated Financial Statements for information regarding new accounting pronouncements.

DTC PRODUCT DESCRIPTIONS, KEY DEFINITIONS AND SUPPLEMENTAL INFORMATION

Product Offerings

In the U.S., Disney+, ESPN+ and Hulu SVOD Only are each offered as a standalone service or as part of various multi-product offerings.

Hulu Live TV + SVOD includes Disney+ and ESPN+.

ENTERTAINMENT DTC PRODUCT DESCRIPTIONS AND KEY DEFINITIONS

Entertainment DTC Product Offerings

In the U.S., Disney+ and Hulu SVOD Only are each offered as a standalone service or as part of various bundled offerings, which may include one of the ESPN DTC plans.

Hulu Live TV + SVOD includes Disney+ and ESPN Select.

Disney+ is available in more than 150 countries and territories outside the U.S.

In India and certain other Southeast Asian countries, the service is branded Disney+ Hotstar.

In certain Latin American countries prior to July 2024, we offered Disney+ as well as Star+, a general entertainment SVOD service, which was available on a standalone basis or together with Disney+ (Combo+).

At the end of June 2024, we merged these services into a single Disney+ product offering.

Depending on the market, our services can be purchased on our websites or through third-party platforms/apps or are available via wholesale arrangements.

Paid Subscribers

Paid subscribers reflect subscribers for which we recognized subscription revenue.

Paid Subscribers for Entertainment DTC services

Paid subscribers for Entertainment DTC services reflect subscribers for which we recognized subscription revenue.

Certain product offerings provide the option for an extra member to be added to an account (extra member add-on).

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Subscribers cease to be a paid subscriber as of their effective cancellation date or as a result of a failed payment method.

Subscribers to multi-product offerings in the U.S.

are counted as a paid subscriber for each of the Company's services included in the multi-product offering and subscribers to Hulu Live TV + SVOD are counted as one paid subscriber for each of the Hulu Live TV + SVOD, Disney+ and ESPN+ services.

In Latin America prior to July 2024, if a subscriber had either the standalone Disney+ or Star+ service or subscribed to Combo+, the subscriber was counted as one Disney+ paid subscriber.

Subscribers to bundled offerings in the U.S.

are counted as a paid subscriber for each of the Company's services included in the bundled offering and subscribers to Hulu Live TV + SVOD are counted as one paid subscriber for each of the Hulu Live TV + SVOD and Disney+ services.

Subscribers include those who receive an entitlement to a service through wholesale arrangements, including those for which the service is available to each subscriber of an existing content distribution tier.

When we aggregate the total number of paid subscribers across our DTC streaming services, we refer to them as paid subscriptions.

International Disney+ (excluding Disney+ Hotstar)

International Disney+ (excluding Disney+ Hotstar) includes the Disney+ service outside the U.S.

Average Monthly Revenue Per Paid Subscriber

Hulu and ESPN+ average monthly revenue per paid subscriber is calculated based on the average of the monthly average paid subscribers for each month in the period.

When we aggregate the total number of paid subscribers across our Entertainment DTC streaming services, we refer to them as paid subscriptions.

International Disney+

International Disney+ includes the Disney+ service outside the U.S.

Average Monthly Revenue Per Paid Subscriber for Entertainment DTC services

Hulu average monthly revenue per paid subscriber is calculated based on the average of the monthly average paid subscribers for each month in the period.

The monthly average paid subscribers is calculated as the sum of the beginning of the month and end of the month paid subscriber count, divided by two.

Disney+ average monthly revenue per paid subscriber is calculated using a daily average of paid subscribers for the period.

Revenue includes subscription fees, advertising (excluding revenue earned from selling advertising spots to other Company businesses), premium and feature add-on revenue and extra member add-on revenue but excludes Pay-Per-View revenue.

Advertising revenue generated by content on one DTC streaming service that is accessed through another DTC streaming service by subscribers to both streaming services is allocated between both streaming services.

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Revenue is allocated to each service based on the relative retail or wholesale price of each service on a standalone basis.

Hulu Live TV + SVOD revenue is allocated to the SVOD services based on the wholesale price of the Hulu SVOD Only, Disney+ and ESPN+ multi-product offering.

Hulu Live TV + SVOD revenue is allocated to the SVOD services based on the wholesale price of the Hulu SVOD Only, Disney+ and ESPN Select bundled offering.

In general, wholesale arrangements have a lower average monthly revenue per paid subscriber than subscribers that we acquire directly or through third-party platforms.

Supplemental information about paid subscribers (1) :

(in millions) September 28,

2024 September 30,

Domestic (U.S.

and Canada) standalone 59.6 55.5

Domestic (U.S.

and Canada) multi-product (1)

Domestic (U.S.

and Canada) (2)

International (3)(4)

(1) At September 28, 2024, there were 19.7 million and 7.4 million subscribers to multi-product offerings with two and three of the Company’s services, respectively.

At September 30, 2023, there were 20.3 million and 2.3 million subscribers to multi-product offerings with two and three of the Company’s services, respectively.

(2) Total may not equal the sum of the column due to rounding.

(3) Disney+ Hotstar is not included in any of the Company’s multi-product offerings.

(4) The services within the Combo+ multi-product offering were merged into a single Disney+ product offering in fiscal 2024.

The Combo+ subscribers at September 30, 2023 were 10.8 million.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

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Concurrent with the close of the TFCF acquisition, $16.8 billion of TFCF’s assumed public debt (which then constituted 96% of such debt) was exchanged for senior notes of TWDC (the “exchange notes”) issued pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to an Indenture, dated as of March 20, 2019, between TWDC, Legacy Disney, as guarantor, and Citibank, N.A., as trustee (the “TWDC Indenture”) and guaranteed by Legacy Disney.

On November 26, 2019, $14.0 billion of the outstanding exchange notes were exchanged for new senior notes of TWDC registered under the Securities Act, issued pursuant to the TWDC Indenture and guaranteed by Legacy Disney.

26, 2019, $14.0 billion of the outstanding exchange notes were exchanged for new senior notes of TWDC registered under the Securities Act, issued pursuant to the TWDC Indenture and guaranteed by Legacy Disney.

In addition, contemporaneously with the closing of the March 20, 2019 exchange offer, TWDC entered into a guarantee of the registered debt securities issued by Legacy Disney under the Indenture dated as of September 24, 2001 between Legacy Disney and Wells Fargo Bank, National Association, as trustee (the “2001 Trustee”) (as amended by the first supplemental indenture among Legacy Disney, as issuer, TWDC, as guarantor, and the 2001 Trustee, as trustee).

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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-K

Item 7. Management’s Discussion and Analysis