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Description of the Business and Segment Information
 12 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of the Business and Segment Information Description of the Business and Segment Information
The Walt Disney Company, together with the subsidiaries through which businesses are conducted (the Company), is a diversified worldwide entertainment company with operations in three segments: Entertainment, Sports and Experiences.
The terms “Company”, “we”, “our” and “us” are used in this report to refer collectively to the parent company and the subsidiaries through which businesses are conducted.
Segment Restructuring
In fiscal 2023, the Company reorganized into three business segments: Entertainment, Sports and Experiences (renamed from Disney Parks, Experiences and Products). Fiscal 2022 and 2021 segment financial information has been recast for the following:
•The prior Disney Media and Entertainment Distribution (DMED) segment has been reorganized into the Entertainment and Sports segments
•A portion of Consumer Products (a business within the Experiences segment) revenues is recognized at the Entertainment segment, which is meant to reflect royalties on merchandise licensing revenues generated on IP created by the Entertainment segment
DESCRIPTION OF THE BUSINESS
Entertainment
The Entertainment segment generally encompasses the Company’s non-sports focused global film, television and direct-to-consumer (DTC) video streaming content production and distribution activities.
The significant lines of business within Entertainment are as follows:
•Linear Networks
◦Domestic: ABC Television Network; Disney, Freeform, FX and National Geographic (owned 73% by the Company) branded television channels; and eight owned ABC television stations
◦International: Disney, Fox (which will be rebranded in fiscal 2024 primarily to FX or Star), FX, National Geographic (owned 73% by the Company) and Star branded general entertainment television networks outside of the U.S.
◦A 50% equity investment in A+E Television Networks (A+E), which operates cable channels including A&E, HISTORY and Lifetime
•Direct-to-Consumer
◦Disney+: a global DTC service that primarily offers general entertainment and family programming. In certain Latin American countries, we offer Disney+ as well as Star+, a general entertainment service that also has sports programming
◦Disney+ Hotstar: a DTC service primarily in India that offers general entertainment, family and sports programming
◦Hulu (owned 67% by the Company): a U.S. DTC service that offers general entertainment and family programming and a digital over-the-top service that includes live linear streams of cable networks and the major broadcast networks
•Content Sales/Licensing
◦Sale/licensing of film and episodic content to third-party television and video-on-demand (TV/VOD) services
◦Theatrical distribution
◦Home entertainment distribution: DVD and Blu-ray discs, electronic home video licenses and video-on-demand (VOD) rentals
◦Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)
◦Intersegment allocation of revenues from the Experiences segment, which is meant to reflect royalties on consumer products merchandise licensing revenues generated on intellectual property (“IP”) created by the Entertainment segment
◦Music distribution
◦Post-production services by Industrial Light & Magic and Skywalker Sound
Entertainment also includes the following activities that are reported with Content Sales/Licensing:
•National Geographic magazine and online business (owned 73% by the Company)
•A 30% ownership interest in Tata Play Limited, which operates a direct-to-home satellite distribution platform in India
The significant revenues of Entertainment are as follows:
•Affiliate fees - Fees charged to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g. YouTube TV) service providers) (MVPDs) for the right to deliver our programming to their customers. Linear Networks also generates revenues from fees charged to television stations affiliated with ABC Network.
•Subscription fees - Fees charged to customers/subscribers for our DTC streaming services
•Advertising - Sales of advertising time/space
•TV/VOD distribution - Licensing fees for the right to use our film and episodic content
•Theatrical distribution - Rentals from licensing our films to theaters
•Home entertainment distribution - Sales and rentals of our film and episodic content to retailers and through distributors
•Other revenue - Revenues from licensing our music, ticket sales from stage play performances, fees from licensing our IP for use in stage plays, sales of post-production services and the allocation of consumer products merchandise licensing revenues
The significant expenses of Entertainment are as follows:
•Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor, distribution costs and costs of sales. Programming and production costs include the following:
◦Amortization of capitalized production costs
◦Amortization of the costs of licensed programming rights
◦Subscriber-based fees for programming our 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
◦Production costs related to live programming (primarily news)
◦Amortization of participations and residual obligations
◦Fees paid to the Sports segment to program ESPN on ABC and certain sports content on Star+
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
Sports
The Sports segment generally encompasses the Company’s sports-focused global television and DTC video streaming content production and distribution activities.
The significant lines of business within Sports are as follows:
•ESPN (generally owned 80% by the Company)
◦Domestic:
▪Eight ESPN branded television channels
▪ESPN on ABC (sports programmed on the ABC Network by ESPN)
▪ESPN+ DTC video streaming service
◦International: ESPN-branded channels outside of the U.S.
•Star: Star-branded sports channels in India
The significant revenues of Sports are as follows:
•Affiliate fees
•Advertising
•Subscription fees
•Other revenue - Fees from the following activities: pay-per-view events on ESPN+, sub-licensing of sports rights, programming ESPN on ABC and licensing the ESPN brand
The significant expenses of Sports are as follows:
•Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor and distribution costs. Programming and production costs include amortization of licensed sports rights and production costs related to live sports and other sports-related programming.
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
Experiences
The significant lines of business within Experiences are as follows:
•Parks & Experiences:
◦Domestic:
▪Theme parks and resorts:
•Walt Disney World Resort in Florida
•Disneyland Resort in California
▪Experiences
•Disney Cruise Line
•Disney Vacation Club
•National Geographic Expeditions (owned 73% by the Company) and Adventures by Disney
•Aulani, a Disney Resort & Spa in Hawaii
◦International:
▪Theme parks and resorts:
•Disneyland Paris
•Hong Kong Disneyland Resort (48% ownership interest and consolidated in our financial results)
•Shanghai Disney Resort (43% ownership interest and consolidated in our financial results)
•In addition, the Company licenses its IP to a third party to operate Tokyo Disney Resort
•Consumer Products:
◦Licensing of our trade names, characters, visual, literary and other IP to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games
◦Sale of branded merchandise through online, retail and wholesale businesses, and development and publishing of books, comic books and magazines (except National Geographic magazine, which is reported in Entertainment)
The significant revenues of Experiences are as follows:
•Theme park admissions - Sales of tickets for admission to our theme parks and for premium access to certain attractions (e.g. Genie+ and Lightning Lane)
•Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties
•Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships
•Merchandise licensing and retail:
◦Merchandise licensing - Royalties from licensing our IP for use on consumer goods
◦Retail - Sales of merchandise through internet shopping sites (generally branded shopDisney) and at The Disney Store, as well as to wholesalers (including books, comic books and magazines)
•Parks licensing and other - Revenues from sponsorships and co-branding opportunities, real estate rent and sales and royalties earned on Tokyo Disney Resort revenues
The significant expenses of Experiences are as follows:
•Operating expenses, consisting primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings. Infrastructure costs include technology support costs, repairs and maintenance, property taxes, utilities and fuel, retail occupancy costs, insurance and transportation
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
SEGMENT INFORMATION
Our operating segments report separate financial information, which is evaluated regularly by the Chief Executive Officer in order to decide how to allocate resources and to assess performance.
Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, net other income, net interest expense, income taxes and noncontrolling interests. Segment operating income generally includes equity in the income of investees and excludes impairments of certain equity investments and acquisition accounting amortization of TFCF Corporation (TFCF) and Hulu assets (i.e. intangible assets and the fair value step-up for film and episodic costs) recognized in connection with the TFCF acquisition in fiscal 2019 (TFCF and Hulu acquisition amortization). Corporate and unallocated shared expenses principally consist of corporate functions, executive management and certain unallocated administrative support functions.
Segment operating results include allocations of certain costs, including information technology, pension, legal and other shared services costs, which are allocated based on metrics designed to correlate with consumption.
Segment revenues and segment operating income are as follows:
202320222021
Revenues
Entertainment
Third parties
$40,258  $39,231  $36,155  
Intersegment
377  338  334  
40,635  39,569  36,489  
Sports
Third parties
16,091  16,429  15,302  
Intersegment
1,020  841  658  
17,111  17,270  15,960  
Experiences
32,549  28,085  15,961  
Eliminations
(1,397) (1,179) (992) 
Total segment revenues$88,898  $83,745  $67,418  
Segment operating income (loss)
Entertainment
$1,444  $2,126  $5,196  
Sports
2,465  2,710  2,690  
Experiences
8,954  7,285  (120) 
Total segment operating income(1)
$12,863  $12,121  $7,766  
(1)Equity in the income of investees is included in segment operating income as follows:
202320222021
Entertainment
$685  $783  $744  
Sports
55  55  51  
Experiences
(2) (10) (19) 
Equity in the income of investees included in segment operating income738  828  776  
A+E Gain(1)
56  —  —  
Amortization of TFCF intangible assets related to equity investees
(12) (12) (15) 
Equity in the income of investees$782  $816  $761  
(1)Restructuring and impairment charges include the impact of a content license agreement termination with A+E, which generated a gain at A+E. The Company’s 50% interest of this gain was $56 million (A+E gain).
A reconciliation of segment revenues to total revenues is as follows:
 202320222021
Segment revenues$88,898 $83,745   $67,418 
Content License Early Termination(1)
—   (1,023)—   
Total revenues$88,898 $82,722 $67,418 
(1)In fiscal 2022, the Company early terminated certain license agreements with a customer for film and episodic content, which was delivered in previous years, in order for the Company to use the content primarily on our Entertainment Direct-to-Consumer services (Content License Early Termination). Because the content is functional IP, we had recognized substantially all of the consideration to be paid by the customer under the licenses as revenue in prior years when the content was delivered. Consequently, we have recorded the amounts to terminate the license agreements, net of remaining amounts of deferred revenue, as a reduction of revenue.
A reconciliation of segment operating income to income from continuing operations before income taxes is as follows:
202320222021
Segment operating income$12,863  $12,121  $7,766  
Content License Early Termination— (1,023)— 
Corporate and unallocated shared expenses(1,147) (1,159) (928) 
Restructuring and impairment charges(1)
(3,836) (237) (654) 
Other income (expense), net
96  (667) 201  
Interest expense, net(1,209) (1,397) (1,406) 
TFCF and Hulu acquisition amortization(2)
(1,998) (2,353) (2,418) 
Income from continuing operations before income taxes
$4,769  $5,285  $2,561  
(1)Net of the A+E Gain.
(2)TFCF and Hulu acquisition amortization is as follows:
202320222021
Amortization of intangible assets
$1,547  $1,707  $1,757  
Step-up of film and episodic costs
439 634 646 
Intangibles related to TFCF equity investees
12 12 15 
$1,998 $2,353 $2,418 
Capital expenditures, depreciation expense and amortization expense are as follows:
Capital expenditures202320222021
Entertainment
$1,032  $802  $838  
Sports
15  8  24  
Experiences
Domestic2,203  2,680  1,597  
International822  767  675  
Corporate897  686  444  
Total capital expenditures$4,969  $4,943  $3,578  
Depreciation expense
Entertainment
$669  $560  $513  
Sports
73  90  100 
Experiences
Domestic2,011  1,680  1,551  
International669  662  718  
Amounts included in segment operating income2,680  2,342  2,269  
Corporate204  191  186  
Total depreciation expense$3,626  $3,183  $3,068  
Amortization of intangible assets
Entertainment
$87  $164  $174  
Sports
—  —  4  
Experiences
109  109  108  
Amounts included in segment operating income196  273  286  
TFCF and Hulu1,547  1,707  1,757  
Total amortization of intangible assets$1,743  $1,980  $2,043  
Identifiable assets, including equity method investments(1) and intangible assets,(2) are as follows:
September 30, 2023October 1, 2022
Entertainment
$113,307  $117,184  
Sports
25,402  24,988  
Experiences
42,808  41,969  
Corporate (primarily fixed asset and cash and cash equivalents)24,062  19,490  
Total consolidated assets$205,579  203,631  
(1)Equity method investments included in identifiable assets by segment are as follows:
September 30, 2023October 1, 2022
Entertainment
$2,433  $2,449  
Sports
213  184  
Experiences
—  2  
Corporate42  43  
$2,688  $2,678  
(2)Intangible assets, which include character/franchise intangibles, copyrights, trademarks, MVPD agreements and FCC licenses (see Note 13), included in identifiable assets by segment are as follows:
September 30, 2023October 1, 2022
Entertainment
$8,556  $9,829  
Sports
1,767  2,152  
Experiences
2,718  2,836  
Corporate20  20  
$13,061  $14,837  
The following table presents our revenues and segment operating income by geographical markets:
202320222021
Revenues
Americas$71,205  $68,218  $54,157  
Europe9,533  8,680  6,690  
Asia Pacific8,160  6,847  6,571  
$88,898  $83,745  $67,418  
Content License Early Termination(1,023) 
$82,722  
Segment operating income
Americas$10,779  $11,099  $6,314  
Europe856  586  800  
Asia Pacific1,228  436  652  
$12,863  $12,121  $7,766  
Long-lived assets(1) by geographical markets are as follows:
September 30, 2023October 1, 2022
Americas$148,567  $150,786  
Europe9,895  8,739  
Asia Pacific10,244  10,976  
$168,706  $170,501  
(1)Long-lived assets are total assets less: current assets, long-term receivables, deferred taxes, financial investments and the fair value of derivative instruments.
The changes in the carrying amount of goodwill are as follows:
DMED
Experiences
Entertainment
Sports
Total
Balance at Oct. 2, 2021$72,521  $5,550  $—  $—  $78,071  
Currency translation adjustments and other, net(174) —  —  —  (174) 
Balance at Oct. 1, 202272,347  5,550  —  —  77,897  
Segment recast(1)
(72,347) —  55,488  16,859  —  
Goodwill impairment(2)
—  —  (425) (296) (721) 
Currency translation adjustments and other, net—  —  (32) (77) (109) 
Balance at Sep. 30, 2023$—  $5,550  $55,031  $16,486  $77,067  
(1)Reflects the reallocation of goodwill as a result of the Company recasting its segments from the strategic reorganization during fiscal 2023.
(2)Reflects goodwill impairments at entertainment and international sports linear networks (See Note 18).