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Description of the Business and Segment Information
 12 Months Ended
Sep. 28, 2024
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.
DESCRIPTION OF THE BUSINESS
Entertainment
The Entertainment segment generally encompasses the Company’s non-sports focused global film and television content production and distribution activities.
The lines of business within Entertainment along with their significant business activities include the following:
•Linear Networks
◦Domestic: ABC Television Network (ABC Network); Disney, Freeform, FX and National Geographic (owned 73% by the Company) branded television channels; and eight owned ABC television stations
◦International: Disney, FX, National Geographic (owned 73% by the Company) and Star branded general entertainment television channels 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 direct-to-consumer (DTC) service that primarily offers general entertainment and family programming
◦Disney+ Hotstar: a DTC service primarily in India that offers general entertainment, family and sports programming.
◦Hulu: 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 various cable and broadcast networks. See Note 2 for information on Hulu LLC (Hulu) ownership.
•Content Sales/Licensing
◦Theatrical distribution
◦Sale/licensing of film and episodic content to television and video-on-demand (TV/VOD) services
◦Home entertainment distribution: electronic home video licenses, video-on-demand rentals and sales of DVD/Blu-ray discs
◦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
◦Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)
◦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:
•Subscription fees - Fees charged to customers/subscribers for our DTC streaming services
•Advertising - Sales of advertising time/space
•Affiliate fees - Fees charged to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top 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.
•Theatrical distribution - Rentals from licensing our films to theaters
•TV/VOD distribution - Licensing fees for the right to use our film and episodic content
•Home entertainment distribution - Electronic sales and rentals of film and episodic content through distributors and royalties from the licensing of physical distribution rights
•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 and distribution costs. 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)
◦Participations and residual expenses
◦Fees paid to the Sports segment to program ESPN on ABC and certain sports content on Disney+
•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 lines of business within Sports include the following:
•ESPN (generally owned 80% by the Company)
◦Domestic:
▪Seven ESPN branded television channels
▪ESPN on ABC (sports programmed on the ABC Network by ESPN)
▪ESPN+ DTC service
◦International: ESPN-branded channels outside of the U.S.
◦Star: Star-branded sports channels in India
In February 2024, the Company, Fox Corporation and Warner Bros. Discovery, Inc. announced plans to create a joint venture to offer a sports-focused DTC platform (Venu Sports) that will distribute each party’s domestic sports networks, certain broadcast networks and sports streaming services. In August 2024, a motion for preliminary injunction in a matter before the District Court for the Southern District of New York was granted, enjoining the launch of Venu Sports. See Note 14 for additional information regarding this legal matter. Further, the formation and launch of Venu Sports are subject to the finalization of definitive agreements among the parties.
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 lines of business within Experiences along with their significant business activities include the following:
•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 that owns and operates 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. 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, at The Disney Store and to wholesalers
•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, infrastructure costs, costs of goods sold and distribution costs, supplies, commissions and entertainment offerings. Infrastructure costs include technology support costs, repairs and maintenance, utilities and fuel, property taxes, retail occupancy costs, insurance and transportation
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
STAR INDIA TRANSACTION
On or about November 14, 2024, the Company and Reliance Industries Limited (RIL) plan to finalize the formation of a joint venture that combines our Star-branded and other general entertainment and sports television channels and direct-to-consumer Disney+ Hotstar service in India (Star India) and certain media and entertainment businesses controlled by RIL (the Star India Transaction) (see Note 4 for additional information).
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. We do not present a measure of total assets for our reportable segments as this information is not used by management to allocate resources and capital.
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:
202420232022
Revenues
Entertainment
Third parties
$40,775  $40,258  $39,231  
Intersegment
411  377  338  
41,186  40,635  39,569  
Sports
Third parties
16,435  16,091  16,429  
Intersegment
1,184  1,020  841  
17,619  17,111  17,270  
Experiences
34,151  32,549  28,085  
Eliminations
(1,595) (1,397) (1,179) 
Total segment revenues$91,361  $88,898  $83,745  
Segment operating income (loss)
Entertainment
$3,923  $1,444  $2,126  
Sports
2,406  2,465  2,710  
Experiences
9,272  8,954  7,285  
Total segment operating income(1)
$15,601  $12,863  $12,121  
(1)Equity in the income of investees is included in segment operating income as follows:
202420232022
Entertainment
$529  $685  $783  
Sports
58  55  55  
Experiences
—  (2) (10) 
Equity in the income of investees included in segment operating income587  738  828  
A+E Gain(1)
—  56  —  
Amortization of TFCF intangible assets related to equity investees
(12) (12) (12) 
Equity in the income of investees$575  $782  $816  
(1)Restructuring and impairment charges in fiscal 2023 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:
 202420232022
Segment revenues$91,361 $88,898   $83,745 
Content License Early Termination(1)
—   — (1,023)  
Total revenues$91,361 $88,898 $82,722 
(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:
202420232022
Segment operating income$15,601  $12,863  $12,121  
Content License Early Termination— — (1,023)
Corporate and unallocated shared expenses(1,435) (1,147) (1,159) 
Restructuring and impairment charges(1)
(3,595) (3,836) (237) 
Other income (expense), net(2)
(65) 96  (667) 
Interest expense, net(1,260) (1,209) (1,397) 
TFCF and Hulu acquisition amortization(3)
(1,677) (1,998) (2,353) 
Income from continuing operations before income taxes
$7,569  $4,769  $5,285  
(1)Net of the A+E Gain in fiscal 2023.
(2)“Other income (expense), net” for fiscal 2024 and 2023 includes charges related to a legal ruling of $65 million and $101 million, respectively. Fiscal 2023 and 2022 include a gain of $169 million and a loss of $663 million, respectively, to adjust our investment in DraftKings, Inc. to fair value. The Company sold the DraftKings investment in fiscal 2023.
(3)TFCF and Hulu acquisition amortization is as follows:
202420232022
Amortization of intangible assets
$1,394  $1,547  $1,707  
Step-up of film and episodic costs
271 439 634 
Intangibles related to TFCF equity investees
12 12 12 
$1,677 $1,998 $2,353 
Capital expenditures, depreciation expense and amortization of intangible assets are as follows:
Capital expenditures202420232022
Entertainment
$977  $1,032  $802  
Sports
10  15  8  
Experiences
Domestic2,710  2,203  2,680  
International949  822  767  
Corporate766  897  686  
Total capital expenditures$5,412  $4,969  $4,943  
Depreciation expense
Entertainment
$681  $669  $560  
Sports
39  73  90 
Experiences
Domestic1,744  2,011  1,680  
International726  669  662  
Amounts included in segment operating income2,470  2,680  2,342  
Corporate244  204  191  
Total depreciation expense$3,434  $3,626  $3,183  
Amortization of intangible assets
Entertainment
$53  $87  $164  
Experiences
109  109  109  
Amounts included in segment operating income162  196  273  
TFCF and Hulu1,394  1,547  1,707  
Total amortization of intangible assets$1,556  $1,743  $1,980  
The following table presents our revenues and segment operating income by geographical markets:
202420232022
Revenues
Americas$72,162  $71,205  $68,218  
Europe10,279  9,533  8,680  
Asia Pacific8,920  8,160  6,847  
$91,361  $88,898  $83,745  
Content License Early Termination(1,023) 
$82,722  
Segment operating income
Americas$12,921  $10,779  $11,099  
Europe1,369  856  586  
Asia Pacific1,311  1,228  436  
$15,601  $12,863  $12,121  
Long-lived assets(1) by geographical markets are as follows:
September 28, 2024September 30, 2023
Americas$62,107  $60,988  
Europe10,299  9,760  
Asia Pacific6,535  7,829  
$78,941  $78,577  
(1)Long-lived assets are primarily parks, resorts and other property, produced and licensed content costs, right-of-use lease assets, equity method investments and benefit plans in a net asset position. The fiscal 2023 presentation has been adjusted to conform with the fiscal 2024 presentation.