Published
# The Walt Disney Company (NYSE: DIS) — Narrative, FY26 Q3 CIK 0001744489. Delaware incorporated; headquarters in Burbank, California. Fiscal year ends on the Saturday closest to September 30. Sources: the FY2025 Annual Report on Form 10-K (fiscal year ended September 27, 2025, filed November 13, 2025, accession 0001744489-25-000155); the Quarterly Report on Form 10-Q for the quarter ended June 27, 2026 (filed August 5, 2026, accession 0001744489-26-000057); and Current Reports on Form 8-K as cited. --- ## Business *From the FY2025 10-K, accession 0001744489-25-000155.* Disney is a diversified worldwide entertainment company operating in three segments: **Entertainment**, **Sports** and **Experiences**. FY2025 revenue was $94.4 billion, split by segment as follows (before $1.9 billion of intersegment eliminations): Entertainment $42.5 billion, Sports $17.7 billion, Experiences $36.2 billion. Segment operating income was Entertainment $4.7 billion, Sports $2.9 billion, Experiences $10.0 billion. The company employed approximately 231,000 people at fiscal year end 2025 (about 172,000 in the U.S., 59,000 outside), roughly 76% full-time, 16% part-time and 8% seasonal, with a significant portion covered by collective bargaining agreements. ### Entertainment ($42.5bn FY2025 revenue; $4.7bn operating income) Non-sports global film and episodic content production and distribution, organized in three lines of business: - **Linear Networks** ($9.4bn revenue, $3.0bn operating income in FY2025). Domestically: the ABC Television Network, eight owned ABC stations, and the Disney, Freeform, FX and National Geographic (73%-owned) channels. Internationally: Disney, FX and National Geographic branded channels. Includes a 50% equity investment in A+E Global Media (see Subsequent events). Revenue is affiliate fees from multichannel video programming distributors (MVPDs) plus advertising. FY2025 affiliate fees fell 8% to $6.3 billion; domestic affiliate revenue declined 9% on fewer subscribers, partly offset by a 7% rate increase — the structural pattern of the business. - **Direct-to-Consumer** ($24.6bn revenue; operating income of $1.3 billion in FY2025 vs. $143 million in FY2024). Disney+ (available in more than 150 countries and territories outside the U.S.) and Hulu (U.S. general entertainment plus the Hulu Live TV vMVPD service). At September 27, 2025: Disney+ paid subscribers 131.6 million (59.3 million domestic, 72.4 million international) and total Hulu 64.1 million (59.7 million SVOD only, 4.4 million Live TV + SVOD), including 43.7 million subscribers to bundles containing both. FY2025 average monthly revenue per paid subscriber: Disney+ $7.81 ($8.06 domestic, $7.59 international), Hulu SVOD Only $12.36, Hulu Live TV + SVOD $99.85. These were the last subscriber figures the company published. The fiscal 2025 fourth-quarter earnings release (Form 8-K, accession 0001744489-25-000154) carried both a paid-subscriber table and a revenue-per-paid-subscriber table; the fiscal 2026 first-, second- and third-quarter releases (accessions 0001744489-26-000018, 0001744489-26-000036 and 0001744489-26-000056) and the third-quarter 10-Q contain neither, so no subscriber counts are available after September 27, 2025. None of those filings gives a reason for the change. - **Content Sales/Licensing and Other** ($8.5bn revenue, $0.4bn operating income). Theatrical distribution, TV/VOD and home entertainment licensing, Disney Theatrical Group (*The Lion King*, *Aladdin*, *Frozen*), Disney Music Group, National Geographic magazine, Industrial Light & Magic and Skywalker Sound post-production, a 30% interest in India's Tata Play, and an intersegment allocation of consumer-products royalties on Entertainment-created IP. Content is produced under Walt Disney Pictures, Pixar, Marvel, Lucasfilm, Twentieth Century Studios, Searchlight, 20th Television, FX Productions, Disney Branded Television and National Geographic Studios. The library spans roughly 100 years and includes about 5,300 live-action and 460 animated film titles. Disney has released approximately 1,100 live-action and 100 animated full-length films cumulatively; roughly 20 releases were planned for fiscal 2026. Sony retains rights to produce and distribute Spider-Man films. ### Sports ($17.7bn FY2025 revenue; $2.9bn operating income) ESPN, ESPN2, ESPNU, ESPNEWS, SEC Network, ACC Network and ESPN Deportes domestically; approximately 45 ESPN-branded channels internationally across roughly 110 countries in four languages; ESPN on ABC; and the ESPN DTC service, offered since August 2025 as two plans — ESPN Select (formerly ESPN+) and ESPN Unlimited, which carries all ESPN linear channels. FY2025 supplemental detail: domestic ESPN revenue $16.1 billion (operating income $2.8 billion), international ESPN $1.5 billion (operating income $5 million). Revenue is affiliate and subscription fees, advertising, pay-per-view and sub-licensing. Rights include the NFL, college football (including bowl games and the College Football Playoff) and basketball, the NBA, MLB, NHL, soccer, US Open Tennis, Wimbledon, the Masters, the WNBA and the PGA Championship; ESPN became the exclusive distributor of all WWE Premium Live Events beginning September 2025. Mixed martial arts (UFC) and Formula 1 rights ran through the end of calendar 2025. In November 2025 the ESPN BET promotional agreement with PENN Entertainment was terminated effective December 1, 2025, and DraftKings became ESPN's exclusive sportsbook and odds provider from that date. Sports also holds a 30% interest in Canada's CTV Specialty Television. ### Experiences ($36.2bn FY2025 revenue; $10.0bn operating income) Domestic: Walt Disney World Resort (approximately 25,000 acres; Magic Kingdom, EPCOT, Hollywood Studios, Animal Kingdom, 18 owned hotels/vacation club properties with roughly 23,000 rooms and 3,900 vacation club units, Disney Springs, ESPN Wide World of Sports) and Disneyland Resort (approximately 550 acres, two parks, three hotels, Downtown Disney). Also Disney Cruise Line, Disney Vacation Club (including Aulani), National Geographic Expeditions and Adventures by Disney. International: Disneyland Paris, Hong Kong Disneyland Resort (48% owned, consolidated) and Shanghai Disney Resort (43% owned, consolidated); Tokyo Disney Resort is licensed to a third party and generates royalties. Consumer Products licenses Disney IP for merchandise, games and publishing and operates retail/wholesale channels. FY2025 revenue lines: theme park admissions $11.7 billion, resorts and vacations $9.2 billion, parks & experiences merchandise/food/beverage $8.5 billion, merchandise licensing and retail $4.4 billion, parks licensing and other $2.4 billion. Growth projects disclosed in the 10-K include a Frozen-themed area at Disneyland Paris opening in 2026 (with Walt Disney Studios Park renamed Disney Adventure World), the retheming of DinoLand USA into Tropical Americas planned for 2027, and two new cruise ships in fiscal 2026 — the *Disney Destiny* (approximately 140,000 tons, 1,250 staterooms, first sailing November 20, 2025) and the *Disney Adventure* (approximately 200,000 tons, roughly 2,100 staterooms, first sailing March 2026). In May 2025 Disney and Miral LLC agreed to create a Disney-branded theme park and resort in Abu Dhabi to be built and operated by Miral; Disney licenses its IP and provides development and management services for royalties and fees, and contributes no capital. ### Recent portfolio changes *From the FY2025 10-K, accession 0001744489-25-000155, and the Q3 FY2026 10-Q, accession 0001744489-26-000057. The 10-K, filed November 13, 2025, described the NFL transaction as a binding agreement expected to close in calendar 2026; the closing date below comes from the 10-Q.* - **Star India.** On November 14, 2024 Disney and Reliance Industries combined Star India with certain Reliance media businesses into a joint venture in which Disney holds 37%, accounted for under the equity method. Star India results were consolidated only through November 14, 2024, which depresses reported growth in Entertainment and Sports across FY2025 and the first quarter of FY2026 comparisons. - **Hulu.** Disney acquired NBCUniversal's redeemable interest; an $8.6 billion payment was made in FY2024 and an incremental $0.4 billion in June 2025 upon final appraisal. - **Fubo.** On October 29, 2025 Disney combined certain Hulu Live TV assets with publicly traded vMVPD FuboTV Inc. and took a 70% economic and voting interest, with the right to appoint a majority of Fubo's board; 30% remains with Fubo public shareholders. - **NFL media assets.** On January 31, 2026 ESPN acquired NFL Network, the NFL RedZone channel's pay-TV distribution and NFL Fantasy in exchange for a 10% noncontrolling interest in ESPN. (The Fubo combination and the ESPN/NFL asset exchange are detailed under *Current quarter* below.) --- ## Risk factors *From the FY2025 10-K, accession 0001744489-25-000155, as updated by Part II, Item 1A of the Q3 FY2026 10-Q, accession 0001744489-26-000057.* **Secular decline of linear distribution and the economics of the DTC transition.** Industry-wide declines in broadcast and cable ratings, falling traditional pay-TV subscriber levels and reduced home entertainment demand have already decreased advertising and affiliate revenue and have led to asset impairments. Disney's own DTC strategy accelerates those declines and requires it to forgo revenue from traditional sources. The company states plainly that there can be no assurance the DTC model will be or remain profitable, or as profitable long term, as its historic business models. **Carriage and rights renewals; blackouts.** Long-term contracts for acquiring programming rights and for distributing Disney networks expire and must be renegotiated, which has repeatedly produced service blackouts. The 10-K disclosed that Disney's channels were removed from YouTube TV on October 30, 2025 after the distribution contract expired without renewal terms. The Q3 FY2026 10-Q updates this: the YouTube TV removal in the first quarter of fiscal 2026 was temporary, but NFL Network and NFL RedZone were removed from Comcast Xfinity in the third quarter of fiscal 2026 and service had not been reinstated as of filing. Additional MVPD contracts were scheduled to expire in fiscal 2026. Renewal terms increasingly include fewer linear networks or genre-specific mini- bundles in exchange for making DTC services available to distributor subscribers. Sports rights costs continue to rise, with no assurance that revenue from a given rights package exceeds its cost. **DTC execution risk specifically.** Success depends on content curation and investment decisions, subscriber growth and churn management, pricing and bundling, and cost containment against a crowded field of competing services. Disney notes it has experienced flat subscriber growth or net subscriber losses in past periods, that consumers may not pay for an expanding set of services at rising prices, and that competitive intensity may force it to hold or lower prices or accept higher churn. **Consumer taste and demand risk.** The business depends on consistently producing content that resonates; large investments in films, sports rights, attractions, cruise ships and hotels must be committed long before consumer acceptance is known. Consumer perceptions of the company's positions on matters of public interest have led to boycott calls. Demand for out-of-home entertainment, including theatrical moviegoing, has not fully recovered to pre-pandemic levels. **Macroeconomic, travel and event risk.** Recessions, slowdowns and inflation reduce park attendance and guest spending, subscription levels and advertising, while raising labor and input costs; Disney expects labor costs to remain elevated even as inflation moderates. The parks and cruise businesses are highly exposed to the travel environment and to uncontrollable events — hurricanes and other severe weather, wildfires, health crises, terrorism, geopolitical and military developments, tariffs and supply-chain disruption. Insurance is subject to deductibles, exclusions and limits and does not cover all losses. **Competition.** Disney competes for viewers, subscribers, advertising dollars, carriage, guests, creative and performing talent, sports rights and story properties. It notes that expanded supply of advertising inventory and platforms depresses advertising rates across its DTC services and linear networks and creates demand uncertainty, and that generative AI tools capable of producing low-cost competing content increase competitive pressure. **Strategy and portfolio execution.** Repeated strategy changes — the Fubo combination, the ESPN/NFL asset exchange, the Star India joint venture and related impairments, the 2023 segment reorganization and content-curation write-downs, and continued cruise-fleet and parks expansion — carry execution risk, may not deliver the anticipated benefits, and have produced and may again produce write-downs of content, goodwill, intangible and retail/hotel assets. **Foreign currency.** Results are exposed to the dollar's movement against the euro, British pound, Japanese yen, Chinese yuan and Canadian dollar; hedging is not expected to offset all impact, and political or economic conditions in some countries limit hedging and repatriation. **Intellectual property.** IP value depends on the scope and duration of legal protection. U.S. copyright terms expire 95 years after the copyright was secured; the copyright on *Steamboat Willie* (1928) and the early character versions in it has already expired, and further expirations will follow, which Disney expects to negatively affect revenue from that IP to some extent. Piracy — increasingly facilitated by AI tools — and third-party infringement claims against Disney's streaming services and technology are both persistent risks. **Litigation and regulation.** Disney faces securities, antitrust, IP, employment, tax, privacy, consumer-protection and broadcasting proceedings; adverse outcomes can produce substantial damages or injunctive relief that constrains business plans, including the ability to complete strategic transactions. The Q3 FY2026 10-Q adds a regulatory development: in April 2026 the FCC ordered Disney to file early license renewal applications for all of its owned television stations; the applications were filed on May 28, 2026 and a response from the FCC was pending at the time of filing. Broader regulatory exposure spans FCC rules, privacy and child-safety law, consumer-product and theme-park safety, land-use, environmental and sustainability rules, anti-corruption and sanctions regimes, tariffs and trade restrictions, and international content quotas and ownership limits — with international park operations in France, mainland China and Hong Kong specifically flagged. **Cybersecurity.** Disney holds customer and employee personal data and relies on cloud and computing systems to deliver its products; it states that its systems and those of third parties are continually attacked, sometimes successfully, and that the risk of a material incident cannot be eliminated. In fiscal 2025 it identified no cybersecurity threat that materially affected or was reasonably likely to materially affect the business. **Labor.** A significant share of the workforce is unionized, including theme park employees and production personnel. The FY2023 WGA (almost five months) and SAG-AFTRA (almost four months) work stoppages disrupted production pipelines and reduced revenue. Certain guild agreements and domestic parks union contracts were scheduled to expire in fiscal 2026, and resulting settlements increase costs. **Balance sheet and ratings.** Borrowing costs are tied to agency ratings; at September 27, 2025 Moody's rated the company A2/P-1 (Stable) and S&P A/A-1 (Stable). Fitch affirmed A-/F2 (Stable) on September 29, 2025 and then withdrew its ratings for commercial reasons. Elevated indebtedness would reduce financial flexibility and funds available for capital investment, buybacks and dividends. **Seasonality.** Experiences peaks in the summer and around winter/spring holidays; consumer products skew to the first and fourth fiscal quarters; advertising is heavier in the fall and in election years; content sales swing with release timing. A disruption during a peak season has a disproportionate effect on the full year. **Governance/stock.** The bylaws designate the Delaware Court of Chancery as exclusive forum for most intra-corporate actions. The stock has been volatile and may remain so. --- ## Management's discussion and analysis — fiscal 2025 *From the FY2025 10-K, accession 0001744489-25-000155.* **Consolidated.** FY2025 revenue rose 3%, or $3.1 billion, to $94.4 billion. Net income attributable to Disney rose $7.4 billion to $12.4 billion from $5.0 billion, and diluted EPS from continuing operations rose to $6.85 from $2.72. The increase was driven mainly by a much lower effective tax rate and the absence of the prior year's Star India and goodwill impairments, plus higher operating income at Entertainment and Experiences. Income before income taxes was $12.0 billion versus $7.6 billion. Service revenue rose 3% to $84.6 billion, which included an approximate three-percentage- point drag from the Star India deconsolidation; excluding that, growth came from higher subscription revenue, parks and experiences growth and higher content sales. Product revenue rose 3% to $9.8 billion on parks growth, partly offset by lower physical home entertainment as Disney shifted to licensing physical distribution rights to third parties. Cost of services rose $0.2 billion to $52.7 billion (a four-point benefit from Star India masking higher programming and production costs and parks inflation); cost of products fell 2% to $6.1 billion; SG&A rose 5% to $16.5 billion on higher marketing; D&A rose 7% to $5.3 billion on higher parks depreciation. The effective tax rate was **negative 11.9%** versus a positive 23.7% in FY2024. The swing was driven by a non-cash benefit of roughly 26 percentage points from a change in Hulu's U.S. income tax classification, plus a 10-point favorable prior-year tax resolution, offset by about 2 points of non-cash tax expense related to Star India. Items management identified as affecting FY2025: the Hulu tax-classification benefit of $3,277 million in income taxes together with a $462 million charge in net income attributable to noncontrolling interests; TFCF and Hulu acquisition amortization of $1,576 million; a $1,016 million favorable prior-year tax resolution; and restructuring and impairment charges of $819 million ($748 million after tax) plus $244 million of non-cash Star India tax expense. FY2024 comparatives included $3,595 million of restructuring and impairment charges (including $1.3 billion of goodwill impairment at the entertainment linear networks reporting unit and $1.5 billion related to Star India), $1,677 million of acquisition amortization, and a $65 million legal charge. **Entertainment** revenue rose 3% to $42.5 billion and operating income rose 19% to $4.7 billion. Direct-to-Consumer did the work: operating income of $1,327 million versus $143 million, on subscription fee growth of 8% from higher effective rates and 4% from more subscribers. Linear Networks operating income fell 14% to $2,955 million from $3,452 million, but the driver was international rather than domestic: management attributed the decline to lower results at the international business as a result of the Star India Transaction and to lower income from equity investees. Domestic Linear Networks operating income was essentially flat at $2,378 million versus $2,387 million, international fell 75% to $132 million, and equity in the income of investees — chiefly A+E, on lower affiliate and advertising revenue there — fell $94 million to $445 million. Domestic pressure showed up in the top line rather than in segment profit: domestic affiliate revenue fell 1% (a 9% decline from fewer subscribers against a 7% increase from higher effective rates) and domestic advertising fell 9% to $2,457 million, of which 8 points came from fewer impressions attributable to lower average viewership — offset at the operating-income line by lower domestic programming and other operating costs. Content Sales/Licensing and Other operating income rose to $392 million from $328 million; FY2025 theatrical slate included *Moana 2*, *Lilo & Stitch*, *Mufasa: The Lion King*, *The Fantastic Four: First Steps*, *Captain America: Brave New World*, *Thunderbolts\** and *Snow White*. **Sports** revenue was flat at $17.7 billion but operating income rose 20% to $2,882 million, mostly because Star India losses were removed and international ESPN improved; domestic ESPN operating income actually declined 8% to $2,801 million as programming costs rose on expanded college football rights (including four additional College Football Playoff games) and contractual rate increases. Domestic ESPN advertising rose 13% on higher rates. Marketing costs rose with the August 2025 ESPN DTC launch. **Experiences** revenue rose 6% to $36.2 billion and operating income rose 8% to $10.0 billion. Theme park admissions grew on a 4% increase in per capita ticket revenue; resorts and vacations grew on 5% more passenger cruise days (the *Disney Treasure* launch), 2% more occupied room nights and 1% from Disney Vacation Club unit sales. Domestic park attendance was down 1% with per capita guest spending up 5%; domestic hotel occupancy was 87%. **Corporate and unallocated shared expenses** rose to $1,646 million, driven by legal settlements and higher compensation costs, partly offset by a gain on a land sale. **Liquidity.** Cash from operations rose 30%, or $4.1 billion, to $18.1 billion, largely on lower tax payments (FY2025 U.S. federal and California liabilities were deferred to October 2025 under California wildfire relief) and higher Entertainment cash flow. FY2025 capital expenditures were $8 billion, with fiscal 2026 guided to approximately $9 billion on theme park and resort expansion and new attractions, partly offset by lower cruise ship spend. Fiscal 2026 produced and licensed content spend, including sports rights, was expected to be approximately $24 billion. On November 13, 2025 the board declared a dividend of $1.50 per share (approximately $2.6 billion) payable in two semi-annual installments of $0.75 on January 15, 2026 and July 22, 2026, and the company said it was targeting $7 billion of share repurchases in fiscal 2026. Bank facilities totaled $12.25 billion, undrawn, with a single financial covenant requiring interest coverage of three times EBITDA (including film/programming amortization), met by a significant margin. **Trends and uncertainties.** Management framed the core bet directly: strategic investment in DTC offerings is expected to grow subscription and advertising revenue by more than enough to offset continuing declines in linear affiliate fees, subscribers and viewership — declines it expects to continue — while cautioning that there can be no assurance those investments succeed. It also flagged evolving macroeconomic, trade and travel conditions, including tariffs and consumer spending dynamics, as unknowns that could reduce demand and raise costs. **Critical estimates** center on film and television cost amortization and impairment (ultimate revenue estimates for individually monetized titles, projected usage for content monetized as a group, and estimated relative value for multi-year sports rights); pension assumptions (discount rate raised to 5.45% at FY2025 year end; expected return on plan assets 7.25%; a one-point decrease in the discount rate would raise the projected benefit obligation by roughly $2.1 billion); and goodwill and long-lived asset impairment testing. Disney used a qualitative goodwill assessment in FY2025 and concluded no quantitative test was required. --- ## Current quarter — Q3 fiscal 2026 (quarter ended June 27, 2026) *From the 10-Q, accession 0001744489-26-000057, with outlook from the earnings release furnished on Form 8-K, accession 0001744489-26-000056.* **Headline.** Revenue rose 7%, or $1.6 billion, to $25.2 billion. Income before income taxes rose 14% to $3.6 billion. But net income attributable to Disney fell 50% to $2.6 billion and diluted EPS fell to $1.51 from $2.92, because the prior-year quarter contained the $3,277 million non-cash Hulu tax benefit and because the current quarter carried an $812 million impairment of the A+E investment. Adjusting for identified items, diluted EPS excluding certain items was $2.06 versus $1.61. Nine-month revenue was $76.4 billion (up 6%) with net income attributable to Disney of $7.3 billion and diluted EPS of $4.12, against $11.1 billion and $6.12 a year earlier. The quarter's effective tax rate was 22.0%, versus negative 85.1% a year ago. For the nine months the rate was 27.2%, including roughly four percentage points of unfavourable non-cash tax charges tied to the Fubo and NFL transactions ($307 million and $115 million respectively). Restructuring and impairment charges were $900 million in the quarter ($812 million A+E impairment plus $88 million severance) versus $185 million a year ago, and $1,139 million for the nine months ($959 million A+E impairments, $180 million severance). **Two transactions reshaped the segments.** - **Fubo (October 29, 2025).** Disney combined certain Hulu Live TV assets — carriage, subscription and advertising agreements, related data and the "Live TV" brand IP — with FuboTV Inc., taking a 70% economic interest and 70% fully diluted voting interest and the right to appoint a majority of Fubo's board; 30% remains with Fubo's public shareholders. Based on Fubo's $3.69 closing price on October 29, 2025, the estimated fair value was $1.3 billion, allocated primarily to $1.4 billion of goodwill and $0.4 billion of identifiable intangibles, partly offset by $0.4 billion of assumed debt. Fubo contributed approximately $0.3 billion of revenue in the quarter and $1.0 billion in the nine months, with an immaterial net income impact. Disney is the exclusive distributor of Hulu Live TV for five years (renewable for a further five by mutual agreement), pays Fubo a wholesale programming fee, and manages Hulu Live TV marketing and sells advertising for both services for a fee. - **NFL media assets (January 31, 2026).** ESPN acquired NFL Network and certain other NFL Enterprises media assets, including NFL RedZone's pay-TV distribution and NFL Fantasy, in exchange for a **10% noncontrolling interest in ESPN**. Disney now holds an effective 72% interest in ESPN and Hearst Corporation holds 18%. Estimated transaction fair value was approximately $3 billion; because it was an exchange of equity interests it was non-cash and does not appear in the cash flow statement. A significant portion of the value was deferred in other assets and will begin amortizing as expense in 2033 (or be charged to equity if Disney exercises its exchange right). After July 2034, depending on the performance of the acquired assets, Disney may have the right to reacquire the NFL's ESPN stake for a ten-year note at 70% of then fair market value; alternatively the NFL may have the right to buy up to an additional 4% of ESPN at 70% of then fair market value. In Q2 FY2026 Disney entered license agreements for the sports rights needed to operate NFL Network and NFL RedZone through 2033. Goodwill from the two deals combined added $1,406 million ($1,357 million to Entertainment, $49 million to Sports), bringing total goodwill to $74.7 billion at June 27, 2026. **Entertainment** — revenue $11,345 million, up 6%; operating income $1,680 million, up 64%. Subscription and affiliate fees rose 12% to $7,545 million, composed of 4 points from Fubo, 3 points from higher effective rates, 3 points from more subscribers and 1 point of favourable FX. Advertising slipped 1% to $1,625 million as a 4-point rate decline outweighed volume and Fubo. Content sales fell 6% to $1,596 million on lower TV/VOD and home entertainment. SG&A fell $187 million on lower marketing. For the nine months, Entertainment revenue was $34,669 million (up 7%) with operating income of $4,116 million (up 3%); nine-month content sales rose 8% on an 11% increase in theatrical distribution, with *Zootopia 2*, *Avatar: Fire and Ash*, *The Devil Wears Prada 2*, *Toy Story 5*, *Hoppers* and *The Mandalorian and Grogu* against the prior-year slate. Nine-month Entertainment programming and production costs rose 9% to $18,539 million, with 5 points from theatrical, 4 from Fubo and 3 from streaming. **Sports** — revenue $4,500 million, up 4%; operating income $858 million, **down 17%**. Subscription and affiliate fees rose 8% to $3,142 million (5 points from rates, 4 points from the NFL transaction). Advertising rose 5% on higher impressions. Other revenue fell 41% to $154 million, mainly because UFC pay-per-view revenue is gone — those rights expired in December 2025. Programming and production costs rose 10% to $3,050 million on contractual rate increases, new sports rights, and a timing shift from the NBA contract renewal that moved costs from the first half into the third quarter. Nine-month Sports revenue was $14,018 million (up 2%) with operating income of $1,701 million (down 14%); nine-month affiliate/subscription growth of 6% from rates and 2% from the NFL transaction was partly offset by 3 points from fewer subscribers and 1 point from the temporary suspension of carriage with an affiliate — the first-quarter removal of Disney's channels from YouTube TV, the only temporary suspension disclosed in the period. Management attributed the steeper-than-guided operating income decline — 17% against prior guidance of approximately 14% — to four-game sweeps in early NBA playoff rounds and the impact of a network carriage dispute; the carriage dispute disclosed for the quarter is the removal of NFL Network and NFL RedZone from Comcast Xfinity, still unresolved at the filing date. **Experiences** — revenue $9,968 million, up 10%; operating income $3,017 million, up 20%. Theme park admissions rose 9% (5 points per-capita ticket revenue, 3 points attendance); resorts and vacations rose 17% (10 points from additional passenger cruise days following the *Disney Destiny* launch in November 2025 and the *Disney Adventure* in March 2026, 2 points hotel rate, 2 points occupied room nights); merchandise, food and beverage rose 7%; merchandise licensing and retail rose 8%, with merchandise licensing up 10%. Domestic Parks & Experiences revenue rose 11% to $7,116 million with operating income up 27% to $2,088 million; international Parks & Experiences revenue rose 6% but operating income fell 13% to $369 million; Consumer Products revenue rose 7% with operating income up 26% to $560 million. Global guests rose 4% and domestic attendance rose 3%; domestic hotel occupancy was 91% versus 86%. Cost of goods sold fell on tariff refunds — management quantified roughly $100 million of tariff refunds in the quarter, about four points of the segment's operating income growth, with no revenue impact and only insignificant further refunds expected. Nine-month Experiences revenue was $29,461 million (up 8%) with operating income of $8,941 million (up 10%). **Corporate and unallocated shared expenses** fell 19% to $334 million on a favourable legal resolution. **Cash flow and balance sheet.** Nine-month cash from operations was $12,515 million, down 8% from $13,627 million, on higher tax payments (including FY2025 and part of FY2024 U.S. federal and California liabilities deferred under wildfire relief) and lower Sports cash flow from higher sports content spend. Nine-month investments in parks, resorts and other property were $6,780 million, of which Experiences accounted for $5,596 million. Repurchases of common stock were $7,245 million for the nine months versus $2,496 million a year earlier — 16,992,627 shares at an average $100.74 were repurchased in the June quarter alone, leaving 271 million shares available under the 400-million-share authorization effective February 7, 2024. Dividends paid were $1,337 million. Total borrowings rose to $46,041 million from $42,026 million at fiscal year end, reflecting $13,556 million of borrowings against $9,867 million of payments: in February 2026 Disney issued $3.5 billion of fixed-rate notes maturing in 3 to 10 years at coupons of 3.75% to 4.63% plus $0.5 billion of 3-year SOFR-indexed floating notes, and in October 2025 it borrowed $1.1 billion at a fixed 3.74% over a 12-year term in connection with delivery of the *Disney Destiny*. Cash and equivalents were $5,185 million, total assets $204,740 million and total equity $116,842 million (Disney shareholders' equity $110,032 million) at June 27, 2026. Bank facilities remained $12.25 billion, fully undrawn, across facilities expiring February 2027, March 2029 and February 2031; the interest-coverage covenant was met by a significant margin. Moody's (A2/P-1 Stable) and S&P (A/A-1 Stable) ratings were unchanged. Fiscal 2026 content spend including sports rights was still expected to be approximately $24 billion (versus $23 billion in fiscal 2025). **Outlook given with the quarter** (earnings release furnished on Form 8-K, accession 0001744489-26-000056). One mechanical point runs through all of it: fiscal 2026 is a 53-week year. Disney's fiscal year ends on the Saturday closest to September 30, which adds a fifty-third week roughly every six years — fiscal 2026 ends October 3, 2026 and reports the extra week in the fourth quarter; fiscal 2027 laps it in its own fourth quarter. Guidance is therefore given both ways. Fiscal 2026 adjusted EPS growth of approximately 12% excluding the 53rd week, or approximately 16% including it; fourth-quarter total segment operating income of $4.9 billion, with the extra week contributing roughly $600 million spread across segments and lifting revenue by roughly 1.5–2%. By segment for the full year, excluding the extra week: Experiences operating income at the high end of prior high-single-digit guidance; Sports mid-single-digit growth; Entertainment double-digit growth, though Q4 Entertainment will absorb *Moana* box office coming in below prior expectations and a softer advertising environment, particularly in domestic SVOD. Full-year cash from operations of at least $19 billion was reiterated. Share repurchases for fiscal 2026 were raised to **at least $9 billion** (from the at least $8 billion repurchase target set with the second-quarter results), funded in part by the A+E sale proceeds. Entertainment SVOD operating margin was 13% in the quarter, with double-digit full-year SVOD margin still expected excluding the extra week. Looking further out, management said it continues to expect double-digit growth in adjusted EPS in fiscal 2027, again excluding the extra week. It also said it is mid-stream in an enterprise cost-reduction effort spanning labor and SG&A. **Leadership.** On February 2, 2026 the board appointed Josh D'Amaro, then Chairman of Disney Experiences, as Chief Executive Officer effective March 18, 2026, with Robert A. Iger moving to Senior Advisor reporting exclusively to the board and remaining a director; his service in both roles terminates on December 31, 2026. The same board action appointed Dana Walden, then Co-Chairman of Disney Entertainment, as President and Chief Creative Officer of the company, also effective March 18, 2026, under an employment agreement running to March 17, 2030 (Form 8-K, accession 0001744489-26-000022). D'Amaro was appointed to the board and its Executive Committee on March 18, 2026 (Form 8-K, accession 0001628280-26-020172). On February 20, 2026 the company terminated without cause the employment of Kristina K. Schake as Senior Executive Vice President and Chief Communications Officer, effective March 19, 2026 (Form 8-K, accession 0001744489-26-000025). **Credit facilities.** On February 27, 2026 Disney entered a new $5.25 billion 364-day credit agreement (expiring February 26, 2027, extendable to February 26, 2028) and a new $4 billion five-year credit agreement (expiring February 27, 2031), replacing the prior facilities of the same sizes, and amended its 2024 five-year credit agreement to exclude Fubo as a covered entity. Each requires a minimum ratio of consolidated EBITDA to consolidated interest expense of 3.00 to 1.00 (Form 8-K, accession 0001193125-26-088356). **Litigation of note** (10-Q Note 12). The 2023 securities class action alleging misstatements about Disney+ costs and subscriber growth survived dismissal in part; trial is set for November 16, 2027 and discovery is under way. A parallel action brought by Union Asset Management Holding AG and GIC Private Limited (filed December 8, 2025) has been stayed pending the class action. Ten shareholder derivative complaints on substantially the same allegations are outstanding, most of them stayed. In the vMVPD antitrust litigation, a settlement covering YouTube TV and DirecTV Stream subscriber classes received preliminary court approval on March 31, 2026 for an amount not material to Disney, with final approval scheduled for January 14, 2027; the related Unger action on behalf of fuboTV subscribers — which seeks, among other relief, an injunction requiring Disney to divest or segregate its interests in Fubo and Hulu — was not settled, and Disney's motion to compel arbitration remained pending. DISH Network filed antitrust counterclaims in January 2026 (amended March 2026) challenging carriage tying provisions, an ESPN/Fox One bundle, the creation of Fubo Sports and the Fubo acquisition; on July 14, 2026 the court stayed both sides' claims pending DISH's bankruptcy proceedings. --- ## Subsequent events *From Note 17 to the condensed consolidated financial statements in the 10-Q for the quarter ended June 27, 2026, accession 0001744489-26-000057, with related detail from the earnings release furnished on Form 8-K, accession 0001744489-26-000056.* - **Sale of the A+E stake.** In **July 2026**, Disney entered into an agreement to sell its **50% interest in A+E Global Media** to an affiliate of co-owner **Hearst Corporation** for **approximately $1.2 billion in cash**. Closing was expected by the end of fiscal 2026, subject to customary closing conditions including regulatory approvals and government consents. Ahead of the agreement, Disney recorded an $812 million impairment of its A+E investment in the June quarter ($959 million for the nine months). Management said it intends to use the approximately $1.2 billion of proceeds to repurchase additional Disney shares. Other developments after the June 27, 2026 quarter end, disclosed elsewhere in the same filings: - **New derivative complaint.** On July 24, 2026 William Ballard filed a shareholder derivative complaint in the Delaware Court of Chancery, the tenth such action, on substantially the same allegations as those underlying the securities class action. - **TikTok agreement.** Announced with the third-quarter results on August 5, 2026, an agreement to bring a curated feed of fan-created content featuring Disney characters and stories to Disney+ through the Verts feature, including a creator ambassador program. - **CW Sports on ESPN.** On August 4, 2026 the CW Network joined ESPN's "marketplace of sports," under which more than 800 annual hours of CW Sports stream live on the ESPN app for ESPN Unlimited subscribers — the fourth such relationship after the NFL, MLB and Fox One. - **Segment reporting change.** Beginning in the first quarter of fiscal 2027 Disney intends to move much of the Consumer Products business from Experiences into Entertainment, which will restate the segment picture described above.