The Walt Disney Company
08/05/2026 | Press release | Distributed by Public on 08/05/2026 04:33
Quarterly Report for Quarter Ending June 27, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
ORGANIZATION OF INFORMATION
Management's Discussion and Analysis provides a narrative of the Company's financial performance and condition that should be read in conjunction with the accompanying financial statements. It includes the following sections:
•Consolidated Results
•Current Quarter Results Compared to Prior-Year Quarter
•Current Nine-Month Period Results Compared to Prior-Year Nine-Month Period
•Seasonality
•Business Segment Results
•Corporate and Unallocated Shared Expenses
•Financial Condition
•Market Risk
•Commitments and Contingencies
•Other Matters
•Supplemental Guarantor Financial Information
CONSOLIDATED RESULTS
| Quarter Ended |
% Change Better (Worse) |
Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||||||||||||||||||
| (in millions, except per share data) |
June 27, 2026 |
June 28, 2025 |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Services | $ | 22,675 | $ | 21,214 | 7 % | $ | 68,565 | $ | 64,520 | 6 % | |||||||||||||||||||||||||
| Products | 2,573 | 2,436 | 6 % | 7,832 | 7,441 | 5 % | |||||||||||||||||||||||||||||
| Total revenues | 25,248 | 23,650 | 7 % | 76,397 | 71,961 | 6 % | |||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Cost of services (exclusive of depreciation and amortization) | (13,674) | (13,034) | (5) % | (43,094) | (40,201) | (7) % | |||||||||||||||||||||||||||||
| Cost of products (exclusive of depreciation and amortization) | (1,432) | (1,498) | 4 % | (4,582) | (4,547) | (1) % | |||||||||||||||||||||||||||||
| Selling, general, administrative and other | (3,968) | (4,141) | 4 % | (12,162) | (12,052) | (1) % | |||||||||||||||||||||||||||||
| Depreciation and amortization | (1,414) | (1,332) | (6) % | (4,135) | (3,932) | (5) % | |||||||||||||||||||||||||||||
| Total costs and expenses | (20,488) | (20,005) | (2) % | (63,973) | (60,732) | (5) % | |||||||||||||||||||||||||||||
| Restructuring and impairment charges | (900) | (185) | >(100) % | (1,139) | (437) | >(100) % | |||||||||||||||||||||||||||||
| Interest expense, net | (298) | (324) | 8 % | (813) | (1,037) | 22 % | |||||||||||||||||||||||||||||
| Equity in the income of investees | 83 | 75 | 11 % | 233 | 203 | 15 % | |||||||||||||||||||||||||||||
| Income before income taxes | 3,645 | 3,211 | 14 % | 10,705 | 9,958 | 8 % | |||||||||||||||||||||||||||||
| Income taxes | (801) | 2,732 | nm | (2,912) | 2,030 | nm | |||||||||||||||||||||||||||||
| Net income | 2,844 | 5,943 | (52) % | 7,793 | 11,988 | (35) % | |||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (206) | (681) | 70 % | (506) | (897) | 44 % | |||||||||||||||||||||||||||||
|
Net income attributable to Disney
|
$ | 2,638 | $ | 5,262 | (50) % | $ | 7,287 | $ | 11,091 | (34) % | |||||||||||||||||||||||||
|
Diluted earnings per share attributable to Disney
|
$ | 1.51 | $ | 2.92 | (48) % | $ | 4.12 | $ | 6.12 | (33) % | |||||||||||||||||||||||||
CURRENT QUARTER RESULTS COMPARED TO PRIOR-YEAR QUARTER
Revenues for the quarter increased 7%, or $1.6 billion, to $25.2 billion; net income attributable to Disney decreased to $2.6 billion compared to $5.3 billion in the prior-year quarter; and diluted earnings per share (EPS) attributable to Disney decreased to $1.51 compared to $2.92 in the prior-year quarter. The net income and EPS decreases reflected the comparison to a non-cash tax benefit recognized upon a change in Hulu's U.S. income tax classification in the prior-year quarter and, to a lesser extent, an impairment of our investment in A+E in the current quarter. These decreases were partially offset by higher operating
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
income at Entertainment and Experiences in the current quarter and the comparison to a charge for a payment to acquire Hulu in the prior-year quarter (Hulu Charge).
Revenues
Service revenues for the quarter increased 7%, or $1.5 billion, to $22.7 billion, which included an approximate 2 percentage point favorable impact from the Fubo and NFL Transactions. Aside from this impact, service revenues increased due to growth in resorts and vacations and theme park admissions revenue and higher subscription and affiliate fees.
Product revenues for the quarter increased 6%, or $0.1 billion, to $2.6 billion due to growth in parks & experiences merchandise, food and beverage revenue.
Costs and expenses
Cost of services for the quarter increased 5%, or $0.6 billion, to $13.7 billion, which included an approximate 2 percentage point unfavorable impact from the Fubo Transaction and, to a lesser extent, NFL Transaction. Aside from this impact, cost of services increased due to the impact of new guest offerings, inflation and increased volumes at our parks and experiences businesses.
Selling, general, administrative and other costs decreased 4%, or $0.2 billion, to $4.0 billion due to lower marketing costs.
Depreciation and amortization increased 6%, or $0.1 billion, to $1.4 billion primarily due to higher depreciation at Experiences, partially offset by lower amortization of intangible assets.
Restructuring and impairment charges
Charges in the current quarter were $812 million for an impairment of our investment in A+E and $88 million for severance. Charges in the prior-year quarter were $185 million primarily for an impairment of our investment in Tata Play Limited.
Interest expense, net
Interest expense, net is as follows:
| Quarter Ended | |||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
% Change Better (Worse) |
||||||||||||||
| Interest expense | $ | (463) | $ | (438) | (6) % | ||||||||||||
| Interest income, investment income and other | 165 | 114 | 45 % | ||||||||||||||
| Interest expense, net | $ | (298) | $ | (324) | 8 % | ||||||||||||
The increase in interest expense was driven by higher average debt balances, partially offset by lower effective interest rates.
The increase in interest income, investment income and other was due to a favorable comparison related to pension and postretirement benefit costs, other than service cost.
Income Taxes
| Quarter Ended | |||||||||||
|
June 27, 2026 |
June 28, 2025 |
||||||||||
|
Income before income taxes
|
$ | 3,645 | $ | 3,211 | |||||||
|
Income tax expense (benefit)
|
801 | (2,732) | |||||||||
|
Effective income tax rate
|
22.0 | % | (85.1) | % | |||||||
The effective income tax rate was 22.0% in the current quarter compared to negative 85.1% in the prior-year quarter. The prior-year quarter included a $3.3 billion non-cash tax benefit recognized upon a change in Hulu's U.S. income tax classification.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Noncontrolling Interests
| Quarter Ended | |||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
% Change Better (Worse) |
||||||||||||||
|
Net income attributable to noncontrolling interests
|
$ | (206) | $ | (681) | 70 % | ||||||||||||
The decrease in net income attributable to noncontrolling interests was due to the Hulu Charge in the prior-year quarter.
Net income attributable to noncontrolling interests is determined on income after royalties and management fees, financing costs and income taxes, as applicable.
Certain Items Impacting Results in the Quarter
Results for the quarter ended June 27, 2026 were impacted by the following:
•Restructuring and impairment charges of $900 million
•Acquisition Amortization of $334 million
Results for the quarter ended June 28, 2025 were impacted by the following:
•A $3,277 million non-cash tax benefit recognized upon a change in Hulu's U.S. income tax classification recognized in "Income taxes" and $477 million Hulu Charge recognized in "Net income attributable to noncontrolling interest" (Hulu Transaction Impacts)
•Acquisition Amortization of $395 million
•Restructuring and impairment charges of $185 million
A summary of the impact of these items on EPS is as follows:
| (in millions, except per share data) | Pre-Tax Income (Loss) |
Tax Benefit (Expense)(1)
|
After-Tax Income (Loss) |
EPS Favorable (Adverse)(2)
|
|||||||||||||||||||
| Quarter Ended June 27, 2026: | |||||||||||||||||||||||
| Restructuring and impairment charges | $ | (900) | $ | 175 | $ | (725) | $ | (0.41) | |||||||||||||||
|
Acquisition Amortization
|
(334) | 76 | (258) | (0.13) | |||||||||||||||||||
| Total | $ | (1,234) | $ | 251 | $ | (983) | $ | (0.55) | |||||||||||||||
| Quarter Ended June 28, 2025: | |||||||||||||||||||||||
| Hulu Transaction Impacts | $ | - | $ | 3,277 | $ | 3,277 | $ | 1.56 | |||||||||||||||
|
Acquisition Amortization
|
(395) | 92 | (303) | (0.16) | |||||||||||||||||||
| Restructuring and impairment charges | (185) | 43 | (142) | (0.08) | |||||||||||||||||||
| Total | $ | (580) | $ | 3,412 | $ | 2,832 | $ | 1.31 | |||||||||||||||
(1)Tax benefit (expense) amounts are determined using the tax rate applicable to the individual item.
(2)EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.
CURRENT NINE-MONTH PERIOD RESULTS COMPARED TO PRIOR-YEAR NINE-MONTH PERIOD
Revenues for the current period increased $4.4 billion, to $76.4 billion; net income attributable to Disney decreased $3.8 billion, to $7.3 billion; and EPS decreased to $4.12 from $6.12 in the prior-year period. The net income and EPS decreases were due to the comparison to a tax benefit recognized related to a change in Hulu's U.S. income tax classification, a favorable resolution of a tax matter in the prior-year period, and an impairment of our investment in A+E in the current period. These decreases were partially offset by higher operating income at Experiences in the current period and the comparison to the Hulu Charge in the prior-year period.
Revenues
Service revenues for the current period increased 6%, or $4.0 billion to $68.6 billion, which included an approximate 1 percentage point net favorable impact from the Fubo, NFL and Star India Transactions. Aside from this impact, service revenues increased due to growth in resorts and vacations and theme park admissions revenue, higher subscription and affiliate fees and, to a lesser extent, an increase in content sales.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Product revenues for the current period increased 5%, or $0.4 billion, to $7.8 billion, due to growth in parks & experiences merchandise, food and beverage revenue.
Costs and expenses
Cost of services for the current period increased 7%, or $2.9 billion, to $43.1 billion, which included an approximate 1 percentage point net unfavorable impact from the Fubo, NFL and Star India Transactions. Aside from this impact, cost of services increased due to higher programming and production costs and, to a lesser extent, the impact of new guest offerings, inflation and increased volumes at our parks and experiences businesses.
Selling, general, administrative and other costs increased 1%, or $0.1 billion, to $12.2 billion due to higher marketing costs, partially offset by the comparison to legal settlements in the prior-year period.
Depreciation and amortization increased 5%, or $0.2 billion, to $4.1 billion, driven by higher depreciation at Experiences and Entertainment, partially offset by lower amortization of intangible assets.
Restructuring and impairment charges
Charges in the current period were $959 million for impairments of our investment in A+E and $180 million for severance. Charges in the prior-year period were $185 million primarily for an impairment of our investment in Tata Play Limited, $143 million for impairment of goodwill related to Star India and $109 million for content impairments.
Interest expense, net
Interest expense, net is as follows:
| Nine Months Ended | |||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
% Change Better (Worse) |
||||||||||||||
| Interest expense | $ | (1,379) | $ | (1,396) | 1 % | ||||||||||||
| Interest income, investment income and other | 566 | 359 | 58 % | ||||||||||||||
| Interest expense, net | $ | (813) | $ | (1,037) | 22 % | ||||||||||||
The decrease in interest expense was due to lower average rates, partially offset by higher average debt balances.
The increase in interest income, investment income and other was due to a favorable comparison of pension and postretirement benefit costs, other than service cost, and a net gain on investments in the current period compared to a net loss on investments in the prior-year period.
Equity in the Income of Investees
Income from equity investees increased $30 million, to $233 million from $203 million, driven by a lower loss from the India joint venture, partially offset by a decrease in income from A+E.
Income Taxes
| Nine Months Ended | |||||||||||
|
June 27, 2026 |
June 28, 2025 |
||||||||||
|
Income before income taxes
|
$ | 10,705 | $ | 9,958 | |||||||
| Income tax expense (benefit) | 2,912 | (2,030) | |||||||||
|
Effective income tax rate
|
27.2 | % | (20.4) | % | |||||||
The effective income tax rate was 27.2% in the current period compared to negative 20.4% in the prior-year period. Significant items impacting the effective income tax rate included the following:
•The current period included an unfavorable impact of approximately 4 percentage points from non-cash tax charges in connection with the Fubo and NFL Transactions.
•The prior-year period included a favorable impact of approximately 33 percentage points from a non-cash tax benefit recognized upon a change in Hulu's U.S. income tax classification and a favorable impact of approximately 12 percentage points from adjustments related to prior-year tax matters, partially offset by a non-cash tax charge of approximately 2 percentage points in connection with the Star India Transaction.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Noncontrolling Interests
| Nine Months Ended | |||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
% Change Better (Worse) |
||||||||||||||
|
Net income attributable to noncontrolling interests
|
$ | (506) | $ | (897) | 44 % | ||||||||||||
The decrease in net income attributable to noncontrolling interests was due to the Hulu Charge in the prior-year period, partially offset by the impact of the NFL Transaction in the current period.
Certain Items Impacting Results in the Nine Month Period
Results for the nine months ended June 27, 2026 were impacted by the following:
•Restructuring and impairment charges of $1,139 million
•Acquisition Amortization of $947 million
•Non-cash tax charges resulting from the Fubo Transaction and NFL Transaction of $307 million and $115 million, respectively
Results for the nine months ended June 28, 2025 were impacted by the following:
•Hulu Transaction Impacts of $3,277 million recognized in "Income taxes" and $477 million recognized in "Net income attributable to noncontrolling interests"
•Resolution of a prior-year tax matter of $1,016 million
•Acquisition Amortization of $1,188 million
•Restructuring and impairment charges of $437 million and a non-cash tax charge of $244 million, which was related to the Star India Transaction.
A summary of the impact of these items on EPS is as follows:
| (in millions, except per share data) | Pre-Tax Income (Loss) |
Tax Benefit
(Expense)(1)
|
After-Tax Income (Loss) |
EPS Favorable
(Adverse)(2)
|
|||||||||||||||||||
| Nine Months Ended June 27, 2026: | |||||||||||||||||||||||
| Restructuring and impairment charges | $ | (1,139) | $ | 197 | $ | (942) | $ | (0.53) | |||||||||||||||
|
Acquisition Amortization
|
(947) | 216 | (731) | (0.37) | |||||||||||||||||||
|
Non-cash tax charges resulting from the Fubo and NFL Transactions
|
- | (422) | (422) | (0.22) | |||||||||||||||||||
| Total | $ | (2,086) | $ | (9) | $ | (2,095) | $ | (1.13) | |||||||||||||||
| Nine Months Ended June 28, 2025: | |||||||||||||||||||||||
| Hulu Transaction Impacts | $ | - | $ | 3,277 | $ | 3,277 | $ | 1.55 | |||||||||||||||
| Resolution of a prior-year tax matter | - | 1,016 | 1,016 | 0.56 | |||||||||||||||||||
|
Acquisition Amortization
|
(1,188) | 276 | (912) | (0.49) | |||||||||||||||||||
| Restructuring and impairment charges | (437) | (145) | (582) | (0.32) | |||||||||||||||||||
| Total | $ | (1,625) | $ | 4,424 | $ | 2,799 | $ | 1.30 | |||||||||||||||
(1)Tax benefit (expense) amounts are determined using the tax rate applicable to the individual item.
(2)EPS is net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding.
SEASONALITY
The Company's businesses are subject to the effects of seasonality. Consequently, the operating results for the nine months ended June 27, 2026 for each business segment, and for the Company as a whole, are not necessarily indicative of results to be expected for the full year.
Entertainment revenues are subject to seasonal and other cyclical advertising patterns, changes in viewership and subscriber levels, timing and performance of theatrical releases, and the timing of and demand for film and television programs. In general, domestic advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months and domestic advertising revenue is typically higher during election cycles. Subscription and affiliate fees vary with the subscriber trends of multi-channel video programming distributors (i.e. cable, satellite telecommunications and digital over-the-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
top service providers) and our streaming services. Theatrical release dates are determined by several factors, including competition and the timing of vacation and holiday periods.
Sports revenues are subject to seasonal advertising patterns, changes in viewership and subscriber levels, and the availability of and demand for sports programming. Advertising revenues generated from sports programming and the recognition of sports rights cost amortization are also impacted by the timing of sports seasons and events, which timing may vary throughout the year or may take place periodically (e.g. biannually, quadrennially).
Experiences revenues fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and leisure activities, the opening of new guest offerings and pricing and promotional offers. Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early winter and spring holiday periods. In addition, theme park and resort revenues may be higher during significant celebrations such as theme park or character anniversaries and lower in the periods preceding or following such celebrations. Consumer products revenue fluctuates with consumer purchasing behavior, which generally results in higher revenues during the Company's first and fourth fiscal quarters. In addition, licensing revenues fluctuate with the timing and performance of theatrical and game releases and direct-to-consumer content.
BUSINESS SEGMENT RESULTS
The Company evaluates the performance of its operating businesses based on segment revenue and segment operating income.
The following table presents revenues from our operating segments:
| Quarter Ended |
% Change Better (Worse) |
Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||||||||||||||||||
| Entertainment | $ | 11,345 | $ | 10,704 | 6 % | $ | 34,669 | $ | 32,258 | 7 % | |||||||||||||||||||||||||
| Sports | 4,500 | 4,308 | 4 % | 14,018 | 13,692 | 2 % | |||||||||||||||||||||||||||||
| Experiences | 9,968 | 9,086 | 10 % | 29,461 | 27,390 | 8 % | |||||||||||||||||||||||||||||
|
Eliminations (1)
|
(565) | (448) | (26) % | (1,751) | (1,379) | (27) % | |||||||||||||||||||||||||||||
| Revenues | $ | 25,248 | $ | 23,650 | 7 % | $ | 76,397 | $ | 71,961 | 6 % | |||||||||||||||||||||||||
(1)Reflects fees paid by (a) the entertainment vMVPD services to the sports and entertainment linear networks for the right to air the networks on the Hulu Live TV and Fubo services and (b) the Entertainment segment to the Sports segment to program certain sports content on ABC Network and Disney+. The increase in eliminations for the quarter and nine-month period was due to the Fubo and NFL Transactions.
The following table presents income from our operating segments and other components of income before income taxes:
| Quarter Ended |
% Change Better (Worse) |
Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||||||||||||||||||
| Entertainment operating income | $ | 1,680 | $ | 1,022 | 64 % | $ | 4,116 | $ | 3,983 | 3 % | |||||||||||||||||||||||||
|
Sports operating income
|
858 | 1,037 | (17) % | 1,701 | 1,971 | (14) % | |||||||||||||||||||||||||||||
| Experiences operating income | 3,017 | 2,516 | 20 % | 8,941 | 8,117 | 10 % | |||||||||||||||||||||||||||||
| Corporate and unallocated shared expenses | (334) | (410) | 19 % | (1,018) | (1,265) | 20 % | |||||||||||||||||||||||||||||
|
Equity in the loss of India joint venture
|
(44) | (50) | 12 % | (136) | (186) | 27 % | |||||||||||||||||||||||||||||
| Restructuring and impairment charges | (900) | (185) | >(100) % | (1,139) | (437) | >(100) % | |||||||||||||||||||||||||||||
| Interest expense, net | (298) | (324) | 8 % | (813) | (1,037) | 22 % | |||||||||||||||||||||||||||||
|
Acquisition Amortization
|
(334) | (395) | 15 % | (947) | (1,188) | 20 % | |||||||||||||||||||||||||||||
|
Income before income taxes
|
$ | 3,645 | $ | 3,211 | 14 % | $ | 10,705 | $ | 9,958 | 8 % | |||||||||||||||||||||||||
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Depreciation expense is as follows:
| Quarter Ended |
% Change Better (Worse) |
Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||||||||||||||||||
| Entertainment | $ | 205 | $ | 185 | (11) % | $ | 648 | $ | 540 | (20) % | |||||||||||||||||||||||||
| Sports | 29 | 13 | >(100) % | 81 | 34 | >(100) % | |||||||||||||||||||||||||||||
| Experiences | |||||||||||||||||||||||||||||||||||
| Domestic | 563 | 487 | (16) % | 1,631 | 1,438 | (13) % | |||||||||||||||||||||||||||||
| International | 231 | 197 | (17) % | 656 | 576 | (14) % | |||||||||||||||||||||||||||||
| Total Experiences | 794 | 684 | (16) % | 2,287 | 2,014 | (14) % | |||||||||||||||||||||||||||||
| Corporate | 76 | 84 | 10 % | 244 | 244 | - % | |||||||||||||||||||||||||||||
| Total depreciation expense | $ | 1,104 | $ | 966 | (14) % | $ | 3,260 | $ | 2,832 | (15) % | |||||||||||||||||||||||||
Amortization of intangible assets is as follows:
| Quarter Ended |
% Change Better (Worse) |
Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||||||||||||||||||
| Entertainment | $ | 13 | $ | 13 | - % | $ | 39 | $ | 39 | - % | |||||||||||||||||||||||||
| Experiences | 27 | 27 | - % | 81 | 81 | - % | |||||||||||||||||||||||||||||
|
Acquisition amortization - intangible assets
|
270 | 326 | 17 % | 755 | 980 | 23 % | |||||||||||||||||||||||||||||
| Total amortization of intangible assets | $ | 310 | $ | 366 | 15 % | $ | 875 | $ | 1,100 | 20 % | |||||||||||||||||||||||||
BUSINESS SEGMENT RESULTS - Current Quarter Results Compared to Prior-Year Quarter
Entertainment
Operating results for Entertainment are as follows:
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Revenues | |||||||||||||||||
| Subscription and affiliate fees | $ | 7,545 | $ | 6,765 | 12 % | ||||||||||||
| Advertising | 1,625 | 1,641 | (1) % | ||||||||||||||
| Content sales | 1,596 | 1,698 | (6) % | ||||||||||||||
| Other | 579 | 600 | (4) % | ||||||||||||||
| Total revenues | 11,345 | 10,704 | 6 % | ||||||||||||||
| Operating expenses | (7,238) | (7,098) | (2) % | ||||||||||||||
| Selling, general, administrative and other | (2,301) | (2,488) | 8 % | ||||||||||||||
| Depreciation and amortization | (218) | (198) | (10) % | ||||||||||||||
| Equity in the income of investees | 92 | 102 | (10) % | ||||||||||||||
| Operating Income | $ | 1,680 | $ | 1,022 | 64 % | ||||||||||||
Revenues - Subscription and affiliate fees
Growth in subscription and affiliate fees was due to increases of 4% from the Fubo Transaction, 3% from higher effective rates, 3% from more subscribers and 1% from a favorable foreign exchange impact.
Revenues - Advertising
The decrease in advertising revenue was attributable to a decrease of 4% from lower rates, partially offset by increases of 1% from more impressions and 1% from the Fubo Transaction.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Revenues - Content sales
Lower content sales revenue was due to a decrease of 8% from TV/VOD and home entertainment distribution revenue.
Revenues - Other
The decrease in other revenue was attributable to the impact of our foreign exchange hedging program, partially offset by revenue increases including from higher intersegment allocations of revenues from the Experiences segment reflecting an increase in merchandise licensing royalties.
Operating expenses
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Programming and production costs | $ | (5,819) | $ | (5,772) | (1) % | ||||||||||||
| Other operating expenses | (1,419) | (1,326) | (7) % | ||||||||||||||
| $ | (7,238) | $ | (7,098) | (2) % | |||||||||||||
Programming and production costs reflected increases of 4% from the Fubo Transaction and 2% from our streaming services, which were largely offset by decreases of 3% from lower film cost impairments and 2% from linear networks.
The increase in other operating expenses was attributable to higher technology and distribution costs.
Selling, general, administrative and other
Selling, general, administrative and other costs decreased $187 million, to $2,301 million from $2,488 million, driven by lower marketing costs, partially offset by the Fubo Transaction.
Depreciation and amortization
Depreciation and amortization increased $20 million, to $218 million from $198 million, due to investments in technology.
Equity in the Income of Investees
Income from equity investees decreased $10 million, to $92 million from $102 million, due to lower income from A+E attributable to a decrease in advertising revenue.
Operating Income from Entertainment
Segment operating income increased $658 million, to $1,680 million from $1,022 million, due to an increase in subscription and affiliate fees.
Items Excluded from Segment Operating Income Related to Entertainment
The following table presents supplemental information for items related to the Entertainment segment that are excluded from segment operating income:
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
|
Restructuring and impairment charges(1)
|
$ | (872) | $ | (185) | >(100) % | ||||||||||||
|
Acquisition Amortization(2)
|
(300) | (320) | 6 % | ||||||||||||||
(1)Charges in the current quarter were $812 million for an impairment of our investment in A+E and $60 million for severance. Charges in the prior-year quarter were primarily for an impairment of our investment in Tata Play Limited.
(2)In the current quarter, amortization of intangible assets was $236 million and amortization of step-up on film and television costs was $64 million. In the prior-year quarter, amortization of intangible assets was $251 million and amortization of step-up on film and television costs was $66 million.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Sports
Operating results for Sports are as follows:
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Revenues | |||||||||||||||||
| Subscription and affiliate fees | $ | 3,142 | $ | 2,899 | 8 % | ||||||||||||
| Advertising | 1,204 | 1,148 | 5 % | ||||||||||||||
| Other | 154 | 261 | (41) % | ||||||||||||||
| Total revenues | 4,500 | 4,308 | 4 % | ||||||||||||||
| Operating expenses | (3,304) | (3,008) | (10) % | ||||||||||||||
| Selling, general, administrative and other | (344) | (276) | (25) % | ||||||||||||||
| Depreciation and amortization | (29) | (13) | >(100) % | ||||||||||||||
| Equity in the income of investees | 35 | 26 | 35 % | ||||||||||||||
| Operating Income | $ | 858 | $ | 1,037 | (17) % | ||||||||||||
Revenues - Subscription and affiliate fees
Growth in subscription and affiliate fees reflected increases of 5% from higher effective rates and 4% from the NFL Transaction.
Revenues - Advertising
Advertising revenue growth was due to higher impressions.
Revenues - Other
The decrease in other revenue was primarily due to the comparison to Ultimate Fighting Championship (UFC) pay-per-view revenue in the prior-year quarter. Our UFC rights expired in December 2025.
Operating expenses
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Programming and production costs | $ | (3,050) | $ | (2,762) | (10) % | ||||||||||||
| Other operating expenses | (254) | (246) | (3) % | ||||||||||||||
| $ | (3,304) | $ | (3,008) | (10) % | |||||||||||||
Programming and production costs increased in the current quarter compared to the prior-year quarter primarily due to contractual rate increases, costs for new sports rights and an impact from the timing of rights costs recognition as a result of the NBA contract renewal. These increases were partially offset by the absence of certain rights costs compared to the prior-year quarter, primarily for UFC content. The NBA contract renewal resulted in a shift of costs from the first half of the year to the third quarter.
Selling, general, administrative and other
Selling, general, administrative and other costs increased $68 million, to $344 million from $276 million, primarily due to higher sales and marketing costs.
Depreciation and amortization
Depreciation and amortization increased $16 million, to $29 million from $13 million, due to investments in technology.
Operating Income from Sports
Segment operating income decreased $179 million, to $858 million from $1,037 million, as an increase in subscription and affiliate fees was more than offset by higher programming and production costs.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Items Excluded from Segment Operating Income Related to Sports
The following table presents supplemental information for items related to the Sports segment that are excluded from segment operating income:
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
|
Acquisition Amortization(1)
|
$ | (33) | $ | (74) | 55 % | ||||||||||||
|
Restructuring and impairment charges
|
(10) | - | nm | ||||||||||||||
(1)Represents amortization of intangible assets.
Experiences
Operating results for the Experiences segment are as follows:
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Revenues | |||||||||||||||||
| Theme park admissions | $ | 3,253 | $ | 2,996 | 9 % | ||||||||||||
| Resorts and vacations | 2,766 | 2,373 | 17 % | ||||||||||||||
| Parks & Experiences merchandise, food and beverage | 2,284 | 2,143 | 7 % | ||||||||||||||
| Merchandise licensing and retail | 1,056 | 979 | 8 % | ||||||||||||||
| Parks licensing and other | 609 | 595 | 2 % | ||||||||||||||
| Total revenues | 9,968 | 9,086 | 10 % | ||||||||||||||
| Operating expenses | (5,065) | (4,808) | (5) % | ||||||||||||||
| Selling, general, administrative and other | (1,065) | (1,051) | (1) % | ||||||||||||||
| Depreciation and amortization | (821) | (711) | (15) % | ||||||||||||||
| Operating Income | $ | 3,017 | $ | 2,516 | 20 % | ||||||||||||
Revenues - Theme park admissions
Theme park admissions revenue growth was due to increases of 5% from higher average per capita ticket revenue and 3% from increased attendance.
Revenues - Resorts and vacations
Higher resorts and vacations revenue was attributable to increases of 10% from additional passenger cruise days, 2% from an increase in average daily hotel room rates and 2% from higher occupied hotel room nights. The increase in passenger cruise days reflected the launches of the Disney Destiny in November 2025 and the Disney Adventure in March 2026.
Revenues - Parks & Experiences merchandise, food and beverage
Parks & Experiences merchandise, food and beverage revenue growth was due to increases of 4% from volume growth and 3% from higher average guest spending.
Revenues - Merchandise licensing and retail
Higher merchandise licensing and retail revenue was due to an increase of 10% from merchandise licensing, partially offset by a decrease of 2% from an unfavorable foreign exchange impact.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Key Metrics
In addition to revenue, costs and operating income, management uses the following key metrics to analyze trends and evaluate the overall performance of our Parks & Experiences, and we believe these metrics are useful to investors in analyzing the businesses:
| Quarter Ended | |||||||||||
|
June 27, 2026 |
June 28, 2025 |
||||||||||
|
Global guests(1) increase (decrease)
|
4 % | 1 % | |||||||||
| Domestic |
International(2)
|
||||||||||||||||||||||
| Quarter Ended | Quarter Ended | ||||||||||||||||||||||
|
June 27, 2026 |
June 28, 2025 |
June 27, 2026 |
June 28, 2025 |
||||||||||||||||||||
| Parks | |||||||||||||||||||||||
| Increase (decrease) | |||||||||||||||||||||||
|
Attendance(3)
|
3 % | - % | - % | 1 % | |||||||||||||||||||
|
Per Capita Guest Spending(4)
|
4 % | 8 % | 7 % | 2 % | |||||||||||||||||||
| Hotels | |||||||||||||||||||||||
|
Occupancy(5)
|
91 % | 86 % | 85 % | 87 % | |||||||||||||||||||
|
Available Hotel Room Nights (in thousands)(6)
|
2,565 | 2,566 | 797 | 791 | |||||||||||||||||||
|
Change in Per Room Guest Spending(7)
|
3 % | 2 % | 7 % | (3) % | |||||||||||||||||||
(1)Global guests is used to analyze combined volume trends across our theme parks and cruise businesses and is defined as the sum of theme park attendance and passenger cruise days. Passenger cruise days is the number of passengers on a cruise multiplied by the number of days in the voyage.
(2)Per capita guest spending growth rate and per room guest spending growth rate exclude the impact of changes in foreign exchange rates.
(3)Attendance is used to analyze volume trends at our theme parks and is based on the number of unique daily entries, i.e. a person visiting multiple theme parks in a single day is counted only once. Our attendance count includes complimentary entries but excludes entries by children under the age of three.
(4)Per capita guest spending is used to analyze guest spending trends and is defined as total revenue from ticket sales and sales of food, beverage and merchandise in our theme parks, divided by total theme park attendance.
(5)Occupancy is used to analyze the usage of available capacity at hotels and is defined as the number of room nights occupied by guests as a percentage of available hotel room nights.
(6)Available hotel room nights is defined as the total number of room nights that are available at our hotels and at Disney Vacation Club (DVC) properties located at our theme parks and resorts that are not utilized by DVC members. Available hotel room nights include rooms temporarily taken out of service.
(7)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.
Operating expenses
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Operating labor | $ | (2,356) | $ | (2,284) | (3) % | ||||||||||||
| Infrastructure costs | (953) | (870) | (10) % | ||||||||||||||
| Cost of goods sold and distribution costs | (721) | (779) | 7 % | ||||||||||||||
| Other operating expense | (1,035) | (875) | (18) % | ||||||||||||||
| $ | (5,065) | $ | (4,808) | (5) % | |||||||||||||
Higher operating labor was due to new guest offerings and inflation. The increase in infrastructure costs was attributable to new guest offerings and higher operations support costs. The decrease in cost of goods sold and distribution costs was due to
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
tariff refunds, partially offset by volume growth and inflation. Higher other operating expense was primarily due to new guest offerings, volume growth and inflation. New guest offerings include the fleet expansion at Disney Cruise Line.
Depreciation and amortization
Depreciation and amortization increased $110 million, to $821 million from $711 million, primarily due to higher depreciation at our domestic parks and experiences attributable to an increase at Disney Cruise Line.
Operating Income from Experiences
Segment operating income increased $501 million, to $3,017 million from $2,516 million, due to higher revenues at Parks & Experiences and, to a lesser extent, Consumer Products, partially offset by higher costs.
Supplemental revenue and operating income
The following table presents supplemental revenue and operating income detail for the Experiences segment:
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Supplemental revenue detail | |||||||||||||||||
| Parks & Experiences | |||||||||||||||||
| Domestic | $ | 7,116 | $ | 6,403 | 11 % | ||||||||||||
| International | 1,787 | 1,691 | 6 % | ||||||||||||||
| Total Parks & Experiences | 8,903 | 8,094 | 10 % | ||||||||||||||
| Consumer Products | 1,065 | 992 | 7 % | ||||||||||||||
| $ | 9,968 | $ | 9,086 | 10 % | |||||||||||||
|
Supplemental operating income detail
|
|||||||||||||||||
| Parks & Experiences | |||||||||||||||||
| Domestic | $ | 2,088 | $ | 1,650 | 27 % | ||||||||||||
| International | 369 | 422 | (13) % | ||||||||||||||
| Consumer Products | 560 | 444 | 26 % | ||||||||||||||
| $ | 3,017 | $ | 2,516 | 20 % | |||||||||||||
Total Parks & Experiences revenue increased $809 million, to $8,903 million from $8,094 million due to increases of 6% from higher volumes and 3% from increased guest spending.
Items Excluded from Segment Operating Income Related to Experiences
The following table presents supplemental information for items related to the Experiences segment that are excluded from segment operating income:
| Quarter Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
|
Restructuring and impairment charges
|
$ | (10) | $ | - | nm | ||||||||||||
|
Acquisition Amortization
|
(1) | (1) | - % | ||||||||||||||
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
BUSINESS SEGMENT RESULTS - Current Period Nine-Month Results Compared to the Prior-Year Nine-Month Period
Entertainment
Operating results for Entertainment are as follows:
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Revenues | |||||||||||||||||
| Subscription and affiliate fees | $ | 22,596 | $ | 20,343 | 11 % | ||||||||||||
| Advertising | 5,070 | 5,137 | (1) % | ||||||||||||||
| Content sales | 5,257 | 4,877 | 8 % | ||||||||||||||
| Other | 1,746 | 1,901 | (8) % | ||||||||||||||
| Total revenues | 34,669 | 32,258 | 7 % | ||||||||||||||
| Operating expenses | (22,927) | (20,965) | (9) % | ||||||||||||||
| Selling, general, administrative and other | (7,257) | (7,075) | (3) % | ||||||||||||||
| Depreciation and amortization | (687) | (579) | (19) % | ||||||||||||||
| Equity in the income of investees | 318 | 344 | (8) % | ||||||||||||||
| Operating Income | $ | 4,116 | $ | 3,983 | 3 % | ||||||||||||
Revenues - Subscription and affiliate fees
Growth in subscription and affiliate fees was due to increases of 5% from the Fubo Transaction, 4% from higher effective rates, 2% from more subscribers and 1% from a favorable foreign exchange impact.
Revenues - Advertising
The decline in advertising revenue included a decrease of 5% from lower rates, largely offset by an increase of 4% from higher impressions. Rates included an impact from less political advertising.
Revenues - Content sales
Higher content sales revenue was primarily due to an increase of 11% from theatrical distribution, partially offset by a decrease of 5% from TV/VOD and home entertainment distribution revenue. Higher theatrical distribution revenue was due to the performance of Zootopia 2, Avatar: Fire and Ash, The Devil Wears Prada 2, Toy Story 5, Hoppers and The Mandalorian and Grogu in the current period compared to Moana 2, Lilo & Stitch, Mufasa: The Lion King, Captain America: Brave New World, Thunderbolts* and Snow White in the prior-year period.
Revenues - Other
The decrease in other revenue was attributable to the impact of our foreign exchange hedging program, partially offset by revenue increases including from higher intersegment allocations of revenues from the Experiences segment reflecting an increase in merchandise licensing royalties.
Operating expenses
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Programming and production costs | $ | (18,539) | $ | (16,938) | (9) % | ||||||||||||
| Other operating expenses | (4,388) | (4,027) | (9) % | ||||||||||||||
| $ | (22,927) | $ | (20,965) | (9) % | |||||||||||||
The increase in programming and production costs was due to increases of 5% from theatrical distribution, 4% from the Fubo Transaction and 3% from our streaming services, partially offset by decreases of 1% from lower film cost impairments and 1% from linear networks.
The increase in other operating expenses was due to higher technology and distribution costs.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Selling, general, administrative and other
Selling, general, administrative and other costs increased $182 million, to $7,257 million from $7,075 million, due to higher theatrical marketing costs and the Fubo Transaction.
Depreciation and amortization
Depreciation and amortization increased $108 million, to $687 million from $579 million, due to investments in technology and production facilities and other equipment.
Equity in the Income of Investees
Income from equity investees decreased $26 million, to $318 million from $344 million, due to lower income from A+E attributable to a decrease in advertising revenue.
Operating Income from Entertainment
Segment operating income increased $133 million, to $4,116 million from $3,983 million, due to an increase in subscription and affiliate fees, partially offset by higher operating costs.
Items Excluded from Segment Operating Income Related to Entertainment
The following table presents supplemental information for items related to the Entertainment segment that are excluded from segment operating income:
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
|
Restructuring and impairment charges(1)
|
$ | (1,088) | $ | (294) | >(100) % | ||||||||||||
|
Acquisition Amortization(2)
|
(887) | (961) | 8 % | ||||||||||||||
(1)Charges in the current period were $959 million for an impairment of our investment in A+E and $129 million for severance. Charges in the prior-year period were $185 million primarily for an impairment of our investment in Tata Play Limited and $109 million for content impairments.
(2)In the current period, amortization of intangible assets was $695 million and amortization of step-up on film and television costs was $192 million. In the prior-year period, amortization of intangible assets was $753 million and amortization of step-up on film and television costs was $199 million.
Sports
Operating results for Sports are as follows:
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Revenues | |||||||||||||||||
|
Subscription and affiliate fees
|
$ | 9,376 | $ | 9,036 | 4 % | ||||||||||||
| Advertising | 3,813 | 3,647 | 5 % | ||||||||||||||
| Other | 829 | 1,009 | (18) % | ||||||||||||||
| Total revenues | 14,018 | 13,692 | 2 % | ||||||||||||||
| Operating expenses | (11,298) | (10,808) | (5) % | ||||||||||||||
| Selling, general, administrative and other | (989) | (933) | (6) % | ||||||||||||||
| Depreciation and amortization | (81) | (34) | >(100) % | ||||||||||||||
| Equity in the income of investees | 51 | 54 | (6) % | ||||||||||||||
| Operating Income | $ | 1,701 | $ | 1,971 | (14) % | ||||||||||||
Revenues - Subscription and affiliate fees
Growth in subscription and affiliate fees reflected increases of 6% from higher effective rates and 2% from the NFL Transaction, partially offset by decreases of 3% from fewer subscribers and 1% from the temporary suspension of carriage with an affiliate in the current period.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Revenues - Advertising
Advertising revenue growth was due to higher rates.
Revenues - Other
The decrease in other revenue was due to a decrease in UFC pay-per-view revenue.
Operating expenses
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Programming and production costs | $ | (10,539) | $ | (10,072) | (5) % | ||||||||||||
| Other operating expenses | (759) | (736) | (3) % | ||||||||||||||
| $ | (11,298) | $ | (10,808) | (5) % | |||||||||||||
Programming and production costs increased in the current period compared to the prior-year period primarily due to contractual rate increases and costs for new sports rights, partially offset by the absence of certain rights costs, primarily for UFC content.
Selling, general, administrative and other
Selling, general, administrative and other costs increased $56 million, to $989 million from $933 million, due to higher sales and marketing costs, partially offset by the benefit from a comparison to the write-off of an investment in the prior-year period.
Depreciation and amortization
Depreciation and amortization increased $47 million, to $81 million from $34 million, due to investments in technology.
Operating Income from Sports
Segment operating income decreased $270 million, to $1,701 million from $1,971 million, as an increase in revenues was more than offset by higher programming and production costs and, to a lesser extent, an increase in sales and marketing costs.
Items Excluded from Segment Operating Income Related to Sports
The following table presents supplemental information for items related to the Sports segment that are excluded from segment operating income:
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
|
Acquisition Amortization(1)
|
$ | (55) | $ | (222) | 75 % | ||||||||||||
|
Restructuring and impairment charges
|
(15) | - | nm | ||||||||||||||
(1)Represents amortization of intangible assets.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Experiences
Operating results for the Experiences segment are as follows:
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Revenues | |||||||||||||||||
| Theme park admissions | $ | 9,646 | $ | 9,002 | 7 % | ||||||||||||
| Resorts and vacations | 7,740 | 6,953 | 11 % | ||||||||||||||
| Parks & Experiences merchandise, food and beverage | 6,831 | 6,425 | 6 % | ||||||||||||||
| Merchandise licensing and retail | 3,355 | 3,234 | 4 % | ||||||||||||||
| Parks licensing and other | 1,889 | 1,776 | 6 % | ||||||||||||||
| Total revenues | 29,461 | 27,390 | 8 % | ||||||||||||||
| Operating expenses | (15,010) | (14,155) | (6) % | ||||||||||||||
| Selling, general, administrative and other | (3,142) | (3,023) | (4) % | ||||||||||||||
| Depreciation and amortization | (2,368) | (2,095) | (13) % | ||||||||||||||
| Operating Income | $ | 8,941 | $ | 8,117 | 10 % | ||||||||||||
Revenues - Theme park admissions
Theme park admissions revenue growth was due to increases of 5% from higher average per capita ticket revenue, 2% from increased attendance at our domestic and international parks and 1% from a favorable foreign exchange impact. Attendance growth at our domestic parks benefited from the comparison to the adverse impact of Hurricane Milton in the prior-year period.
Revenues - Resorts and vacations
Higher resorts and vacations revenue was due to increases of 8% from additional passenger cruise days and 2% from an increase in average daily hotel room rates. The increase in passenger cruise days reflected the launches of the Disney Treasure in December 2024, the Disney Destiny in November 2025 and the Disney Adventure in March 2026.
Revenues - Parks & Experiences merchandise, food and beverage
Parks & Experiences merchandise, food and beverage revenue growth was attributable to increases of 3% from higher average guest spending, 2% from volume growth and 1% from a favorable foreign exchange impact.
Revenues - Merchandise licensing and retail
Higher merchandise licensing and retail revenue was due to an increase of 4% 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 primarily due to higher co-branding and sponsorship revenue, partially offset by an unfavorable foreign exchange impact.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Key metrics
| Nine Months Ended | ||||||||||||||
|
June 27, 2026 |
June 28, 2025 |
|||||||||||||
|
Global guests increase (decrease)
|
4 % | 1 % | ||||||||||||
| Domestic | International | ||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||
|
June 27, 2026 |
June 28, 2025 |
June 27, 2026 |
June 28, 2025 |
||||||||||||||||||||
| Parks | |||||||||||||||||||||||
| Increase (decrease) | |||||||||||||||||||||||
| Attendance | 1 % | - % | 3 % | - % | |||||||||||||||||||
| Per Capita Guest Spending | 4 % | 5 % | 4 % | - % | |||||||||||||||||||
| Hotels | |||||||||||||||||||||||
| Occupancy | 89 % | 88 % | 86 % | 87 % | |||||||||||||||||||
| Available Hotel Room Nights (in thousands) | 7,667 | 7,653 | 2,380 | 2,376 | |||||||||||||||||||
| Change in Per Room Guest Spending | 4 % | 4 % | 3 % | 5 % | |||||||||||||||||||
Operating expenses
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Operating labor | $ | (6,996) | $ | (6,661) | (5) % | ||||||||||||
| Infrastructure costs | (2,655) | (2,527) | (5) % | ||||||||||||||
| Cost of goods sold and distribution costs | (2,437) | (2,431) | - % | ||||||||||||||
| Other operating expense | (2,922) | (2,536) | (15) % | ||||||||||||||
| $ | (15,010) | $ | (14,155) | (6) % | |||||||||||||
The increase in operating labor was due to inflation, new guest offerings and an unfavorable foreign exchange impact. Higher infrastructure costs were primarily attributable to new guest offerings. Other operating expense increased due to new guest offerings, higher volumes, inflation and an unfavorable foreign exchange impact. New guest offerings include the fleet expansion at Disney Cruise Line.
Selling, general, administrative and other
Selling, general, administrative and other costs increased $119 million, to $3,142 million from $3,023 million, primarily due to new guest offerings and inflation.
Depreciation and amortization
Depreciation and amortization increased $273 million, to $2,368 million from $2,095 million, primarily due to higher depreciation at our domestic parks and experiences primarily attributable to an increase at Disney Cruise Line.
Operating Income from Experiences
Segment operating income increased $824 million, to $8,941 million from $8,117 million, due to higher revenues at Parks & Experiences and, to a lesser extent, Consumer Products, partially offset by higher costs.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Supplemental revenue and operating income
The following table presents supplemental revenue and operating income detail for the Experiences segment:
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Supplemental revenue detail | |||||||||||||||||
| Parks & Experiences | |||||||||||||||||
| Domestic | $ | 20,943 | $ | 19,334 | 8 % | ||||||||||||
| International | 5,136 | 4,778 | 7 % | ||||||||||||||
| Total Parks & Experiences | 26,079 | 24,112 | 8 % | ||||||||||||||
| Consumer Products | 3,382 | 3,278 | 3 % | ||||||||||||||
| $ | 29,461 | $ | 27,390 | 8 % | |||||||||||||
| Supplemental operating income detail | |||||||||||||||||
| Parks & Experiences | |||||||||||||||||
| Domestic | $ | 6,146 | $ | 5,455 | 13 % | ||||||||||||
| International | 1,024 | 1,067 | (4) % | ||||||||||||||
| Consumer Products | 1,771 | 1,595 | 11 % | ||||||||||||||
| $ | 8,941 | $ | 8,117 | 10 % | |||||||||||||
Total Parks & Experiences revenue increased $1,967 million, to $26,079 million from $24,112 million primarily due to increases of 4% from higher volumes and 3% from increased guest spending.
Items Excluded from Segment Operating Income Related to Experiences
The following table presents supplemental information for items related to the Experiences segment that are excluded from segment operating income:
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Restructuring and impairment charges | $ | (23) | $ | - | nm | ||||||||||||
|
Acquisition Amortization
|
(5) | (5) | - % | ||||||||||||||
CORPORATE AND UNALLOCATED SHARED EXPENSES
| Quarter Ended |
% Change Better (Worse) |
Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||||||||||||||||||
| Corporate and unallocated shared expenses | $ | (334) | $ | (410) | 19 % | $ | (1,018) | $ | (1,265) | 20 % | |||||||||||||||||||||||||
Corporate and unallocated expenses decreased $76 million for the quarter, from $410 million to $334 million, primarily due to a favorable resolution of a legal matter in the current quarter compared to a legal settlement in the prior-year quarter and timing of allocations to the segments, partially offset by a gain on a land sale in the prior-year quarter.
Corporate and unallocated shared expenses for the nine-month period decreased $247 million, from $1,265 million to $1,018 million, attributable to a favorable resolution of a legal matter in the current period compared to legal settlements in the prior-year period.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
FINANCIAL CONDITION
The change in cash and cash equivalents is as follows:
| Nine Months Ended |
% Change Better (Worse) |
||||||||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||||||||
| Cash provided by operations | $ | 12,515 | $ | 13,627 | (8) % | ||||||||||||
| Cash used in investing activities | (7,256) | (6,193) | (17) % | ||||||||||||||
| Cash used in financing activities | (5,740) | (8,090) | 29 % | ||||||||||||||
| Impact of exchange rates on cash, cash equivalents and restricted cash | (19) | 31 | nm | ||||||||||||||
| Change in cash, cash equivalents and restricted cash | $ | (500) | $ | (625) | 20 % | ||||||||||||
Operating Activities
Cash provided by operations decreased from $13.6 billion in the prior-year period to $12.5 billion for the current period due to higher income tax payments and, to a lesser extent, lower operating cash flows at Sports driven by higher spending on sports content. These decreases were partially offset by higher operating cash flows at Experiences and Entertainment. The current period included payment of U.S. federal and California state income tax liabilities for fiscal 2025 and a portion of fiscal 2024, which were deferred pursuant to relief related to the 2025 wildfires in California. The increase in operating cash flow at both Experiences and Entertainment was due to higher operating cash receipts attributable to higher revenue, partially offset by higher operating cash disbursements attributable to higher operating expenses.
Produced and licensed programming costs
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 and episodic series. Production costs also include original content commissioned from third-party studios. Programming costs include content rights licensed from third parties for use on the Company's sports and general entertainment networks and streaming services. Programming assets are generally recorded when the programming becomes available to us with a corresponding increase in programming liabilities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
The Company's film and television production and programming activity for the nine months ended June 27, 2026 and June 28, 2025 are as follows:
| Nine Months Ended | |||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||
| Beginning balances: | |||||||||||
| Produced and licensed programming assets | $ | 33,390 | $ | 34,409 | |||||||
| Programming liabilities | (3,353) | (3,692) | |||||||||
| 30,037 | 30,717 | ||||||||||
| Spending: | |||||||||||
| Programming licenses and rights | 11,101 | 10,492 | |||||||||
| Produced film and television content | 7,051 | 7,116 | |||||||||
| 18,152 | 17,608 | ||||||||||
| Amortization: | |||||||||||
| Programming licenses and rights | (10,986) | (10,431) | |||||||||
| Produced film and television content | (8,272) | (7,996) | |||||||||
| (19,258) | (18,427) | ||||||||||
| Change in produced and licensed content costs | (1,106) | (819) | |||||||||
|
Content Impairment (see Note 15 to the Condensed Consolidated Financial Statements)
|
- | (109) | |||||||||
| Other non-cash activity | 96 | 92 | |||||||||
| Ending balances: | |||||||||||
| Produced and licensed programming assets | 32,127 | 33,034 | |||||||||
| Programming liabilities | (3,100) | (3,153) | |||||||||
| $ | 29,027 | $ | 29,881 | ||||||||
The Company currently expects its fiscal 2026 spend on produced and licensed content, including sports rights, to be approximately $24 billion compared to fiscal 2025 spend on produced and licensed content, including sports rights, of $23 billion.
Investing Activities
Investing activities consist principally of investments in parks, resorts and other property and acquisition and divestiture activity. The Company's investing activities for the nine months ended June 27, 2026 and June 28, 2025 are as follows:
| Nine Months Ended | |||||||||||
|
(in millions)
|
June 27, 2026 |
June 28, 2025 |
|||||||||
| Investments in parks, resorts and other property: | |||||||||||
|
Entertainment
|
$ | (968) | $ | (835) | |||||||
|
Sports
|
(1) | - | |||||||||
|
Experiences
|
|||||||||||
| Domestic | (4,527) | (4,068) | |||||||||
| International | (1,069) | (865) | |||||||||
|
Total Experiences
|
(5,596) | (4,933) | |||||||||
| Corporate | (215) | (340) | |||||||||
|
Total investments in parks, resorts and other property
|
(6,780) | (6,108) | |||||||||
|
Other investing activities, net
|
(476) | (85) | |||||||||
| Cash used in investing activities | $ | (7,256) | $ | (6,193) | |||||||
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Capital expenditures at the Entertainment segment primarily reflect investments in technology and in facilities and equipment for expanding and upgrading broadcast centers, production facilities and television station facilities. The increase in the current period compared to the prior-year period was due to higher spend on technology assets.
Capital expenditures at the Experiences segment are principally for theme park and resort expansion, new attractions, cruise ships, capital improvements and technology. The increase in the current period compared to the prior-year period was due to higher spend on new theme park attractions.
Capital expenditures at Corporate primarily reflect investments in corporate facilities, technology and equipment. The decrease in the current period compared to the prior-year period was due to lower spend on facilities.
The Company currently expects its fiscal 2026 capital expenditures to be approximately $9 billion compared to fiscal 2025 capital expenditures of $8 billion. The projected increase in capital expenditures is 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.
The increase in cash used in other investing activities is primarily due to the acquisition of equity interests in different investments, partially offset by cash assumed as part of the acquisition of Fubo.
Financing Activities
Financing activities for the nine months ended June 27, 2026 and June 28, 2025 are as follows:
| Nine Months Ended | |||||||||||
| (in millions) |
June 27, 2026 |
June 28, 2025 |
|||||||||
|
Change in borrowings
|
$ | 3,689 | $ | (3,410) | |||||||
|
Dividends
|
(1,337) | (905) | |||||||||
|
Repurchases of common stock
|
(7,245) | (2,496) | |||||||||
|
Acquisition of redeemable noncontrolling interest
|
- | (439) | |||||||||
|
Other financing activities, net(1)
|
(847) | (840) | |||||||||
|
Cash used in financing activities
|
$ | (5,740) | $ | (8,090) | |||||||
(1)Primarily consists of dividends to noncontrolling interest holders and equity award activity.
See Note 5 to the Condensed Consolidated Financial Statements for a summary of the Company's borrowing activities during the nine months ended June 27, 2026 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 10 to the Condensed Consolidated Financial Statements for a summary of dividends and share repurchases. The Company is targeting at least $9 billion in share repurchases in fiscal 2026.
The Company's operating cash flow and access to the capital markets can be impacted by factors outside of its control. We believe that the Company's financial condition is strong and that its cash balances, other liquid assets, operating cash flows, access to debt and equity capital markets and borrowing capacity under current bank facilities, taken together, provide adequate resources to fund ongoing operating requirements, contractual obligations, upcoming debt maturities, as well as future capital expenditures related to the expansion of existing businesses and development of new projects. In addition, the Company could undertake other measures to ensure sufficient liquidity, such as raising additional financing, reducing or not declaring future dividends; reducing or stopping share repurchases; reducing capital spending; reducing film and episodic content investments; or implementing further cost-saving initiatives.
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 June 27, 2026, 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), respectively. 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. On June 27, 2026, the Company met this covenant by a significant margin. The Company's bank facilities also specifically exclude certain entities, including the Asia Theme Parks and Fubo, from any representations, covenants or events of default.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
MARKET RISK
The Company is exposed to the impact of interest rate changes, foreign currency fluctuations, commodity fluctuations and changes in the market values of its investments.
Policies and Procedures
In the normal course of business, we employ established policies and procedures to manage the Company's exposure to changes in interest rates, foreign currencies and commodities using a variety of financial instruments.
Our objectives in managing exposure to interest rate changes are to limit the impact of interest rate volatility on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we primarily use interest rate swaps to manage net exposure to interest rate changes related to the Company's portfolio of borrowings. By policy, the Company targets fixed-rate debt as a percentage of its net debt between minimum and maximum percentages.
Our objective in managing exposure to foreign currency fluctuations is to reduce volatility of earnings and cash flows in order to allow management to focus on core business issues and challenges. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the U.S. dollar equivalent value of its existing foreign currency assets, liabilities, commitments and forecasted foreign currency revenues and expenses. The Company utilizes option strategies and forward contracts that provide for the purchase or sale of foreign currencies to hedge probable, but not firmly committed, transactions. The Company also uses forward and option contracts to hedge foreign currency assets and liabilities. The principal foreign currencies hedged are the euro, British pound, Japanese yen, Chinese yuan and Canadian dollar. Cross-currency swaps are used to effectively convert foreign currency denominated borrowings to U.S. dollar denominated borrowings. By policy, the Company maintains hedge coverage between minimum and maximum percentages of its forecasted foreign exchange exposures generally for periods not to exceed four years. The gains and losses on these contracts are intended to offset changes in the U.S. dollar equivalent value of the related exposures. The economic or political conditions in a country have reduced and in the future could reduce our ability to hedge exposure to currency fluctuations in the country or our ability to repatriate revenue from the country.
Our objectives in managing exposure to commodity fluctuations are to use commodity derivatives to reduce volatility of earnings and cash flows arising from commodity price changes. The amounts hedged using commodity swap contracts are based on forecasted levels of consumption of certain commodities, such as fuel, oil and gasoline.
Our objectives in managing exposures to market-based fluctuations in certain retirement liabilities are to use total return swap contracts to reduce the volatility of earnings arising from changes in these retirement liabilities. The amounts hedged using total return swap contracts are based on estimated liability balances.
It is the Company's policy to enter into foreign currency and interest rate derivative transactions and other financial instruments only to the extent considered necessary to meet its objectives as stated above. The Company does not enter into these transactions or any other hedging transactions for speculative purposes.
COMMITMENTS AND CONTINGENCIES
Legal Matters
As disclosed in Note 12 to the Condensed Consolidated Financial Statements, the Company has exposure for certain legal matters.
Tax Matters
As disclosed in Note 9 to the Consolidated Financial Statements in the 2025 Annual Report on Form 10-K, the Company has exposure for certain tax matters.
Contractual Commitments
See Note 14 to the Consolidated Financial Statements in the 2025 Annual Report on Form 10-K and Note 12 to the Condensed Consolidated Financial Statements.
OTHER MATTERS
Accounting Policies and Estimates
For a discussion of each of our critical accounting estimates, including information and analysis of estimates and assumptions involved in their application, see "Critical Accounting Policies and Estimates" included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report on Form 10-K.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
New Accounting Pronouncements
See Note 16 to the Condensed Consolidated Financial Statements for information regarding new accounting pronouncements.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
On March 20, 2019 as part of the acquisition of TFCF, The Walt Disney Company ("TWDC") became the ultimate parent of TWDC Enterprises 18 Corp. (formerly known as The Walt Disney Company) ("Legacy Disney"). Legacy Disney and TWDC are collectively referred to as "Obligor Group", and individually, as a "Guarantor". 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. 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).
Other subsidiaries of the Company do not guarantee the registered debt securities of either TWDC or Legacy Disney (such subsidiaries are referred to as the "non-Guarantors"). The par value and carrying value of total outstanding and guaranteed registered debt securities of the Obligor Group at June 27, 2026 was as follows:
| TWDC | Legacy Disney | ||||||||||||||||||||||
| (in millions) | Par Value | Carrying Value | Par Value | Carrying Value | |||||||||||||||||||
| Registered debt with unconditional guarantee | $ | 32,049 | $ | 32,772 | $ | 5,450 | $ | 5,418 | |||||||||||||||
The guarantees by TWDC and Legacy Disney are full and unconditional and cover all payment obligations arising under the guaranteed registered debt securities. The guarantees may be released and discharged upon (i) as a general matter, the indebtedness for borrowed money of the consolidated subsidiaries of TWDC in aggregate constituting no more than 10% of all consolidated indebtedness for borrowed money of TWDC and its subsidiaries (subject to certain exclusions), (ii) upon the sale, transfer or disposition of all or substantially all of the equity interests or all or substantially all, or substantially as an entirety, the assets of Legacy Disney to a third party, and (iii) other customary events constituting a discharge of a guarantor's obligations. In addition, in the case of Legacy Disney's guarantee of registered debt securities issued by TWDC, Legacy Disney may be released and discharged from its guarantee at any time Legacy Disney is not a borrower, issuer or guarantor under certain material bank facilities or any debt securities.
Operations are conducted almost entirely through the Company's subsidiaries. Accordingly, the Obligor Group's cash flow and ability to service its debt, including the public debt, are dependent upon the earnings of the Company's subsidiaries and the distribution of those earnings to the Obligor Group, whether by dividends, loans or otherwise. Holders of the guaranteed registered debt securities have a direct claim only against the Obligor Group.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Set forth below is summarized financial information for the Obligor Group on a combined basis after elimination of (i) intercompany transactions and balances between TWDC and Legacy Disney and (ii) equity in the earnings from and investments in any subsidiary that is a non-Guarantor. This summarized financial information has been prepared and presented pursuant to the Securities and Exchange Commission Regulation S-X Rule 13-01, "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities" and is not intended to present the financial position or results of operations of the Obligor Group in accordance with GAAP.
| Results of operations (in millions) | Nine Months Ended June 27, 2026 | ||||
| Revenues | $ | - | |||
| Costs and expenses | - | ||||
| Net income (loss) | (1,919) | ||||
| Net income (loss) attributable to TWDC shareholders | (1,919) | ||||
| Balance Sheet (in millions) |
June 27, 2026 |
September 27, 2025 |
|||||||||
| Current assets | $ | 1,658 | $ | 2,295 | |||||||
| Noncurrent assets | 3,686 | 3,613 | |||||||||
| Current liabilities | 11,274 | 9,592 | |||||||||
| Noncurrent liabilities (excluding intercompany to non-Guarantors) | 37,504 | 36,314 | |||||||||
| Intercompany payables to non-Guarantors | 174,026 | 167,091 | |||||||||
The Walt Disney Company published this content on August 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 05, 2026 at 10:38 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]