Walt Disney Q1 2025 Earnings Report

SkyWater Technology EPS Results

• Actual EPS: $1.76
• Consensus EPS: $1.44
• Beat/Miss: Beat by +$0.32
• One Year Ago EPS: N/A

SkyWater Technology Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $24.55 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

SkyWater Technology Announcement Details

• Quarter: Q1 2025
• Date: 2/5/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, February 5, 2025
• Conference Call Time: 8:30AM ET

SkyWater Technology (NASDAQ:SKYT), together with its subsidiaries, operates as a pure-play technology foundry that engages in the provision of semiconductor development, manufacturing, and packaging services in the United States. The company offers engineering and process development support services to co-create technologies with customers; and semiconductor manufacturing services for various silicon-based analog and mixed-signal, micro-electromechanical systems, and rad-hard integrated circuits. It serves customers operating in the computation, aerospace and defense, automotive, bio-health, consumer, and industrial sectors. The company was incorporated in 2016 and is headquartered in Bloomington, Minnesota.

Walt Disney Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good day, and welcome to The Walt Disney Company First Quarter twenty twenty five Financial Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Carlos Gomez, Executive Vice President, Treasurer and Head of Investor Relations.

[Operator]

Please go ahead, sir.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Good morning. It's my pleasure to welcome everyone to The Walt Disney Company's first quarter twenty twenty five earnings call. Our press release, Form 10 Q and management's posted prepared remarks were issued earlier this morning and are available on our website at www.disney.com/investors. Today's call is being webcast and a replay and transcript will be made available on our website after the call. Before we begin, please take note of our cautionary statement regarding forward looking statements on our Investor Relations website.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Certain statements on this call, including those regarding our expectations, beliefs, plans, financial estimates and prospects, trends, outlook and guidance and other statements that are not historical may be forward looking statements under the securities laws. We make these statements on the basis of our assumptions regarding the future at the time we make them and do not undertake any obligation to provide updates. Forward looking statements are subject to risks and uncertainties. Actual results may differ materially from the results expressed or implied in light of a variety of factors. These factors include, among others, economic or industry conditions, competition, execution risks, the market for advertising, our future financial performance and legal and regulatory developments.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Refer to our IR website, the press release issued today and the risks and uncertainties described in our Form 10 K, Form 10 Q and other filings with the SEC for more information about key risk factors. A reconciliation of certain non GAAP measures referred to on this call to most comparable GAAP measures can be found on our IR website. Joining me this morning are Bob Iger, Disney's Chief Executive Officer and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. Following introductory remarks from Bob, we will be happy to take your questions. So with that, I will now turn the call over to Bob.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

Good morning. Before we turn to our results this quarter, I want to take a moment to express our continued sympathies to all those affected by the devastating wildfires across Southern California, including our own employees, creative partners and so many others that we know and love. Our company's roots run deep in Los Angeles, and we feel a strong sense of obligation to support the community that has helped make this company what it is today. I'm proud of the many ways our employees have stepped up to assist their neighbors in need, and Disney remains committed to helping with recovery efforts while our community rebuilds from this tragedy. Moving on to the quarter, our results in Q1 demonstrate our creative and financial strength, and they reflect the success of our strategic initiatives that we set in motion over the past two years.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

Clearly, one of the great highlights of the quarter was the performance of our film studios. We had the top three movies of 2024 at the global box office, and I want to thank and congratulate our creative teams on such an incredible year. Looking at the rest of the calendar year, we have a lot more to come with an exciting slate of theatrical releases tied to some of our most popular IP. On top of our studio's outstanding performance, we saw growth in streaming profitability, historic ratings at ESPN and the strong and enduring appeal of Disney's experiences business. Overall, we're very encouraged by our results this quarter and we'll be happy to take your questions.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thank you, Bob.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, Bob. As we transition to Q and A, we ask that you please try to limit yourself to one question in order to help us get to as many analysts as possible today. And with that operator, we are ready to take the first question.

[Operator]

Thank you, sir. Our first question today comes from Ben Swinburne with Morgan Stanley. Please go ahead.

[Benjamin Swinburne, Managing Director at Morgan Stanley]

Thanks. Good morning. You guys have a lot going on in terms of platform enhancements this year at Disney plus I'm wondering as Adam builds out his team, you work on password sharing, bundling ESPN in. What do you think will be the most impactful to driving that business? And what's realistic for investors to sort of in terms of timeline to expect kind of tangible results playing out in what we see in your reported numbers?

[Benjamin Swinburne, Managing Director at Morgan Stanley]

And then I thought I would at least ask you if you could comment on the outlook for experiences in parks, in particular around the opening of Epic. There's probably no other question I get more than your ability to deliver on your guidance on the domestic parks front for the year. So any update there would be greatly appreciated. Thank you so much.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

Thanks for your question, Ben. Regarding the timing of the different technological advances that Adam and his team are working on, they're actually starting to roll out already and will continue to throughout the next twelve months, but we're not going to obviously stop at the end of the year. I wouldn't really call out any one of them in terms of one of them having a greater impact than the others because it's a collection of them. You mentioned paid sharing, that's certainly one. Using technology more and more for personalization and essentially upping our game from an algorithm perspective, getting less out of our control or curation and more basically into the business of serving the consumer, what the consumer wants.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

We've got some work to do internationally, particularly on the ad tier. Ad tech is also something that we're working on, a variety of different AI initiatives going on. And these were also developing flagship. I'd say that of all of them, one of the things that we are very, very mindful of is that home screen or front screen or the first experience that consumers have has to be more dynamic. Ours was elegant looking, but fairly static in nature.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

The more dynamic it is, the more people are drawn into it, the more people use it and the more people don't basically close the app out and go elsewhere. That's a big deal, but a lot going on. We're still building his team out. And I'd say that by the end of the year, there'll be significant progress made, but we've already had made some progress. We've made some progress already.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

Yes, Ben. And I'll handle the experiences question. Obviously no change to the guide that we had previously provided. We had said experiences would be up six to eight on the year. The strong Q1 increases our level of confidence in the guide for sure.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

It's obviously quite early, but we certainly feel good about the fact that we were able to power through with stronger performance than our expectations were for Q1. In terms of the balance of the year, recall, the easier comps for the experiences business occur in the back half of the year, particularly in Q4. In addition to that, we obviously have lots going on in terms of our ships coming or our ship coming on as of this quarter, which will support the results from Q2 going forward. And in addition to that, we as we built our plans, we did anticipate some small impact. I think we have it effectively hedged in the guides that we've given to you.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

So overall level of confidence in the experiences guide is high.

[Benjamin Swinburne, Managing Director at Morgan Stanley]

Thank you.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, Ben. Operator, next question please.

[Operator]

Yes, sir. Our next question today comes from Robert Fishman with MoffettNathanson. Please go ahead.

[Robert Fishman, Senior Research Analyst at Moffettnathanson LLC]

Thank you. Bob, now that DIRECTV and Comcast have launched their skinnier bundles and Blue Live Fubo planning their own, do you expect these skinnier bundles at current pricing to change the trajectory of cord cutting? And if not, what else on the pricing or product side do you plan with Fubo that you couldn't accomplish with just Hulu Live? And then if I could just take a step back, after the Fubo deal and shutting down venue, can you discuss Disney's overall sports or broader streaming strategy with the potential for consumer confusion from all the different options, including the upcoming ESPN flagship launch? Thank you.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

The

[Robert Iger, Chief Executive Officer at Walt Disney Company]

goal all along, Robert, as it relates to ESPN is to make ESPN as accessible as possible and in as many ways as possible to the consumer. Some will want to consume it just through an app. Some will want to consume it as part of a call the more traditional expanded basic bundle. Some will migrate into in the direction of skinnier bundles or sports bundles only. I can't predict whether the emergence of these skinnier bundles is going to have a material impact on cord cutting or not, except to say that we plan to take advantage of the emergence of these bundles because it is a great way to distribute ESPN.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

And look, what essentially happened is after the decision was made and we started to implement the launch of Venu, the emergence of these skinnier bundles surfaced and Venue basically looked redundant to us. And so this was a great opportunity for us to make ESPN available to multiple skinny bundles and then to actually merge the Hulu Live and the Fubo essentially channel business as one, because frankly, while we like being in that business, it wasn't a core business to Hulu. This gives us the ability to actually enhance the Hulu Live experience because the combination the combined entity, when it's approved, will spend more time, put more resources into the user interface and essentially making the former Hulu Live experience better for consumers. In terms of our sports strategy, I've touched on some of it and that is make ESPN available. However, the consumer wants it wherever the consumer wants it, some will want to consume it as part of a linear channel.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

But we're obviously leaning into the development of what is now called Flagship, which is essentially ESPN with multiple, multiple elements to it or multiple essentially enhancements. And of course the inclusion ultimately of some form of bedding and fantasy and a high degree of customization and personalization and essentially a much bigger offering in terms of product programming than the linear channels currently offer. The plan will be to launch it sometime toward the in the fall of this year. And we're actually quite excited about it because first of all, it gives us an opportunity to bundle it with Disney plus and Hulu. And then we will get really smart and strategic about pricing there.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

But it gives consumers the option of basically just staying in a sports only experience or combining it with their other services. And if they happen to subscribe to Disney plus and Hulu, then they can experience ESPN flagship in a one app experience, which it will be both convenient from a subscription perspective and also convenient from a user perspective. So we're bullish. The other thing I want to mention about ESPN, because I know that others have gotten other streamers are getting into the sports game is we have the advantage of not only a menu of sports and sports programming that no one else has, but we're on three sixty five days a year, twenty four hours a day. So if you're a sports fan, it's not about one day of one boxing event or one day of football, it's about sports every single day of the year and every hour of the day.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

And that's a pretty compelling consumer proposition.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, Robert. Operator, next question please.

[Operator]

Absolutely. And our next question today comes from John Hodulik with UBS. Please go ahead.

[John Hodulik, Telecom and Cable Analyst at UBS Group]

Great. Thank you. And maybe some questions for Hugh. Hugh, can you update us on the cost cutting initiatives and how far along you are? And along with that, it looks like from the Q that you guys trimmed the content budget to $23,000,000,000 from $24,000,000,000 just what's behind that?

[John Hodulik, Telecom and Cable Analyst at UBS Group]

And was that related to the fires in LA or just some changes to the overall budget? And then lastly, I have to ask your guidance for high single digit earnings growth for the year. It started out with earnings growth of over 40% in the first quarter here. Can you just talk a little bit about sort of the cadence of the earnings growth as we look out through the rest of the year? Thanks.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

Sure, happy. That's quite a few questions, but I'll take a good whack at them. First, in terms of cost cutting, as a company, we're focused constantly on identifying opportunities that where we're spending money, perhaps less efficiently and looking for opportunities to do it more efficiently. That's not a once a year thing. That's not a once a month thing.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

That's something that we do every day of the year. It's part of what a good management team does and we do think we're a good management team in that regard. So we're going to continue to identify opportunities to redeploy money in order to make the company both higher growth and ultimately more profitable. Regarding your question on the guide overall, obviously the results were certainly in excess of expectations in the first quarter. It certainly gives us confidence, an even higher level of confidence than we probably even had before as we get into the balance of the year.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

At the same time, given the rapidly evolving macro environment, we think it would be premature at this point to change the guidance. That said, to the degree that the business momentum and the business performance justifies it, we're certainly not a management team that's afraid of over delivering if in fact that is where the business takes us. So generally speaking feel better about the balance of the year and we started out the year feeling very, very positively about

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

it.

[John Hodulik, Telecom and Cable Analyst at UBS Group]

Thank you, Hugh.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, John. Operator, next question please.

[Operator]

Absolutely. Our next question today comes from Jessica Reif Ehrlich with Bank of America. Please go ahead.

[Jessica Reif Ehrlich, Analyst at Bank of America]

Thank you. I guess two things. One, on the MBA, can you talk about the how you view the path to profitability in the new contract given the weaker season to date ratings and obviously the step up next season? And then on DTC, maybe we drill down a little bit on how you're thinking about subscriber drivers. Bob, you mentioned password sharing crackdown.

[Jessica Reif Ehrlich, Analyst at Bank of America]

How do you think about the TAM or the potential subscriber impact? Obviously, some great films coming onto the platform later this year. And then how important is news to the overall product offer?

[Robert Iger, Chief Executive Officer at Walt Disney Company]

In the NBA, we don't talk about profitability for any one of our licensed sports packages. We obviously believe in the NBA long term, it's a great sport. We think it's a growth sport. We don't really look at ratings year to year that carefully. First of all, it's not even we haven't even seen half a season, but we're not distracted by in any sense what's happening ratings wise in the NBA this season at all.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

We're happy to have it for now eleven more years, including the finals 10 of those years. And it will be it is and will continue to be a marquee part of ESPN's offering. In terms of subscribers, we believe that in order for us to grow subscribers is really a combination of things. We have to continue to make great product films and television series. We clearly have demonstrated over the last couple of years the ability to do that.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

And we are confident that we will deliver on a consistent basis, high quality films and television over the long run. Second, you need really strong technology. And this is where we have as we have said very publicly, we had a lot of work to do. And while we've made progress already, in some ways we're just getting started. The only way you succeed in global streaming, both from a subscription perspective and a profitability perspective is with a great combination of high quality product with volume and technology.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

And we feel if you look at all the competitors that are in that space, we're very well positioned to both grow subs and grow profits over the long run and actually over the next few years. We've already demonstrated the ability to make this a much more economically attractive business And with the technology that we've got in place combined with the success of our content, we actually are bullish about our ability to grow subs too.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

And Jessica, the only thing I would add to Bob's comments are, we gave you guidance in terms of ESPN for next year. We knew all of the aspects of the NBA contract when we made that deal, and there is nothing that is changing in our mind in that regard.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

And one last thing, you've asked about news. We like the opportunity to make room for our news output, both the ABC News output and the output of our local stations as part of the app experience. With improved technology, we're now offering live streams on the Disney plus Hulu app and news will does occupy one of those streams and it will continue to be a feature of our overall Disney plus and Hulu offering. And it's also something that differentiates us from some of the others in the space.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, Justin.

[Jessica Reif Ehrlich, Analyst at Bank of America]

Thank you.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Operator, next question please.

[Operator]

Absolutely. Our next question today comes from Michael Ng with Goldman Sachs. Please go ahead.

[Mike Ng, Analyst at Goldman Sachs]

Hi, good morning. Thank you for the question. I just wanted to follow-up on your comments, Bob, about streaming and news. Could you talk a little bit about your decision to add the SportsCenter Daily Show to Disney plus instead of ESPN flagship and with streams and SC plus the investments in live content, what have you found to be the benefit of live as it relates to gross ads and churn in streaming? And could you expand a little bit about the competitive advantage that Disney has in producing and distributed live relative to some other streaming services?

[Mike Ng, Analyst at Goldman Sachs]

Thank you.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

Well, I think we've all seen the benefit of live. Just look at ESPN's ratings as a for instance or talk to anyone in the advertising business, live is extremely attractive. And we have the benefit, as I said earlier, of having live programming every day of the week, every day of the year or every week of the year. And so I think that as we provide our consumers with a one app experience, live will be a major component of basically our growth the growth in that business. It will contribute to the growth in that business for us.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

What we did with ESPN and the SportsCenter show that you mentioned is we put us in the ESPN tile as we call it or presence on the home screen of Disney plus that was in part designed to increase engagement for Disney plus Hulu subscribers, gives them something to see on a daily basis. And obviously, as we've talked today, growing engagement is critical particularly to lowering churn. It also gives us the ability to use it as an introductory offer, sort of an introductory ESPN digital offer. And ultimately when flagship is launched, people who use the ESPN tile will have an opportunity to subscribe to flagship right from that tile. And if they do subscribe to it, then it becomes a completely integrated app experience with Disney plus and Hulu.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

So it's there to improve, but to do two things to benefit Disney plus Hulu and it's also there to ultimately benefit ESPN flagship.

[Mike Ng, Analyst at Goldman Sachs]

Thank you, Bob.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, Michael. Operator, next question please.

[Operator]

Our next question comes from David Karnovsky with JPMorgan. Please go ahead.

[David Karnovsky, Senior Research Analyst at JP Morgan]

Hi, thank you. With experiences, I wanted to see if you could provide any color on the Disney treasure launch, how the early returns look relative to expectations and the read throughs for the launches later this calendar year? And then just sticking with parks, maybe you could discuss the route of Lightning Lane Premier, which I think you recently expanded access for. What type of take rates are you observing on the product and how is that impacting other spending buckets or the overall experience? Thanks.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

Yes, good morning. Disney Treasure is off to a spectacular start. Certainly in terms of selling out the rooms, we've done terrifically well. The feedback and guest experience, the high percentage of people are rating it excellent, very much in line with the rest of our ships. And this is just sort of in the initial cruises.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

So feel terrific about that. As we've said before, our expectation is for the ship to be profitable in the first quarter and the first quarter it's in the water. And frankly, that is very much our expectation from here going forward. So feel great about that one. Lightning Lane, we're launching that product, but remember it is a premium product.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

It is a product that we are learning how to use. So we are marketing it very gently initially. It's very much in line with our expectations, but we are moving slowly with that product in order to make it a great experience both for the purchasers of Lightning Lane and for the rest of our guests in the park. So feel great about it. It's going to build over time, but it's certainly very much early days.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, David. Operator, next question please.

[Operator]

Absolutely. And our next question today comes from Michael Morris with Guggenheim. Please go ahead.

[Michael Morris, Senior Managing Director at Guggenheim Partners]

Thank you. Good morning. Two questions about your outlook. First, it experiences, Hugh, on the fourth quarter call, you mentioned that bookings in the back half of the year were positive at that point in time. I'm wondering if you can give us an update there.

[Michael Morris, Senior Managing Director at Guggenheim Partners]

Are they still positive? Do you have any more visibility? How has that trended? And then my second question is on direct to consumer. You had a really strong first quarter.

[Michael Morris, Senior Managing Director at Guggenheim Partners]

I think you grew about $400,000,000 year over year on operating profit and your guide only implies about $100,000,000 a quarter for the next three quarters. So can you talk a little bit about what goes into that outlook, what the puts and takes are maybe on investment that would have that growth slower for the balance of the year? Thank you.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

Yes, happy to cover both of those. Hitting on DTC first, as I mentioned, it's obviously an evolving environment. Our expectations are for the business to do terrifically well. We made $300,000,000 in the quarter for the full year. Our expectation is to be a little over $1,000,000,000 So we obviously still have some work to do, but we're out of the blocks very, very quickly.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

As I mentioned earlier in this call, we're certainly not afraid to over deliver if the business momentum gives us that, but that's something to be seen. It's premature to be thinking about raising guidance in my opinion after just one quarter results.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

And the second question was,

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

in terms of Back into the year. The bookings.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

Oh, the bookings, I'm sorry. I should have written that down. Basically, we are further into the curve, but the messaging is exactly the same as I gave you last quarter. Bookings are up in the summer right now, so certainly feeling positive. And obviously we have more of them in given that we're ninety days later.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

So certainly the outlook is good in that regard. But as always, we're going to take a view at this point that it's premature to be changing guide in that regard, but off to a great start in experiences.

[Michael Morris, Senior Managing Director at Guggenheim Partners]

Great. Thank you for the answers.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Operator, next question please.

[Operator]

And our next question comes from Brian Kraft with Deutsche Bank. Please go ahead.

[Bryan Kraft, Analyst at Deutsche Bank]

Hi, good morning. So I had one on sports and then just a follow-up. So first on sports, you're obviously going to see a step up in rights costs for the NBA next year, but you've guided to low single digit OI growth in fiscal twenty twenty six on top of 13% growth this year. So I just wanted to ask if we should be thinking about some offset in other sports rates coming out of the business to offset the NBA increase or if the fiscal twenty twenty six growth is more a function of OI growth from flagship or a big improvement in pay TV sub declines because of smaller priced excuse me, lower priced small sports and news packages. So just trying to get underneath of the drivers of that strength.

[Bryan Kraft, Analyst at Deutsche Bank]

And then secondly, just on Disney plus if you could talk about the outlook for Disney plus subscriber growth this year, I think you're guiding to essentially flat subs through the end of 2Q. What are you expecting in the second half of the year directionally and what are some of the key factors that are shaping the outlook for the rest

[Bryan Kraft, Analyst at Deutsche Bank]

of the year? Thank you.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

Yes. So in terms of ESPN and the NBA, obviously there are a lot of variables that go into ESPN's P and L, including the advertising market for live sports, which is obviously very, very strong. It's also in terms of aggregate cost management, not just rights costs for the entire business and Jimmy and the team do a phenomenal job managing their costs and that's a tailwind. And then in addition to that, we're going to look at everything else that's out there and we'll make decisions that are reflective of the discipline that I think this team has shown in terms of what we're looking at in rights going forward. So I'll leave it at that, but as I said earlier in the call, we mentioned low single digits next year.

[Hugh Johnston, Senior EVP & CFO at Walt Disney Company]

We're still very much committed to that based on the aggregate of all of those inputs. In terms of outlook for DTC subscribers, our expectation is to grow them for the year. So given we're basically sort of slightly up in the first quarter, we'll be similar in the second quarter. Our expectation is particularly as paid sharing starts to take hold and as we add more of the movie slate that we produced in the back half of twenty twenty four into the streaming service in 2025, we think that content will drive sub growth as well.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

And I'll add to what you said. We actually are very pleased with where we are sub wise for Disney plus and Hulu. As you know, we took prices up significantly fairly recently and expected the churn would be significantly greater. And it turned out we delivered numbers that were better than we had expected. So the combination of Disney plus and Hulu, actually we grew subs modestly in the quarter.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

Now while we did that, we also are implementing, as we talked earlier, these technological advances or enhancements that will enable us to lower churn and continue to grow subs. And we also have a great product pipeline coming. So we're bullish about our ability to turn streaming, not just into the profitable business that it is today, but into a growth business for the company due to the combination of all these things and that includes the ability to successfully bundle both for the consumer and for our shareholder, Disney plus Hulu and ultimately ESPN.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, Brian.

[Bryan Kraft, Analyst at Deutsche Bank]

Thank you very much.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Operator, we have time for one last question.

[Operator]

Thank you. And our final question today comes from Kaman Venkateswar with Barclays. Please go ahead.

[Kannan Venkateshwar, Managing Director at Barclays]

Thank you. Maybe on ESP and flagship, Bob, just in terms of the vision that you have for the product and the objectives with that service, is this to basically further grow the sports business relative to where it is today? Or is it more to preserve existing profitability and preserve the ecosystem as it is today? Would be great to get your thoughts on that. And then maybe another one on just the industry wide consolidation efforts that we are seeing.

[Kannan Venkateshwar, Managing Director at Barclays]

If there is an effort to roll up cable networks across the industry, would there be any interest from your end potentially to participate in that with some of your smaller networks? Thank you.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

Let me just make a quick comment about the linear networks. We actually are at a point where the linear networks in our company are not a burden at all. They're actually an asset. We are programming them and we are funding them at levels that actually give us the ability to enhance our overall television business that obviously includes and leans into streaming, which let's face it is really the future of the television business. So while I won't rule out the possibility, some of the smaller networks in some form or another being configured differently in terms of how we bring them to market, maybe even ownership.

[Robert Iger, Chief Executive Officer at Walt Disney Company]

But we're not right now, we actually feel good about the hand that we have and the manner in which we're managing both the linear and the streaming businesses across the board at Disney. Regarding flagship, it's pretty clear that young viewers, I guess you call them, are young consumers are leaning more and more into streaming experiences, both fixed televisions on walls and mobile devices. And the more ESPN can be present for a new generation of consumers with a product that serves them really well, the better off ESPN's businesses. So Flagship is not really designed to preserve a business, it's designed to grow a business in a market that's evolving or changing right before our eyes. So we're extremely, extremely excited by what's coming and bullish about it because we think it's not only a good business proposition, but it's a sports fan's dream.

[Kannan Venkateshwar, Managing Director at Barclays]

Thank you.

[Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer at Walt Disney Company]

Thanks, Kanaan, and thanks everyone for your questions this morning. We want to thank you for joining us and wish everyone a good rest of the day.

[Operator]

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Participants

Executives

• Carlos Gomez, Executive Vice President of Corporate Finance & Treasurer
• Robert Iger, Chief Executive Officer
• Hugh Johnston, Senior EVP & CFO

Analysts

• Benjamin Swinburne, Managing Director at Morgan Stanley
• Robert Fishman, Senior Research Analyst at Moffettnathanson LLC
• John Hodulik, Telecom and Cable Analyst at UBS Group
• Jessica Reif Ehrlich, Analyst at Bank of America
• Mike Ng, Analyst at Goldman Sachs
• David Karnovsky, Senior Research Analyst at JP Morgan
• Michael Morris, Senior Managing Director at Guggenheim Partners
• Bryan Kraft, Analyst at Deutsche Bank
• Kannan Venkateshwar, Managing Director at Barclays