Disney+ price increase will impact user payments in the next quarter (Disney 4Q23FY conference call minutes)

The following is a summary of the conference call for Disney's FY23Q4, and the analysis of the financial report can be found in the article "Disney: Dawn Breaks? And a Disturbance".

1. Management Statement

Our performance this quarter fully demonstrates the potential strength of our company and the significant amount of work we have accomplished in the past year. Adjusted earnings per share for the fourth quarter were nearly three times that of the same period last year. Compared to the fourth quarter of FY22, all three of our businesses (Entertainment, Experiences, and Sports) saw significant revenue growth in the fourth quarter.

Our thorough restructuring has improved efficiency, and we expect to achieve approximately $7.5 billion in cost savings, which is about $2 billion higher than our earlier target for this year. Our new structure has also allowed us to greatly enhance their efficiency, especially in the streaming field, where we have created a more unified, cohesive, and highly coordinated approach to marketing, pricing, and content production. This has helped us improve the operating performance of our combined streaming business by approximately $1.4 billion from FY22 to FY23. We remain confident in achieving profitability in the fourth quarter of FY24.

Most importantly, our new structure has brought creativity back to the center of our company, and as we certainly know from our 100-year history, nothing is more important or critical than our success. In fact, our strong creative achievements have helped drive the astonishing growth of our core Disney+ subscribers, which increased by nearly 7 million this quarter. This reflects the success of numerous popular titles, including "Guardians of the Galaxy," on the platform.

The trend of our theatrical films, such as "The Little Mermaid" and "Elements," continuing to be the most-watched content on Disney+, also continues.

Our major original works have also performed exceptionally well on all our platforms, including Ahsoka on Disney+, The Kardashians (currently the most-watched unscripted Hulu original series), and the fantastic Korean original series "Moving," which has become a breakthrough hit. As I look back on our achievements over the past year, I note that we have spent a great deal of time and effort addressing challenges posed by recent decisions and disruptions and transformations brought about by the pandemic. While there is still work to be done to continue improving performance, our progress has allowed us to move beyond this recovery period and begin rebuilding our business. Looking ahead, we will focus on four key growth opportunities that are crucial to our success.They have achieved significant and sustained profitability in our streaming business, making ESPN an excellent digital sports platform, improving the output and economic benefits of our film studio, and driving growth in our experiences business. We have made considerable progress in these four opportunities and will continue to move forward with a sense of mission and urgency. I have already outlined many of my thoughts on our strategic initiatives. Therefore, today, as we enter the next phase, I would like to discuss these four growth opportunities in more detail. The first is transforming streaming into a profitable growth business.

Since the launch of Disney+ four years ago, there have been approximately 10 million registered users in the first 24 hours alone, and as of the end of FY23, Disney+ has reached over 112 million core subscribers, including nearly 7 million users acquired during this period. In addition, our ad-supported Disney+ product saw a subscription growth of approximately 2 million in the fourth quarter, reaching 5.2 million.

Subscribers have chosen the ad-supported Disney+ product. In the past six months, these AVOD subscribers have increased their time spent watching the service by 34%. We have the best advertising technology in the global streaming business, and we have just launched new tools that will make the platform more attractive to advertisers, just as we did with Hulu. Speaking of Hulu, we were pleased to announce last week that we will acquire the remaining stake in Hulu held by Comcast, further advancing Disney's streaming goals.

We remain committed to launching a more unified single application experience domestically, offering a wide range of general entertainment content to bundled subscribers through Disney+. This includes critically acclaimed and audience-favorite works such as "Hulu's Only Murders in the Building," "The Bear," "Abbott Elementary," as well as works from our extensive content library built over the past decade, including outstanding adult animated works like "Family Guy" and popular long-form series like "911," which will move to ABC for its seventh season. We expect Hulu on Disney+ to increase engagement, add advertising opportunities, reduce churn, and lower customer acquisition costs, thereby improving our overall profitability. We will launch a test version for bundled subscribers in December, allowing parents time to set up profiles and parental controls that best suit their families before the official launch in early spring 2024.

Overall, our domestic ESPN business has seen revenue and operating income growth in FY22 and FY23. This fiscal year, the network also achieved its best overall ratings in four years, as well as the highest ratings among the key demographic of 18 to 49-year-olds. ESPN's ratings have increased in all four quarters, maintaining steady success throughout the year. The company has increased its already industry-leading sports viewing share in FY23 across the entire ESPN network, despite challenges faced by the broader media industry, and we continue to see stable advertising sales.ESPN BET will be launched next week through our agreement with PENN Entertainment, and we are excited to bring this fascinating new experience to sports fans. As for our broader linear business, we continue to evaluate options for each linear network with the goal of determining the company's best strategic path and maximizing shareholder value. However, our review of the business so far has identified significant long-term cost opportunities, which we are implementing while continuing to deliver high-quality content. Speaking of which, I would like to express my gratitude to the world-class journalists and producers at ABC News.

I have invested a considerable amount of time with the goal of improving returns, always seeking to exceed audience expectations for Disney's excellence in creativity. At the same time, four of the top 10 highest-grossing films globally this year have been nominated, including Pixar's "Elements," which has earned nearly $500 million in global box office revenue and is also the most-watched film released on Disney+ this year. We have more new releases scheduled for the 23rd calendar year, including Marvel Studios' "Marvels," which will be released this Friday, and the latest film from Walt Disney Animation Studios, "Wish," which marks our company's 100th anniversary and will begin theatrical release on November 22nd. We are also looking forward to a strong lineup in 24, including several films related to popular franchises such as "Deadpool 3" starring Wolverine, "Rise of the Planet of the Apes," and "The Incredibles 2."

In addition, sequels to "Mufasa: The Lion King" as well as the "Toy Story," "Frozen," "Zootopia," and "Avatar" series are in production. Finally, we have the opportunity to build the Disney experience into a larger and more successful cash flow generating business. Overall, the Parks and Experiences business remains a growth story, and we are managing our portfolio very well. Even taking Walt Disney World as an example, we have seen revenue and operating income growth of over 25% and 30%, respectively, when comparing this year's numbers to pre-pandemic levels in fiscal year 19.

Over the past five years, the return on investment capital for our domestic parks has nearly doubled, and we have seen significant growth in the entire experience portfolio during the same period, not to mention the improvement in guest experience ratings we now see at every one of our parks. As we announced in September, we plan to drive growth in the experience business over the next decade through strategic investments. Given our wealth of intellectual property, innovative technology, developable land, unparalleled creativity, and strong return on investment, we are confident in the potential of new investments. From a company-wide perspective.

Today, as we transition from a period of repair to a new era of construction, we are focused on driving profit growth and value creation. We have a strong balance sheet, and we expect significant improvement in free cash flow in fiscal year 24, approaching pre-COVID-19 levels. Disney's experience business provides a wide range of services globally, is a key differentiating factor, and remains a powerful growth engine, expanding operating profit margins by nearly 300 basis points over the past five years.With the transition of ESPN to the future of streaming and the more comprehensive integration of general entertainment content into Disney+, we will have a DTC product that is unlike any other in the industry.

Disney's leadership and workforce are unparalleled. When you combine all of this with our invaluable business, brands, and asset portfolio, as well as the way we collectively manage them, Disney has the powerful strength that sets us apart from other companies in the industry. Our performance this quarter demonstrates the work we have done across the entire company over the past year, and I am optimistic about our opportunities to create sustainable growth and shareholder value, and strengthen Disney's position as the world's leading entertainment company.

FY23Q4 Finance

Earnings per share for the fourth quarter increased to $0.82, and for the entire fiscal year increased to $3.76. The past year has been marked by transformation and execution, and we are pleased with the momentum we are building and the achievements we have made, including meeting our guidance for high single-digit percentage growth in revenue and operating income for fiscal year 2023, excluding the impact of accelerated depreciation of the Galactic Starcruiser. Total company revenue for the year increased by 7%, and segment operating income increased by 8%.

Driven by the work we have done in cost efficiency and the improvement of our underlying financial performance, free cash flow for this year increased significantly, totaling nearly $5 billion. A few weeks ago, we released restructured financial data that aligns with the new departmental structure. Today, I will go through the fourth quarter financial performance of our Entertainment, Sports, and Experiences segments, and I will also provide some information for the next year. Let's start with Entertainment.

Driven by the improvement in our direct-to-consumer business, operating income for the fourth quarter increased by over $800 million compared to the same period last year. We continue to make progress on the path to profitability and streaming, with the operating loss of our Entertainment DTC services in the fourth quarter decreasing by nearly $1 billion compared to the previous year, reaching $420 million. Please note that our Entertainment DTC performance does not include ESPN+, which includes our combined streaming business, and had an operating loss of $387 million in the fourth quarter, a year-over-year improvement of slightly over $1 billion, and a quarter-over-quarter improvement of $125 million. As Bob mentioned earlier, we added nearly 7 million Disney+ core subscribers in the past quarter, reflecting strong content performance and our global summer promotion.

Driven by price increases and increased advertising revenue, Disney+ core ARPU increased by $0.12 compared to the previous quarter, but was partially offset by the impact of the summer promotion. The Disney+ ad tier added approximately 2 million subscribers in the fourth quarter, bringing the total number of subscribers to 5.2 million by the end of this fiscal year. We expect a slight decline in Disney+ core subscribers in the first quarter compared to the fourth quarter, as recent price increases in the United States and the end of the summer promotion are expected to temporarily increase churn rate.However, we expect to see a rebound in growth later this fiscal year. In the fourth quarter, entertainment and B2C advertising revenue increased by 4% compared to the same period last year, partially offsetting the decline in linear advertising. This growth reflects the growth of Disney+, while Hulu's performance declined due to a decrease in political and tech category advertising. We continue to expect the merged streaming business to be profitable in the fourth quarter of fiscal year 2024.

Although, as we have mentioned before, we do not expect linear progress in every quarter. While we expect the first quarter B2C operating loss in entertainment to be roughly flat compared to the fourth quarter, as the sports rights costs for ESPN+ increase with the start of the NHL season. We expect a slight MoM decline in the first quarter for the merged streaming business. But as we mentioned earlier, we expect the upward momentum later this fiscal year to be driven by price increases, the launch of international ad layers, and overall user growth.

In linear networks (excluding our sports channels), fourth quarter revenue remained flat compared to the previous year, reflecting a decline in advertising and affiliate network revenue, but the overall decline in marketing, programming, and production costs offset this impact. The decline in advertising revenue was driven by our domestic business (primarily ABC and our own television stations). The decline in domestic entertainment affiliate revenue of 6 percentage points due to subscriber declines and a negative impact of 1.5 percentage points from Charter blackout partially offset the 4% YoY decline in fourth quarter domestic entertainment affiliate revenue. The impact of higher interest rates. As Bob mentioned, in the long run, we are still committed to improving the cost efficiency of this business.

Compared to the previous year, the decline in content sales, licensing, and other operating performance was due to the decline in theater performance, but partially offset by the rise in home entertainment performance. We currently expect first quarter revenue to be roughly breakeven, similar to the same period last year. Moving on to our sports segment. Fourth quarter revenue increased by 14% compared to the previous year.

The performance was driven by lower programming and production costs in our domestic ESPN business. The growth in ESPN subscription revenue is attributed to pricing and subscription growth, as well as a decrease in marketing costs, but partially offset by a decrease in league revenue. The decline in programming and production costs reflects the absence of the top ten giants. In the domestic market, fourth quarter linear advertising revenue for ESPN increased by 1% compared to the same period last year.

Despite the absence of the top ten giants, Charter still had a blackout in a fiercely competitive market. Fourth quarter domestic affiliate network marketing revenue decreased by slightly less than 5% compared to the previous year, with a 5.5 percentage point increase from rate hikes offset by a roughly 7.5 percentage point decrease in subscriber count and a 2 percentage point negative impact from Charter blackout. As Bob mentioned earlier, it is worth noting that ESPN's domestic business has seen annual revenue and operating income growth in each of the past two years. These results lead us to believe that sports has the ability to bring value to the company even in the face of challenging industry headwinds.In the fourth quarter, the operating performance of the department increased by more than 30% compared to the same period last year, and by 27% compared to the 19 fiscal year. The operating profit margin of the department in the fourth quarter was 22%, an increase of three percentage points from the previous year. Our international business continued to maintain a strong performance trend in this quarter, with all sites showing significant growth compared to the previous year.

The revenue and operating income of the cruise company, Disney Vacation Club, and Disney theme parks also achieved strong year-on-year growth. The operating performance of Walt Disney World declined due to the accelerated depreciation caused by the closure of the Galactic Starcruiser, as well as the impact of inflation and the continued comparison with the 50th anniversary celebration of the previous year. Looking ahead to the 2024 fiscal year, we expect annual operating income from our experiential business to grow strongly, reflecting the continued strong performance of our international parks and Disney Cruise Line. Although domestic parks and experiences are expected to achieve steady growth throughout the year, this growth will bear a heavy burden due to the challenging comparisons in the first half of the year, including the 50th anniversary of Walt Disney World and wage increases.

We remain optimistic about the long-term positioning of our experiential business. As demonstrated by our recent major investments, we plan to make significant investments in the next 10 years to drive growth in this area. We expect these investments to increase gradually in the latter half of this decade and gradually increase in the initial years. As in the past, given the substantial returns these investments will generate over time, the capital expenditures of the parks are essentially self-funded.

I would also like to point out that a portion of our investments in the theme parks in Shanghai and Hong Kong is funded by joint venture cash flows. Before we conclude and move on to the Q&A session, I would like to share some additional information to provide context for the coming year. First, in terms of capital expenditures, the total capital expenditure for the 2023 fiscal year is expected to be approximately $5 billion, roughly in line with the previous year and consistent with our latest guidance. We anticipate that the total capital expenditure for the 2024 fiscal year will reach $6 billion, an increase of approximately $1 billion compared to the 2023 fiscal year, driven by higher experiential spending.

The experiential capital expenditure for the 2024 fiscal year will be more comparable to the level in the 2019 fiscal year, which includes the spending on our cruise business before the launch of three new ships in the 2025 and 2026 fiscal years. According to our guidance, the enterprise-wide content expenditure for the 2023 fiscal year is $27 billion, a decrease of approximately $3 billion compared to the previous year due to significant reductions in entertainment content spending. As we continue to strive for efficiency in content expenditure, and excluding the impact of strikes and the timing of sports payments, we expect the total content expenditure for the 2024 fiscal year to be approximately $25 billion, a decrease of $2 billion compared to 2023, which will amount to $1 billion. Please note that sports rights currently account for more than 40% of our enterprise-wide content expenditure.Our annual entertainment cash content expenditure reduction target is now $4.5 billion, excluding the impact of strikes and sports rights, compared to the previous target of $3 billion. We expect this target to be achieved in the 2024 fiscal year based on cash, although most of the savings will take a few years to reflect in the income statement due to amortization. In terms of cost savings and streamlining operations, we have cut over 8,000 positions. While we currently do not plan for further large-scale layoffs, we are taking important specific steps to continue addressing the cost base of the entire company.

We have raised the annual efficiency target for the company's SG&A and other operating expenses from the previous $2.5 billion to $3 billion, including the impact of strikes. Approximately $2 billion of this efficiency will be achieved in the 2023 fiscal year. Of course, we have also seen inflation and cost increases related to quantity, including higher content amortization and costs associated with the expansion of international parks and cruise operations, which were affected by closures and limited operating capacity last year. The remaining savings are expected to be realized by the end of the 2024 fiscal year.

Our expense base for the 2024 fiscal year is expected to increase only slightly compared to the previous year. This is because most of the efficiency and strike savings will offset the planned growth related to quantity and inflation this year. As Bob announced earlier, adding the new $45 billion cash content expenditure reduction target to the $3 billion spending target brings our total annual target to $7.5 billion. In addition to the continued growth and improvement of our core business, all of these factors are expected to generate approximately $8 billion in free cash flow in the next fiscal year, a significant increase compared to the previous year and close to the level we achieved before the pandemic.

The continued strong growth in free cash flow, combined with our strong balance sheet, will enable us to achieve our investment and shareholder return goals for this year and the future. To this end, we will recommend to the board of directors to announce dividends by the end of this calendar year.

Q&A

Q1: What is the most important impact of the agreement with Charter on Disney? Since this is a new business model, what differences will it bring to your management of the company? Do you see any issues with this film? What is your priority in addressing this issue when you list your top three priorities?

A1: First of all, we believe this is a great deal for us and for Charter. It doesn't really change our strategy because when you look at the deal, it actually accurately reflects our strategic focus on streaming (with the inclusion of Disney+ distribution agreement in the Charter deal). It also aligns more with our streaming-first approach, and that strategy won't change too much. I think there's an opportunity now to do some integration on the distribution side, which is a good thing.

As for the studio, first, let's take a look back. Last year, we did have four very strong films that made it into the top ten, led by Avatar, of course, but there were also other successes.In other words, when we look at our overall output (i.e. the studio), this pandemic has brought many creative challenges to everyone, including us.

Therefore, through collaboration with the talented team in the studio, we hope and strive to integrate, which means reducing production and focusing more on quality. We have rich assets to tell exciting stories from the assets we own or acquire. I am very optimistic about the future plans, which will strike a balance between some very popular game sequels and excellent original content, starting with "Wish" launched over Thanksgiving weekend.

So, I am satisfied with the direction we are heading, but I have noticed that our performance has not really met the standards we set for ourselves in terms of quality.

Q2: DTC pricing is about to increase. You announced cost-cutting plans, some of which may affect DTC or Hulu. Bob, you have expressed confidence in streaming profitability in the media for the past few quarters. Can you describe some of the conditions that may be achieved when streaming becomes profitable?

The second question is about ESPN. Many people have decided not to participate in bundling. How do you consider bringing a certain product to market faster?

A2: When we bring ESPN directly to consumers, our plan is to try to achieve what I call a soft landing, which means continuing to offer it, which is inevitable, and we are planning for it. At the same time, we hope it can serve consumers in two ways: the traditional way and the new way.

Obviously, we will see a mix of consumers who stay in the bundle and those who leave the bundle. We don't care about that. In fact, when we do basic modeling of ESPN's future, we find that in some cases, it will continue to be sold as part of a bundle. As for the first question, the development trajectory of DTC, we will not provide specific details. We will not provide any guidance except for the guidance to achieve profitability by the end of 2024.

But the infrastructure is in place to turn it into our true growth business. The recent announcement of the purchase of the remaining shares of Hulu is just one of them. In terms of pricing, we have indeed increased the price of Disney+ premium service, with the non-ad-supported package increasing by about 27%. It is still too early to draw conclusions, but we raised prices significantly a year ago and the customer churn rate is minimal.

So, I think we have enough room, especially when we improve the quality of Disney+ service. Overall, our pricing strategy is more complex than before and more coordinated globally.

I will come back to bundling between Disney+ and Hulu, and then the opportunity for ESPN bundling. Obviously, we are making technological improvements, whether it is account sharing, fundamentally reducing customer acquisition costs and customer churn, or reducing marketing expenses and increasing profits. Advertising is an important component of this.We do not have a pricing strategy for the Disney + advertiser-supported service, and there is a greater difference between the advertiser-supported service and the premium service because we prefer to have a basically balanced ARPU from both sides. Therefore, we are very satisfied with the potential of this business. If you consider the streaming asset portfolio we will have, Hulu, Disney +, and ESPN, it is a very strong hand. In December, we will launch a test version of the Hulu and Disney + bundle.

In fact, I saw some of it yesterday - basically some demos. We basically put it in the testing phase so that we can prepare parents for basic implementation of parental controls, as you will be able to access Hulu in the same app. Then in late March, we will basically launch it in its full form.

I think we have an opportunity to increase sales capabilities and engagement. We find that bundling can reduce customer churn. Again, these steps are all taken to ultimately turn it into a great business. Finally, in terms of cost reduction, we have basically created a single-world streaming approach.

We had multiple organizations before. We now have one organization led by Dana Walden and Alan Bergman, operating globally. They have assembled a brand-new senior management team to oversee these assets worldwide.

Of course, this is a differentiating factor for us. For example, when competing with Netflix, Netflix is the gold standard. However, by focusing more on some of these movies and improving their quality, we are able to slightly reduce the expenses and investments in some series. We believe that the mix of spending between movies and TV shows provides us with opportunities to increase profits and develop the business.

Q3: In terms of sports, ESPN is seen as a network facing cord-cutting. Can you talk about your views on developing the sports business? Do you think over time you can develop your sports business through linear services, digital services, and other ancillary services?

A3: ESPN is the number one brand on TikTok, with about 44 million followers, which is an incredible statistic. We believe that ESPN is a highly demanded product in the United States and is unique.

We think it is a wise investment because it has unique qualities, popularity, and profitability. We believe we have an opportunity as we take it in the direction of direct-to-consumer, enhancing our strength through partnerships with tech companies that can provide us with marketing, technical support, customer acquisition assistance, or sports leagues. It can provide us with more content. It's as simple as that. We are actually very optimistic about this.

Frankly, if we just stand by and let ESPN be part of linear bundling, we know what that will eventually bring us. It certainly won't bring us growth because it basically means a continuous decline in multi-channel subscribers.Therefore, this is a method that truly reverses this trend, continuing to allow it to be part of a multi-channel bundle, but also providing it on a menu basis, essentially taking a very popular product and making it available and potentially enhancing it by implementing the method I described earlier.

When you think about the components of the company, we believe there are currently four components, one of which is obviously the overall streaming - another is the parks and resorts, which are driving growth. The third one I mentioned earlier is to basically restore the studios to the level of success we were accustomed to before the pandemic.

The fourth goal is to build ESPN into an excellent digital sports platform.

In terms of cash flow, from the perspective of content expenditure, we are indeed satisfied with the final results of the 24-year period. When you look at how we have achieved this goal year after year. The reduction in content expenditure is obviously part of it, but the continued growth and improvement of our core business is also an important component, as are the annual efficiency goals we have all implemented.

Q4: I just wanted to know if you could provide us with your overall view of advertising and what is happening. How much can you make up for on AVOD?

A4: First of all, our cable media business in India is actually doing well. Yes, it is making money. But we know that other parts of that business are challenging for us and others.

India is now probably the most populous country in the world, or may still be second only to China, and is about to surpass them. We want to stay in that market. But we are also looking for ways to significantly enhance our bargaining power and improve the bottom line. In terms of advertising, we actually found that Linear is stronger than we expected. It didn't recover as we hoped.

It is still a challenge, but not as bad as before. So, we see some slight improvements. In fact, the tech industry is still a bit weak. But overall, the advertising industry has improved.

We found that there is obviously a great demand for targeted advertising. As I pointed out in a previous interview, we have now deployed tools, so we are using the tools on Disney+ to provide better targeting for advertisers, and they are starting to work. Overall, sports have always been very strong. So, when we look at the current advertising market, although it is not as strong as we hoped, it is definitely not as bad as some people imagine, and it is effective for us.

On AVOD, the tools provided by the new platforms for advertisers are exactly what advertisers are looking for. These platforms are the dream of advertisers. We know that the more data we have, the more details we can provide - the more background we can provide, the more targeted we can be, the better our situation will be. Hulu has a very powerful advertising engine, in fact, we have one of the best advertising engines in the industry, if not the best.Therefore, in fact, the combination of Hulu and Disney+ with some of the tools we have deployed will allow us to blend growth in engagement and growth in advertising. Therefore, we are very optimistic about our media position in the advertising market.

Q5: Considering the RSN model, does ESPN have the opportunity to increase local sports broadcasting rights or possibly increase the distribution of sports events outside the United States? The second question is that Warner Bros. recently made some news by licensing some of their flagship content, their DC Universe, to Netflix. Do you think Disney can do or do more in this regard? At least more than what you are currently doing, without weakening the Disney brand or the growth prospects of Disney+?

A5: We have been licensing content to Netflix and will continue to do so. In fact, we are currently discussing some opportunities with them.

But I don't want us to license our core brands to them. Obviously, these are real competitive advantages for us and a differentiating factor for our company. For example, Disney, Pixar, Marvel, and Star Wars have all performed extremely well on our platform. I don't understand why we should do this just to chase after money, because they are indeed very important for our current and future streaming business.

Regarding local sports events, the technology we have for ESPN DTC will allow us to offer local sports events in a fairly powerful way, basically like what RSN is doing. But we don't really intend to achieve this goal by taking on significant risks. So if we can find the right business arrangements and partnerships, I think we will seriously consider including local sports in that platform. But again, if it would lead us to take on too much risk, then we won't do it.

Q6: Can you tell us about the latest information on potential types of partnerships for ESPN and the obstacles these partnerships may face? What have you seen in terms of consumer demand in Orlando and across the country? How do you think Walt Disney World is performing compared to the entire Orlando market?

A6: Basically, what we have been talking about and exploring is that when we are ready to go in the direction of ESPN and direct-to-consumer, we believe we have the opportunity to enhance our strength by providing us with technology and marketing entities.

Therefore, since I mentioned our interest in this in July, we have been in contact with many different entities. I can say that people are interested in this. Obviously, it is complex, but not too complex, and there are no barriers that are too high for us to overcome. We will continue to explore it.

Regarding the parks, I think we have discussed Walt Disney World in the prepared remarks, and we will continue to have some impact going into Q1.

But when I look at other domestic businesses, especially Disneyland Resort in California, it still looks exceptionally strong. The Disney Cruise Line is also the same. So the booking volumes for all of these are still very, very strong in the future.So, domestically, we feel very good, and internationally, we also feel very good.

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