UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K10-K/A
(Amendment No. 1)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File Number 001-38842
 twdcimagea02a19.jpg
Delaware 83-0940635
State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification
Incorporation or Organization
500 South Buena Vista Street
Burbank, California 91521
Address of Principal Executive Offices and Zip Code
(818) 560-1000
Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueDISNew York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ☐ No  x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes  ☐ No x
The aggregate market value of common stock held by non-affiliates (based on the closing price on the last business day of the registrant’s most recently completed second fiscal quarter as reported on the New York Stock Exchange-Composite Transactions) was $182.9 billion. All executive officers and directors of the registrant and all persons filing a Schedule 13D with the Securities and Exchange Commission in respect to registrant’s common stock have been deemed, solely for the purpose of the foregoing calculation, to be “affiliates” of the registrant.
There were 1,830,315,9211,834,285,760 shares of common stock outstanding as of January 17, 2024.
Auditor Name: PricewaterhouseCoopers LLP
Auditor Location: Los Angeles, California
Auditor Firm ID: 238


CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding mandates, expectations, beliefs, business plans and other statements that are not historical in nature. These statements are made on the basis of the Company’s views and assumptions regarding future events and business performance and plans as of the time the statements are made. The Company does not undertake any obligation to update these statements unless required by applicable laws or regulations and you should not place undue reliance on forward-looking statements. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.
Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including capital investments, asset acquisitions or dispositions, new or expanded business lines or cessation of certain operations), our execution of our business plans (including the content we create and IP we invest in, our pricing decisions, our cost structure and our management and other personnel decisions), our ability to quickly execute on cost rationalization while preserving revenue, the discovery of additional information or other business decisions, as well as from developments beyond the Company’s control, including: the occurrence of subsequent events; deterioration in domestic and global economic conditions or failure of conditions to improve as anticipated; deterioration in or pressures from competitive conditions, including competition to create or acquire content, competition for talent and competition for advertising revenue; consumer preferences and acceptance of our content, offerings, pricing model and price increases, and corresponding subscriber additions and churn, and the market for advertising sales on our direct-to-consumer services and linear networks; health concerns and their impact on our businesses and productions; international, political or military developments; regulatory and legal developments; technological developments; labor markets and activities, including work stoppages; adverse weather conditions or natural disasters; and availability of content. Such developments may further affect entertainment, travel and leisure businesses generally and may, among other things, affect (or further affect, as applicable): our operations, business plans or profitability, including direct-to-consumer profitability; demand for our products and services; the performance of the Company’s content; our ability to create or obtain desirable content at or under the value we assign the content; the advertising market for programming; income tax expense; and performance of some or all Company businesses either directly or through their impact on those who distribute our products.
Additional factors include those described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023, including under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” in our subsequent quarterly reports on Form 10-Q, including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our subsequent filings with the Securities and Exchange Commission (“SEC”).


EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends The Walt Disney Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023, originally filed with the SEC on November 15, 2023.21, 2023 (the “Original Form 10-K”).
Documents Incorporated by Reference
Certain information required for Part IIIWe are filing this Amendment pursuant to General Instruction G(3) of this report is incorporated herein by reference to theForm 10-K, as we currently expect that our definitive proxy statement for the 2024 annual meeting of stockholders (“Annual Meeting”) will be filed later than the Company’s shareholders.120th day after the end of the last fiscal year. Accordingly, this Amendment is being filed solely to:

•amend Part III, Items 10, 11, 12, 13 and 14 of the Original Form 10-K to include the information required by and not included in such Items;

•delete the reference on the cover of the Original Form 10-K to the incorporation by reference of certain information from our proxy statement into Part III of the Original Form 10-K; and

•file new certifications of our principal executive officer and principal financial officer as exhibits to this Amendment under Item 15 of Part IV hereof pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, and to Section 302 of the Sarbanes-Oxley Act of 2002.

This Amendment does not otherwise change or update any of the disclosures set forth in the Original Form 10-K.

References to the “Company,” “Disney,” “we” or “our” in this Amendment refer to The Walt Disney Company and, as applicable, its consolidated subsidiaries.


THE WALT DISNEY COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
 
  Page
PART I
ITEM 1.
2
ITEM 1A.
17
ITEM 1B.
26
ITEM 2.
26
ITEM 3.
27
ITEM 4.
27
27
PART II
ITEM 5.
29
ITEM 7.
30
ITEM 7A.
68
ITEM 8.
69
ITEM 9.
69
ITEM 9A.
69
ITEM 9B.
69
ITEM 9C
69
PART III
ITEM 10.
701
ITEM 11.
7017
ITEM 12.
7068
ITEM 13.
7071
ITEM 14.
7073
PART IV
ITEM 15.
7174
ITEM 16.
75
76
77



Cautionary Note on Forward-Looking StatementsPART III
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A
ITEM 10. Directors, Executive Officers and Corporate Governance
Executive Officers
Information regarding executive officers of the Securities ActCompany is set forth under “Information About Our Executive Officers” at the end of 1933, as amended, and Section 21EPart I of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance and may include statements concerning, among other things, financial results, business plans (including statements regarding new services and products and future expenditures, costs and investments), future liabilities or other obligations, impairments and amortization, estimatesOriginal Form 10-K.
Directors
The names of the financial impact of certain items, accounting treatment, events or circumstances; competition and seasonality. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “would,” “should,” “expects,” “plans,” “could,” “intends,” “target,” “projects,” “believes,” “estimates,” “anticipates,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements reflect our current views with respect to future events and are based on assumptions as of the date of this report. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.
Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including capital investments, asset acquisitions or dispositions, new or expanded business lines or cessation of certain operations), our execution of our business plans (including the content we create and IP we invest in, our pricing decisions and our cost structure) or other business decisions, as well as from developments beyond the Company’s control, including:
•further deterioration in domestic and global economic conditions;
•deterioration in or pressures from competitive conditions, including competition to create or acquire content;
•consumer preferences and acceptance of our content, offerings, pricing model and price increases and the market for advertising sales on our direct-to-consumer services and linear networks;
•health concerns and their impact on our businesses and productions;
•international, regulatory, legal, political, or military developments;
•technological developments;
•labor markets and activities;
•adverse weather conditions or natural disasters; and
•availability of content;
each such risk includes the current and future impacts of, and is amplified by, COVID-19 and related mitigation efforts.
Such developments may further affect entertainment, travel and leisure businesses generally and may, among other things, affect (or further affect, as applicable):
•our operations, business plans or profitability;
•demand for our products and services;
•the performancemembers of the Company’s content;
•our ability to create or obtain desirable content at or under the value we assign the content;
•the advertising market for programming;
•income tax expense; and
•performanceBoard of some or all Company businesses either directly or throughDirectors (the “Board”), their impact on those who distribute our products.
Additional factors include those described in this Annual Report on Form 10-K, including under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” in our subsequent quarterly reports on Form 10-Q, including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our subsequent filingsrespective ages, their positions with the SecuritiesCompany and Exchange Commission.
A forward-looking statementother biographical information as of January 16, 2024 are set forth below. Mr. Gorman is neithernot a prediction norcurrent Director but will join the Board on February 5, 2024 and is included below as a guarantee of future eventsnominee to the Board at the Annual Meeting. All Directors serve for a term ending at the next annual meeting following the annual meeting at which the Director was elected or circumstances. You should not place undue reliance on the forward-looking statements. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements,following their appointment, as applicable, and until their successors are elected and qualified, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstancesuntil their earlier death, resignation, disqualification or events that occur after the statements are made.removal.
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PART I
ITEM 1. Business
The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with operations in three segments: Entertainment, Sports and Experiences.
The terms “Company”, “we”, “our” and “us” are used in this report to refer collectively to the parent company and the subsidiaries through which businesses are conducted.
Human Capital
The Company’s key human capital management objectives are to attract, retain and develop the highest quality talent. To support these objectives, the Company’s human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, benefit and perquisite programs; enhance the Company’s culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing, diverse workforce; engage employees as brand ambassadors of the Company’s content, products and experiences; and evolve and invest in technology, tools and resources to enable employees at work.
The Company employed approximately 225,000 people as of September 30, 2023, of which approximately 167,000 were employed in the U.S. and approximately 58,000 were employed outside the U.S. Our global workforce is comprised of approximately 77% full time and 16% part time employees, with another 7% being seasonal employees. A significant number of employees in various parts of our businesses, including employees of our theme parks, and writers, directors, actors and production personnel for our productions are covered by collective bargaining agreements. In addition, some of our employees outside the U.S. are represented by works councils, trade unions or other employee associations.
Some of our key programs and initiatives to attract, develop and retain our diverse workforce include:
•Health, wellness, family resources and other benefits: Disney’s benefit offerings are designed to meet the varied and evolving needs of a diverse workforce across businesses and geographies while helping our employees care for themselves and their families. We provide:
◦Healthcare options aimed at improving quality of care while limiting out-of-pocket costs
◦Family care resources, such as childcare and senior care programs for employees, including access to onsite/community centers, enhanced back-up care choices to include personal caregivers, childcare referral assistance and center discounts, homework help, college preparation, support for students with special needs, a variety of parenting educational resources, long-term care coverage and a family building benefit supporting fertility treatments, adoptions or surrogacy
◦Free mental health and well-being resources, including onsite and virtual on-demand access to the Employee Assistance Program for employees and their dependents and access to digital applications to manage stress and encourage movement
◦Two Centers for Living Well facilities that offer convenient, on-demand access to board-certified physicians and counselors
◦Global Well-Being Week (introduced in 2022), a dedicated week for employees around the world to celebrate, learn and engage in well-being through in-person and virtual events and activities focused on physical, emotional, financial and social well-being
◦Access to a variety of well-being focused apps and platforms including our newest offering, Thrive Global, which is an innovative app that helps employees create long-term healthy habits and behaviors while improving their overall well-being and productivity
•Diversity, Equity and Inclusion (DE&I): Our DE&I objectives are to build teams that reflect the life experiences of our audiences, while employing and supporting a diverse array of voices in our creative and production teams. Our DE&I initiatives and programs include:
◦Reimagine Tomorrow, which is the Company’s digital destination for amplifying underrepresented voices and features some of Disney’s DE&I commitments and actions
◦Executive Incubator, Creative Talent Development and Inclusion, and the Disney Launchpad: Shorts Incubator, which are designed to create a pipeline of next-generation creative executives from underrepresented backgrounds
◦Employee development programs and fellowships for underrepresented talent
◦Innovative learning opportunities, which spark dialogue among employees, leaders, Disney talent and external experts
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◦Over 100 employee-led groups, which represent and support the diverse communities that make up our global workforce
◦The Disney Look appearance guidelines, which were updated to cultivate a more inclusive environment that encourages and celebrates authentic expressions of belonging among employees
•Disney Aspire: We support the long-term career aspirations of our hourly employees and further our commitment to strengthening the communities in which we work through our education investment program, Disney Aspire. We pay 100% of the tuition costs upfront for eligible participating employees at a variety of in-network learning providers and universities and reimburse employees for applicable books and fees. The program helps our employees achieve their goals professionally - whether at Disney or beyond - by equipping them with the skills they need to succeed in the rapidly changing 21st century career landscape. More than 15,000 current employees are enrolled and more than 3,800 current employees have graduated since the program launched in 2018. More than 3,100 current students and graduates have been internally promoted across the Company.
•Talent Development: We prioritize and invest in creating opportunities to help employees grow and build their careers through a multitude of training and development programs. These include online, instructor-led and on-the-job learning formats as well as executive talent and succession planning paired with an individualized development approach.
•Sustainability and Social Impact: The Company’s longstanding commitments to sustainability and social impact helps differentiate the Company as an employer. Our priorities include operating responsibly; investing in our people’s development and employee experience; diversity, equity and inclusion; environmental stewardship and conservation; and supporting our communities, with a focus on supporting children and families. Our approach seeks to connect these priorities with the Company’s businesses and employees and is reflected in our philanthropic giving. The Company also supports employees who give back to our communities with a generous U.S. matching gifts program, as well as Disney VoluntEARS, which rewards employees for their volunteer hours with the opportunity to direct not-for-profit donations from the Company to qualified non-profits of their choosing.
Environmental Sustainability
The Company has developed measurable environmental sustainability goals for 2030, based on our assessment of where the Company’s operations have the most significant environmental impacts and where we can most effectively mitigate those impacts. The Company’s goals encompass science-based targets for Scope 1, 2 and 3 emissions, water stewardship, waste reduction, sustainable design in construction and use of more sustainable materials in our products.
ENTERTAINMENT
The Entertainment segment generally encompasses the Company’s non-sports focused global film, television and direct-to-consumer (DTC) video streaming content production and distribution activities.
The significant lines of business within Entertainment are as follows:
•Linear Networks
◦Domestic: ABC Television Network (ABC Network); Disney, Freeform, FX and National Geographic (owned 73% by the Company) branded television channels; and eight owned ABC television stations
◦International: Disney, Fox (which will be rebranded in fiscal 2024, primarily to FX or Star), FX, National Geographic (owned 73% by the Company) and Star branded general entertainment television channels outside of the U.S.
◦A 50% equity investment in A+E Television Networks (A+E), which operates cable channels including A&E, HISTORY and Lifetime
•Direct-to-Consumer
◦Disney+: a global DTC service that primarily offers general entertainment and family programming. In certain Latin American countries, we offer Disney+ as well as Star+, a general entertainment service that also has sports programming
◦Disney+ Hotstar: a DTC service primarily in India that offers general entertainment, family and sports programming
◦Hulu (owned 67% by the Company): a U.S. DTC service that offers general entertainment and family programming and a digital over-the-top (OTT) service that includes live linear streams of cable networks and the major broadcast networks
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•Content Sales/Licensing
◦Sale/licensing of film and episodic content to third-party television and video-on-demand (TV/VOD) services
◦Theatrical distribution
◦Home entertainment distribution: DVD and Blu-ray discs, electronic home video licenses and video-on-demand (VOD) rentals
◦Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)
◦Intersegment allocation of revenues from the Experiences segment, which is meant to reflect royalties on consumer products merchandise licensing revenues generated on intellectual property (“IP”) created by the Entertainment segment
◦Music distribution
◦Post-production services by Industrial Light & Magic and Skywalker Sound
Entertainment also includes the following activities that are reported with Content Sales/Licensing:
•National Geographic magazine and online business (owned 73% by the Company)
•A 30% ownership interest in Tata Play Limited, which operates a direct-to-home satellite distribution platform in India
The significant revenues of Entertainment are as follows:
•Affiliate fees - Fees charged to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g. YouTube TV) service providers) (MVPDs) for the right to deliver our programming to their customers. Linear Networks also generates revenues from fees charged to television stations affiliated with ABC Network.
•Subscription fees - Fees charged to customers/subscribers for our DTC streaming services
•Advertising - Sales of advertising time/space
•TV/VOD distribution - Licensing fees for the right to use our film and episodic content
•Theatrical distribution - Rentals from licensing our films to theaters
•Home entertainment distribution - Sales and rentals of our film and episodic content to retailers and through distributors
•Other revenue - Revenues from licensing our music, ticket sales from stage play performances, fees from licensing our IP for use in stage plays, sales of post-production services and the allocation of consumer products merchandise licensing revenues
The significant expenses of Entertainment are as follows:
•Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor, distribution costs and costs of sales. Programming and production costs include the following:
◦Amortization of capitalized production costs
◦Amortization of the costs of licensed programming rights
◦Subscriber-based fees for programming our Hulu Live service, including fees paid by Hulu to the Sports segment and other Entertainment segment businesses for the right to air their linear networks on Hulu Live
◦Production costs related to live programming (primarily news)
◦Amortization of participations and residual obligations
◦Fees paid to the Sports segment to program ESPN on ABC and certain sports content on Star+
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
Linear Networks
The majority of Linear Networks revenue is derived from affiliate fees and advertising. The Company’s Linear Networks businesses provide programming under multi-year licensing agreements with MVPDs and/or affiliated television stations that are generally based on contractually specified rates on a per subscriber basis. The amounts that we can charge for our networks are largely dependent on the quality and quantity of programming that we can provide and the competitive market for programming services. The ability to sell advertising time and the rates received are primarily dependent on the size and nature of the audience that the network can deliver to the advertiser as well as overall advertiser demand.
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Domestic Linear Networks
ABC Network
ABC Network distributes programming to approximately 240 local affiliated television stations and to our eight owned television stations, which collectively reach almost 100% of U.S. television households. ABC Network programming is aired in the primetime, daytime, late night, news and sports “dayparts”. ESPN programs the sports daypart on the ABC Network, which is branded ESPN on ABC.
ABC Network produces a variety of primetime specials, news and daytime programming.
Disney Channels
Branded television channels include: Disney Channel; Disney Junior; and Disney XD (collectively Disney Channels).
Disney Channel - the Disney Channel airs original series and movie programming 24 hours a day targeted to kids ages 2 to 14. The channel features live-action comedy series, animated programming and preschool series as well as original movies and theatrical films.
Disney Junior - the Disney Junior channel airs programming 24 hours a day targeted to kids ages 2 to 7 and their parents and caregivers. The channel features animated and live-action programming that blends Disney’s storytelling and characters with learning. Disney Junior also airs as a programming block on the Disney Channel.
Disney XD - the Disney XD channel airs programming 24 hours a day targeted to kids ages 6 to 11. The channel features a mix of live-action and animated programming.
Freeform
Freeform is a channel targeted to viewers ages 18 to 34 that airs original, Company owned (“library”) and licensed television series, films and holiday programming events.
FX Channels
Branded television channels include: FX; FXM; and FXX (collectively FX Channels), which air a mix of original, library and licensed television series and films.
National Geographic Channels
Branded television channels include: National Geographic; Nat Geo Wild; and Nat Geo Mundo (collectively National Geographic Channels). National Geographic Channels air scripted and documentary programming on such topics as natural history, adventure, science, exploration and culture.
The number of subscribers (in millions) for the significant domestic branded channels are as follows:
Subscribers(1)
Disney
Disney Channel71
Disney Junior(2)
52
Disney XD(2)
51
Freeform(2)
71
FX Channels
FX72
FXX(2)
68
FXM(2)
43
National Geographic Channels
National Geographic71
National Geographic Wild(2)
42
(1)Based on Nielsen Media Research estimates as of September 2023. Estimates include traditional MVPD and the majority of digital OTT subscriber counts.
(2)The Company renewed its MVPD agreement with an affiliate during September 2023, under which the affiliate will no longer distribute these channels. Nielsen Media Research estimates as of September 2023 do not reflect the impact of this agreement.
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Domestic Television Stations
The Company owns eight television stations, six of which are located in the top ten television household markets in the U.S. Our television stations collectively reach approximately 20% of U.S. television households.
The stations we own are as follows:
TV StationMarket
Television Market
Ranking(1)
WABCNew York, NY1
KABCLos Angeles, CA2
WLSChicago, IL3
WPVIPhiladelphia, PA4
KTRKHouston, TX7
KGOSan Francisco, CA10
WTVDRaleigh-Durham, NC23
KFSNFresno, CA53
(1)Based on Nielsen Media Research, U.S. Television Household Estimates, January 1, 2023
International Linear Networks
International Linear Networks use content from the Company’s various studios, including library titles, as well as content acquired from third parties. The Company operates approximately 285 general entertainment and family channels outside the U.S. in approximately 40 languages and 190 countries/territories.
General Entertainment
General Entertainment channels include Fox (which will be rebranded in fiscal 2024, primarily to FX or Star), FX, National Geographic and Star branded channels, which air a variety of scripted, reality and documentary programming. As of September 2023 and 2022, the estimated number of unique subscribers for our general entertainment channels, based on internal management reports, are 270 million and 315 million, respectively.
Family
Family channels include Disney Channel and Disney Junior, which air a variety of animated and live action original series and movies targeted to kids ages 2 to 14 and their parents and caregivers. As of September 2023 and 2022, the estimated number of unique subscribers for our family channels, based on internal management reports, are 225 million and 220 million, respectively.
Equity Investments
The most significant equity investment at Linear Networks is A+E. The Company’s share of A+E’s financial results are reported as “Equity in the income (loss) of investees, net” in the Company’s Consolidated Statements of Operations.
A+E is owned 50% by the Company and 50% by Hearst. A+E operates a variety of cable channels:
•A&E – which generally offers unscripted entertainment programming
•HISTORY – which offers original unscripted series and event-driven specials
•Lifetime and Lifetime Movie Network (LMN) – which offer female-focused programming
•FYI – which offers contemporary lifestyle programming
A+E programming is available in approximately 200 countries and territories. A+E’s networks are distributed internationally under multi-year licensing agreements with MVPDs. A+E programming is also sold to international TV/VOD services.
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The number of domestic subscribers (in millions) for A+E channels are as follows:
Subscribers(1)
A&E65
HISTORY65
Lifetime65
LMN49
FYI37
(1)Based on Nielsen Media Research estimates as of September 2023. Estimates include traditional MVPD and the majority of digital OTT subscriber counts.
Direct-to-Consumer
Disney+, Disney+ Hotstar and Hulu are subscription services that provide video streaming of general entertainment and family programming. Disney+ and Disney+ Hotstar also provide video streaming of international sports programming. The services are offered individually or in various bundles, which may include ESPN+ (see Sports segment discussion), to customers directly or through third-party distributors on mobile and internet connected devices. The majority of Direct-to-Consumer revenue is derived from subscription fees and advertising.
Disney+ (including Star+ in Latin America)
Disney+ is a subscription-based DTC service with Disney, Pixar, Marvel, Star Wars and National Geographic branded programming, which are all top-level selections or “tiles” within the Disney+ interface. Outside the U.S. and Latin America, Disney+ also includes a Star branded tile, which features general entertainment programming.
Star+ is a standalone DTC service in Latin America with a variety of general entertainment and family content and live sports programming.
Disney+ (including Star+) is also referred to as Disney+ Core.
As of September 30, 2023, the estimated number of paid Disney+ Core subscribers, based on internal management reports, was approximately 113 million.
Disney+ Hotstar
Disney+ Hotstar is a subscription-based DTC service available in India, Indonesia, Malaysia, Philippines and Thailand. Programming includes television shows, movies, sports and original series in approximately ten languages, in addition to gaming and social features. Disney+ Hotstar has exclusive streaming rights to certain cricket programming.
As of September 30, 2023, the estimated number of paid Disney+ Hotstar subscribers, based on internal management reports, was approximately 38 million.
Disney+ Core and Disney+ Hotstar offer content from the Company’s various studios, including library titles, as well as content acquired from third parties.
The majority of Disney+ Core and Disney+ Hotstar revenue is derived from subscription fees and, to a lesser extent, Advertising. The Company launched an ad-supported Disney+ service in the U.S. in December 2022 and in select European markets and in Canada in November 2023. The Company plans to launch an ad-supported Disney+ service in additional international markets in calendar 2024.
Hulu
Hulu is a domestic subscription-based DTC service with general entertainment content from the Company’s various studios as well as content licensed from third parties. Hulu’s revenue is primarily derived from subscription fees and Advertising. Hulu offers subscription VOD (SVOD) services with or without advertising in addition to a digital OTT MVPD (Live TV) service. The Live TV service is available with either of Hulu’s SVOD services and includes live linear streams of cable networks and the major broadcast networks. In addition, Hulu offers subscriptions to premium services such as Max, Cinemax, Starz and Showtime, which can be added to the Hulu service. Certain programming from ABC Network, Freeform and FX Channels is also available on the Hulu SVOD service one day after the linear airing on these channels. As of September 30, 2023, the estimated number of paid Hulu subscribers, based on internal management reports, was approximately 49 million.
The Company has 67% ownership and full operational control of Hulu. NBC Universal (NBCU) owns the remaining 33% of Hulu. In November 2023, NBCU exercised its put right to require the Company to purchase NBCU’s interest in Hulu (see Note 2 of the Consolidated Financial Statements for additional information).
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Content Sales/Licensing and Other
The majority of Content Sales/Licensing revenue is derived from TV/VOD, theatrical and home entertainment distribution. In addition, revenue is generated from music distribution, stage plays and post-production services through Industrial Light & Magic and Skywalker Sound.
The Company also publishes National Geographic magazine, which is reported with Content Sales/Licensing.
TV/VOD Distribution
We license our content to third-party television networks, television stations and other video service providers for distribution to viewers on television or a variety of internet-connected devices, including through other DTC services.
Theatrical Distribution
The Company licenses full-length live-action and animated films to theaters globally. Cumulatively through September 30, 2023, the Company has released approximately 1,100 full-length live-action films and 100 full-length animated films. In the domestic and most major international markets, we generally distribute and market our films directly. In certain international markets our films are distributed by independent companies. In some territories, certain films may be exclusively distributed on our DTC streaming services. During fiscal 2024, we expect to release approximately 15 films, although the ultimate number of releases will depend on when productions resume following the writers/actors’ work stoppages.
The Company incurs significant marketing and advertising costs before and throughout the theatrical release of a film in an effort to generate public awareness of the film, to increase the public’s intent to view the film and to help generate consumer interest in the subsequent home entertainment and other ancillary markets. These costs are expensed as incurred, which may result in a loss on a film in the theatrical markets, including in periods prior to the theatrical release of the film.
Home Entertainment Distribution
We distribute the Company’s film and episodic content in home entertainment markets on DVD and Blu-ray disc, through electronic home video licenses and VOD rentals globally.
Domestically and internationally, we distribute directly to retailers and through independent distribution companies. Electronic formats of our film and episodic content may be purchased through e-tailers such as Apple and Amazon, and MVPDs, such as Comcast and DirecTV, and physical formats are generally sold to retailers, such as Walmart and Target. The Company also operates Disney Movie Club, which sells DVD/Blu-ray discs directly to consumers in the U.S. and Canada.
Distribution of film content in the home entertainment window generally starts within three months after the theatrical release. Electronic formats are typically available approximately four to eight weeks ahead of the physical release. We also license titles to VOD e-tailers concurrent with physical home entertainment distribution.
Distribution of episodic content in the home entertainment window includes electronic sales of season passes that can be purchased prior to, during and after the broadcast season with individual episodes typically available to season pass customers shortly after the initial airing of the show in each territory. Access to individual episodes is also available for electronic purchase shortly after the initial airing in each territory.
Disney Theatrical Group
Disney Theatrical Group develops, produces and licenses live entertainment events on Broadway and around the world. Productions include The Lion King, Frozen, Aladdin and Beauty and the Beast.
Disney Theatrical Group also licenses the Company’s IP to Feld Entertainment, the producer of Disney On Ice and Marvel Universe Live!.
Disney Music Group
The Disney Music Group encompasses all aspects of the Company’s music commercialization and marketing including: recorded music (Walt Disney Records and Hollywood Records); music publishing; and concerts. Disney Music Group distributes music both physically and digitally and also licenses music throughout the world in various forms of media, including: television; print; gaming; and consumer products.
Equity Investment
The Company has a 30% effective interest in Tata Play Limited, which operates a direct-to-home satellite distribution platform in India.
Content Production and Acquisition
Produced content primarily consists of original films and episodic programs, network news and daytime/nighttime content and licensed content includes acquired episodic programming rights. Original content is generally produced under the following banners: ABC Signature; Disney Branded Television; FX Productions; Lucasfilm; Marvel; National Geographic Studios; Pixar;
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Searchlight Pictures; Twentieth Century Studios; 20th Television; and Walt Disney Pictures. Original content is also commissioned and produced by various third-party studios. Program development is carried out in collaboration with writers, producers and creative teams.
Costs to produce content are generally capitalized and allocated across Entertainment’s businesses based on the estimated relative value of the distribution windows.
Generally, the Company has full production and distribution rights to its IP. However, prior to the Company’s acquisition of Marvel, Sony Pictures Entertainment licensed from Marvel the rights to produce and distribute Spider-Man films in all windows except for the merchandise rights, which the Company retains.
The Company has a significant library of content spanning approximately 100 years of production history as well as acquired libraries. The library of content includes approximately 5,100 live-action film titles and 400 animated film titles, as well as episodic series with four or more seasons (approximately 75 dramas, 55 comedies, 35 non-scripted series, 15 animated series and 10 live-action series). In addition, the library includes approximately 100 series and 65 films that were produced for initial distribution on our DTC platforms.
In fiscal 2024, the Company plans to produce or commission approximately 225 episodic and film titles, although the ultimate number will depend on when productions resume following the writers/actors’ work stoppages. The vast majority of our productions will be distributed on our Linear Networks and/or DTC platforms or theatrically. Programming is also produced for third parties, which typically have domestic linear distribution rights while the Company retains domestic VOD and international distribution rights. We also license, acquire or produce local content for use in various countries/territories.
Competition and Seasonality
Linear Networks and Direct-to-Consumer compete for viewers’ attention and audience share primarily with other television networks, independent television stations and other media, such as other DTC streaming services, social media and video games. With respect to the sale of advertising time, we compete with other television networks, independent television stations, MVPDs, other DTC streaming services and other advertising media such as digital content, newspapers, magazines, radio and billboards. Our television and radio stations primarily compete for audiences and advertisers in local market areas.
Linear Networks compete with other networks for carriage by MVPDs. The Company’s contractual agreements with MVPDs are renewed or renegotiated from time to time in the ordinary course of business. Consolidation and other market conditions in the cable, satellite and telecommunication distribution industry, including subscriber trends, and other factors may adversely affect the Company’s ability to obtain and maintain contractual terms for the distribution of its various programming services that are as favorable as those currently in place.
Content Sales/Licensing businesses compete with all forms of entertainment and a significant number of companies produce and/or distribute theatrical and episodic content, distribute products in the home entertainment market, provide pay TV/VOD services, and produce music and live theater.
The operating results of Content Sales/Licensing fluctuate due to the timing and performance of releases in the theatrical, home entertainment and television markets. Release dates are determined by several factors, including competition and the timing of vacation and holiday periods.
We also compete with other media and entertainment companies, independent production companies and VOD services for creative and performing talent, story properties, show concepts, scripted and other programming, advertiser support, production facilities and exhibition outlets that are essential to the success of our Entertainment businesses.
Advertising revenues at Linear Networks and Direct-to-Consumer are subject to seasonal advertising patterns and changes in viewership levels. In general, domestic advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months. Affiliate revenues vary with the subscriber trends of MVPDs.
Sports
The Sports segment generally encompasses the Company’s sports-focused global television and DTC video streaming content production and distribution activities.
The significant lines of business within Sports are as follows:
•ESPN (generally owned 80% by the Company)
◦Domestic:
▪Eight ESPN-branded television channels
▪ESPN on ABC (sports programmed on the ABC Network by ESPN)
▪ESPN+ DTC video streaming service
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◦International: ESPN-branded channels outside of the U.S.
•Star: Star-branded sports channels in India
The significant revenues of Sports are as follows:
•Affiliate fees
•Advertising
•Subscription fees
•Other revenue - Fees from the following activities: pay-per-view events on ESPN+, sub-licensing of sports rights, programming ESPN on ABC and licensing the ESPN brand
The significant expenses of Sports are as follows:
•Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor and distribution costs. Programming and production costs include amortization of licensed sports rights and production costs related to live sports and other sports-related programming.
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
Domestic ESPN
Branded television channels include eight 24-hour domestic television sports channels: ESPN and ESPN2 (both of which are dedicated to professional and college sports as well as sports news and original programming); ESPNU (which is dedicated to college sports); ESPNEWS (which re-airs select ESPN studio shows and airs a variety of other programming); SEC Network (which is dedicated to Southeastern Conference college athletics); ACC Network (which is dedicated to Atlantic Coast Conference college athletics); ESPN Deportes (which airs professional and college sports as well as studio shows in Spanish); and Longhorn Network (which is dedicated to The University of Texas athletics). In addition, ESPN programs ESPN on ABC and recognizes the direct revenues and costs for this programming and receives a fee from the ABC Network, which is eliminated in consolidation.
The Company has various sports programming rights, which are used to produce content aired on ESPN television networks and ESPN+, including live events and sports news. Rights include the National Football League (NFL), college football (including bowl games and the College Football Playoff) and basketball, the National Basketball Association (NBA), mixed martial arts, Major League Baseball (MLB), the National Hockey League (NHL), soccer, Top Rank Boxing, US Open Tennis, the Masters golf tournament, the Wimbledon Championships, the Professional Golfers’ Association (PGA) Championship and the Women’s National Basketball Association (WNBA).
The number of subscribers (in millions) for the significant domestic branded channels are as follows:
Subscribers
ESPN(1)
71
ESPN2(1)
71
ESPNU(1)
50
ESPNEWS(2)
53
SEC Network(2)
48
ACC Network(2)
46
(1)Based on Nielsen Media Research estimates as of September 2023. Estimates include traditional MVPD and the majority of digital OTT subscriber counts.
(2)Because Nielsen Media Research does not measure this channel, estimated subscribers are according to SNL Kagan as of December 2022.
ESPN+ is a domestic subscription-based DTC service offering thousands of live sporting events, on-demand sports content and other original programming. The service is offered individually or in various bundles with Disney+ and Hulu to customers directly or through third-party distributors on mobile and internet connected devices. ESPN+ revenue is derived from subscription fees, pay-per-view fees and, to a lesser extent, advertising. Live events available through the service include mixed martial arts, soccer, hockey, boxing, baseball, college sports, golf, tennis and cricket. ESPN+ is currently the exclusive distributor for Ultimate Fighting Championship (UFC) pay-per-view events in the U.S. As of September 30, 2023, the estimated number of paid ESPN+ subscribers, based on internal management reports, was approximately 26 million.
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International ESPN
The Company operates approximately 40 ESPN branded sports channels outside the U.S. in 4 languages and approximately 105 countries/territories. Channels previously branded Fox are now branded ESPN. In the Netherlands, the ESPN branded channels are operated by Eredivisie Media & Marketing CV (EMM) (owned 51% by the Company), which has the media and sponsorship rights of the Dutch Premier League for soccer. Rights include various soccer leagues (including English Premier League, LaLiga, Bundesliga and multiple UEFA leagues). As of September 2023, the estimated number of subscribers to ESPN branded channels outside the U.S., based on internal management reports, was approximately 59 million.
Star
The Company operates 10 Star branded sports channels in India, in 4 languages. Star has rights to various sports programming, primarily cricket and soccer. As of September 2023, the estimated number of subscribers to Star branded channels, based on internal management reports, was 82 million.
Equity Investments
The most significant equity investment at Sports is a 30% interest in CTV Specialty Television, Inc. (CTV). The Company’s share of CTV’s financial results is reported as “Equity in the income (loss) of investees, net” in the Company’s Consolidated Statements of Operations. CTV operates television networks in Canada, including The Sports Networks (TSN) 1-5, Le Réseau des Sports (RDS), RDS2, RDS Info, Discovery Canada, Discovery Science and Animal Planet Canada.
Investments
In fiscal 2023, the Company entered into an agreement with PENN Entertainment, Inc. (PENN), under which the Company will earn advertising and licensing revenues from providing promotional services and the ESPN BET trademark to PENN in connection with its operation of a sportsbook. In addition, the Company received warrants to purchase equity in PENN, which vest over the term of the agreement. The warrants are recorded at fair market value and adjustments to fair market value are reported as “Interest expense, net” in the Company’s Consolidated Statements of Operations.
Competition and Seasonality
Sports competes for viewers’ attention and audience share primarily with other television networks, independent television stations and other media, such as other DTC streaming services, social media and video games. With respect to the sale of advertising time, we compete with other television networks, independent television stations, MVPDs and other advertising media such as digital content, newspapers, magazines, radio and billboards.
The Sports television networks compete with other networks for carriage by MVPDs. The Company’s contractual agreements with MVPDs are renewed or renegotiated from time to time in the ordinary course of business. Consolidation and other market conditions in the cable, satellite and telecommunication distribution industry and other factors may adversely affect the Company’s ability to obtain and maintain contractual terms for the distribution of its various programming services that are as favorable as those currently in place.
We also compete with other media and entertainment companies and VOD services for sports rights, creative and performing talent and other programming, advertiser support and production facilities that are essential to the success of our Sports businesses.
Advertising revenues are subject to changes in viewership levels and the demand for sports programming. Advertising revenues generated from sports programming 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). Affiliate revenues vary with the subscriber trends of MVPDs.
EXPERIENCES
The significant lines of business within Experiences are as follows:
•Parks & Experiences:
◦Domestic:
▪Theme parks and resorts:
•Walt Disney World Resort in Florida
•Disneyland Resort in California
▪Experiences:
•Disney Cruise Line
•Disney Vacation Club
•National Geographic Expeditions (owned 73% by the Company) and Adventures by Disney
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•Aulani, a Disney Resort & Spa in Hawaii
◦International:
▪Theme parks and resorts:
•Disneyland Paris
•Hong Kong Disneyland Resort (48% ownership interest and consolidated in our financial results)
•Shanghai Disney Resort (43% ownership interest and consolidated in our financial results)
•In addition, the Company licenses its IP to a third party to operate Tokyo Disney Resort
•Consumer Products:
◦Licensing of our trade names, characters, visual, literary and other IP to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games
◦Sale of branded merchandise through online, retail and wholesale businesses, and development and publishing of books, comic books and magazines (except National Geographic magazine, which is reported in Entertainment)
The significant revenues of Experiences are as follows:
•Theme park admissions - Sales of tickets for admission to our theme parks and for premium access to certain attractions (e.g. Genie+ and Lightning Lane)
•Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties
•Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships
•Merchandise licensing and retail:
◦Merchandise licensing - Royalties from licensing our IP for use on consumer goods
◦Retail - Sales of merchandise through internet shopping sites (generally branded shopDisney) and at The Disney Store, as well as to wholesalers (including books, comic books and magazines)
•Parks licensing and other - Revenues from sponsorships and co-branding opportunities, real estate rent and sales and royalties earned on Tokyo Disney Resort revenues
The significant expenses of Experiences are as follows:
•Operating expenses, consisting primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings. Infrastructure costs include technology support costs, repairs and maintenance, property taxes, utilities and fuel, retail occupancy costs, insurance and transportation
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
Significant capital investments:
•In recent years, the majority of the Company’s capital spend has been at our parks and experiences business, which is principally for theme park and resort expansion, new attractions, cruise ships, capital improvements and systems infrastructure.
Parks & Experiences
Walt Disney World Resort
The Walt Disney World Resort is located approximately 20 miles southwest of Orlando, Florida, on approximately 25,000 acres of land. The resort includes theme parks (the Magic Kingdom, EPCOT, Disney’s Hollywood Studios and Disney’s Animal Kingdom); hotels; vacation club properties; a retail, dining and entertainment complex (Disney Springs); a sports complex; conference centers; campgrounds; golf courses; water parks; and other recreational facilities designed to attract visitors for an extended stay.
The Walt Disney World Resort is marketed through a variety of international, national and local advertising and promotional activities. A number of attractions and restaurants in each of the theme parks are sponsored or operated by other companies under multi-year agreements.
Magic Kingdom — The Magic Kingdom consists of six themed areas: Adventureland, Fantasyland, Frontierland, Liberty Square, Main Street USA and Tomorrowland. Each land provides a unique guest experience featuring themed attractions, restaurants, merchandise shops and entertainment experiences.
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EPCOT — EPCOT consists of four major themed areas: World Showcase, World Celebration, World Nature and World Discovery. All areas feature themed attractions, restaurants, merchandise shops and entertainment experiences. Countries represented with pavilions include Canada, China, France, Germany, Italy, Japan, Mexico, Morocco, Norway, the United Kingdom and the U.S. The Journey of Water, inspired by Moana, opened in October 2023 as part of a multi-year transformation at EPCOT.
Disney’s Hollywood Studios — Disney’s Hollywood Studios consists of eight themed areas: Animation Courtyard, Commissary Lane, Echo Lake, Grand Avenue, Hollywood Boulevard, Star Wars: Galaxy’s Edge, Sunset Boulevard and Toy Story Land. The areas provide behind-the-scenes glimpses of Hollywood-style action through various shows and attractions and offer themed food service, merchandise shops and entertainment experiences.
Disney’s Animal Kingdom — Disney’s Animal Kingdom consists of a 145-foot tall Tree of Life centerpiece surrounded by five themed areas: Africa, Asia, DinoLand USA, Discovery Island and Pandora - The World of Avatar. Each themed area contains attractions, restaurants, merchandise shops and entertainment experiences. The park features more than 300 species of live mammals, birds, reptiles and amphibians and 3,000 varieties of vegetation.
Hotels, Vacation Club Properties and Other Resort Facilities — As of September 30, 2023, the Company owned and operated 18 resort hotels and vacation club facilities at the Walt Disney World Resort, with approximately 23,000 rooms and 3,600 vacation club units. Resort facilities include 500,000 square feet of conference meeting space and Disney’s Fort Wilderness camping and recreational area, which offers approximately 800 campsites.
Disney Springs is an approximately 120-acre retail, dining and entertainment complex and consists of four areas: Marketplace, The Landing, Town Center and West Side. The areas are home to more than 150 venues including the 64,000-square-foot World of Disney retail store. Most of the Disney Springs facilities are operated by third parties that pay rent to the Company.
Ten independently-operated hotels with approximately 7,000 rooms are situated on property leased from the Company.
ESPN Wide World of Sports Complex is a 230-acre center that hosts professional caliber training and competitions, festival and tournament events and interactive sports activities. The complex, which welcomes both amateur and professional athletes, accommodates multiple sporting events, including baseball, basketball, football, soccer, softball, tennis and track and field. It also includes a stadium, as well as two venues designed for cheerleading, dance competitions and other indoor sports.
Other recreational amenities and activities available at the Walt Disney World Resort include three championship golf courses, miniature golf courses, full-service spas, tennis, sailing, swimming, horseback riding and a number of other sports and leisure time activities. The resort also includes two water parks: Disney’s Blizzard Beach and Disney’s Typhoon Lagoon.
Disneyland Resort
The Company owns 489 acres and has rights under a long-term lease for use of an additional 52 acres of land in Anaheim, California. The Disneyland Resort includes two theme parks (Disneyland and Disney California Adventure), three resort hotels and a retail, dining and entertainment complex (Downtown Disney).
The Disneyland Resort is marketed through a variety of international, national and local advertising and promotional activities. A number of the attractions and restaurants in the theme parks are sponsored or operated by other companies under multi-year agreements.
Disneyland — Disneyland consists of nine themed areas: Adventureland, Critter Country, Fantasyland, Frontierland, Main Street USA, Mickey’s Toontown, New Orleans Square, Star Wars: Galaxy’s Edge and Tomorrowland. These areas feature themed attractions, restaurants, merchandise shops and entertainment experiences.
Disney California Adventure — Disney California Adventure is adjacent to Disneyland and includes eight themed areas: Avengers Campus, Buena Vista Street, Cars Land, Grizzly Peak, Hollywood Land, Paradise Gardens Park, Pixar Pier and San Fransokyo Square. These areas include themed attractions, restaurants, merchandise shops and entertainment experiences.
Hotels, Vacation Club Units and Other Resort Facilities — Disneyland Resort includes three Company owned and operated hotels and vacation club facilities with approximately 2,400 rooms, 180 vacation club units and 180,000 square feet of conference meeting space.
Downtown Disney is a themed 15-acre retail, entertainment and dining complex with approximately 30 venues located adjacent to both Disneyland and Disney California Adventure. Most of the Downtown Disney facilities are operated by third parties that pay rent to the Company.
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Aulani, a Disney Resort & Spa
Aulani, a Disney Resort & Spa is a family resort on a 21-acre oceanfront property on Oahu, Hawaii featuring approximately 350 hotel rooms, an 18,000-square-foot spa and 12,000 square feet of conference meeting space. The resort also has approximately 480 vacation club units.
Disneyland Paris
Disneyland Paris is located on approximately 5,200-acres in Marne-la-Vallée, approximately 20 miles east of Paris, France. The land is being developed pursuant to a master agreement with French governmental authorities. Disneyland Paris includes two theme parks (Disneyland Park and Walt Disney Studios Park); seven themed resort hotels; two convention centers; a shopping, dining and entertainment complex (Disney Village); and a 27-hole golf facility. Of the 5,200 acres comprising the site, approximately half have been developed to date, including a planned community (Val d’Europe).
Disneyland Park — Disneyland Park consists of five themed areas: Adventureland, Discoveryland, Fantasyland, Frontierland and Main Street USA. These areas include themed attractions, restaurants, merchandise shops and entertainment experiences.
Walt Disney Studios Park — Walt Disney Studios Park includes five themed areas: Front Lot, Production Courtyard, Toon Studio, Worlds of Pixar and Avengers Campus. These areas each include themed attractions, restaurants, merchandise shops and entertainment experiences. Walt Disney Studios Park is undergoing a multi-year expansion that will include a new themed area based on Frozen.
Hotels and Other Facilities — Disneyland Paris operates seven resort hotels, with approximately 5,750 rooms and 250,000 square feet of conference meeting space. In addition, five on-site hotels that are owned and operated by third parties provide approximately 1,500 rooms.
Disney Village is an approximately 500,000-square-foot retail, dining and entertainment complex located between the theme parks and the hotels. A number of the Disney Village facilities are operated by third parties that pay rent to the Company.
Val d’Europe is a planned community near Disneyland Paris that is being developed in phases. Val d’Europe currently includes a regional train station, hotels and a town center consisting of a shopping center as well as office, commercial and residential space. Third parties operate these developments on land leased or purchased from the Company.
Hong Kong Disneyland Resort
The Company owns a 48% interest in Hong Kong Disneyland Resort and the Government of the Hong Kong Special Administrative Region (HKSAR) owns a 52% interest. The resort is located on 310 acres on Lantau Island and is in close proximity to the Hong Kong International Airport and the Hong Kong-Zhuhai-Macau Bridge. Hong Kong Disneyland Resort includes one theme park and three themed resort hotels. A separate Hong Kong subsidiary of the Company is responsible for managing Hong Kong Disneyland Resort. The Company is entitled to receive royalties and management fees based on the operating performance of Hong Kong Disneyland Resort.
Hong Kong Disneyland — Hong Kong Disneyland consists of eight themed areas: Adventureland, Fantasyland, Grizzly Gulch, Main Street USA, Mystic Point, Tomorrowland, Toy Story Land and World of Frozen, which opened in November 2023. These areas feature themed attractions, restaurants, merchandise shops and entertainment experiences.
Hotels — Hong Kong Disneyland Resort includes three themed hotels with approximately 1,750 rooms and 16,000 square feet of conference meeting space.
Shanghai Disney Resort
The Company owns a 43% interest in Shanghai Disney Resort and Shanghai Shendi (Group) Co., Ltd (Shendi) owns a 57% interest. The resort is located in the Pudong district of Shanghai on approximately 1,000 acres of land, which includes the Shanghai Disneyland theme park; two themed resort hotels; a retail, dining and entertainment complex (Disneytown); and an outdoor recreation area. A management company, in which the Company has a 70% interest and Shendi has a 30% interest, is responsible for operating the resort and receives a management fee based on the operating performance of Shanghai Disney Resort. The Company is also entitled to royalties based on the resort’s revenues.
Shanghai Disneyland — Shanghai Disneyland consists of seven themed areas: Adventure Isle, Fantasyland, Gardens of Imagination, Mickey Avenue, Tomorrowland, Toy Story Land and Treasure Cove. These areas feature themed attractions, shows, restaurants, merchandise shops and entertainment experiences. The Company is constructing an eighth themed area based on the animated film Zootopia, which is scheduled to open in late calendar 2023.
Hotels and Other Facilities — Shanghai Disneyland Resort includes two themed hotels with approximately 1,200 rooms. Disneytown is an 11-acre outdoor complex of dining, shopping and entertainment venues located adjacent to Shanghai Disneyland. Most Disneytown facilities are operated by third parties that pay rent to Shanghai Disney Resort. The Company is currently constructing a third themed hotel, which will have approximately 400 rooms.
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Tokyo Disney Resort
Tokyo Disney Resort is located on 494 acres of land, six miles east of downtown Tokyo, Japan. The Company earns royalties on revenues generated by the Tokyo Disney Resort, which is owned and operated by Oriental Land Co., Ltd. (OLC), a third-party Japanese corporation. The resort includes two theme parks (Tokyo Disneyland and Tokyo DisneySea); five Disney-branded hotels; six other hotels (operated by third parties other than OLC); a retail, dining and entertainment complex (Ikspiari); and Bon Voyage, a Disney-themed merchandise location.
Tokyo Disneyland — Tokyo Disneyland consists of seven themed areas: Adventureland, Critter Country, Fantasyland, Tomorrowland, Toontown, Westernland and World Bazaar.
Tokyo DisneySea — Tokyo DisneySea is divided into seven “ports of call,” including American Waterfront, Arabian Coast, Lost River Delta, Mediterranean Harbor, Mermaid Lagoon, Mysterious Island and Port Discovery. OLC is expanding Tokyo DisneySea to include an eighth themed port, Fantasy Springs expected to open in spring 2024.
Hotels and Other Resort Facilities — Tokyo Disney Resort includes five Disney-branded hotels with a total of more than 3,000 rooms and a monorail, which links the theme parks and resort hotels with Ikspiari. OLC is currently constructing a 475-room Disney-branded hotel at Tokyo DisneySea that is expected to open in spring 2024.
Disney Vacation Club (DVC)
DVC offers ownership interests in 16 resort facilities located at the Walt Disney World Resort; Disneyland Resort; Aulani; Vero Beach, Florida; and Hilton Head Island, South Carolina. Available units are offered for sale under a vacation ownership plan and are operated as hotel rooms when not occupied by vacation club members. The Company’s vacation club units range from deluxe studios to three-bedroom grand villas. Unit counts in this document are presented in terms of two-bedroom equivalents. DVC had approximately 4,500 vacation club units as of September 30, 2023, including The Villas at Disneyland Hotel, which opened in September 2023. The Company plans to open The Cabins at Disney’s Fort Wilderness Resort - A Disney Vacation Club Resort and additional units at Disney’s Polynesian Village Resort in 2024.
Storyliving by Disney
The Company is developing its first Storyliving by Disney residential community, Cotino, in Rancho Mirage, California.
Disney Cruise Line
Disney Cruise Line is a five-ship vacation cruise line, which operates out of ports in North America, Europe and the South Pacific. The Disney Magic and the Disney Wonder are 85,000-ton 875-stateroom ships; the Disney Dream and the Disney Fantasy are 130,000-ton 1,250-stateroom ships; and the Disney Wish is a 140,000-ton 1,250-stateroom ship. The ships cater to families, children, teenagers and adults, with themed areas and activities for each group. Many cruise vacations include a visit to Disney’s Castaway Cay, a 1,000-acre private Bahamian island.
Disney Cruise Line is adding the Disney Treasure, the Disney Adventure and an eighth ship. The Disney Treasure and the Disney Adventure are scheduled to be delivered from the shipyard in fiscal 2025 and the eighth ship is scheduled to be delivered in fiscal 2026. The Disney Treasure and eighth ship will be approximately 140,000 tons with 1,250 staterooms. The Disney Adventure will be approximately 200,000 tons with approximately 2,100 staterooms and will operate in Southeast Asia.
Disney Lookout Cay at Lighthouse Point on the island of Eleuthera is scheduled to open as a Disney Cruise Line destination in the summer of 2024.
Adventures by Disney and National Geographic Expeditions
Adventures by Disney and National Geographic Expeditions offer guided tour packages predominantly at non-Disney sites around the world.
Walt Disney Imagineering
Walt Disney Imagineering provides master planning, real estate development, attraction, entertainment and show design, engineering support, production support, project management and research and development.
Consumer Products
Licensing
The Company’s merchandise licensing operations cover a diverse range of product categories, the most significant of which are: toys, apparel, games, home décor and furnishings, accessories, health and beauty, food, books, stationery, footwear, magazines and consumer electronics. The Company licenses characters from its film, television and other properties for use on third-party products in these categories and earns royalties, which are usually based on a fixed percentage of the wholesale or retail selling price of the products. Some of the major properties licensed by the Company include: Mickey and Friends, Star Wars, Spider-Man, Disney Princess, Avengers, Frozen, Toy Story, Winnie the Pooh and Lilo & Stitch.
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Retail
The Company sells Disney-, Marvel-, Pixar- and Lucasfilm-branded products through shopDisney branded internet sites and Disney Store branded retail locations. At September 30, 2023, the Company owns and operates approximately 40 stores in Japan, 20 stores in North America, two stores in Europe and one store in China.
The Company creates, distributes and publishes a variety of products in multiple countries and languages based on the Company’s branded franchises. The products include children’s books and comic books.
Competition and Seasonality
The Company’s theme parks and resorts as well as Disney Cruise Line and Disney Vacation Club compete with other forms of entertainment, lodging, tourism and recreational activities. The profitability of the leisure-time industry may be influenced by various factors that are not directly controllable, such as economic conditions including business cycle and exchange rate fluctuations, health concerns, the political environment, travel industry trends, amount of available leisure time, oil and transportation prices, weather patterns and natural disasters. The licensing and retail business competes with other licensors, retailers and publishers of character, brand and celebrity names, as well as other licensors, publishers and developers of game software, online video content, websites, other types of home entertainment and retailers of toys and kids merchandise.
All of the theme parks and the associated resort facilities are operated on a year-round basis. Typically, theme park attendance and resort occupancy fluctuate based on 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 following such celebrations. The licensing, retail and wholesale businesses are influenced by seasonal consumer purchasing behavior, which generally results in higher revenues during the Company’s first and fourth fiscal quarter, and by the timing and performance of theatrical and game releases and cable programming broadcasts.
INTELLECTUAL PROPERTY PROTECTION
The Company’s businesses throughout the world are affected by its ability to exploit and protect against infringement of its IP, including trademarks, trade names, copyrights, patents and trade secrets. Important IP includes rights in the content of motion pictures, television programs, electronic games, sound recordings, character likenesses, theme park attractions, books and magazines and merchandise. Risks related to the protection and exploitation of IP rights and information concerning the expiration of certain of our copyrights are set forth in Item 1A – Risk Factors.
FEDERAL REGULATION — ENTERTAINMENT AND SPORTS
Television broadcasting is subject to extensive regulation by the Federal Communications Commission (FCC) under federal laws and regulations, including the Communications Act of 1934, as amended. Violation of FCC regulations can result in substantial monetary fines, limited renewals of licenses and, in egregious cases, denial of license renewal or revocation of a license. FCC regulations that affect linear channels include the following:
•Licensing of television stations. Each of the television stations we own must be licensed by the FCC. These licenses are granted for periods of up to eight years, and we must obtain renewal of licenses as they expire in order to continue operating the stations. We (and the acquiring entity in the case of a divestiture) must also obtain FCC approval whenever we seek to have a license transferred in connection with the acquisition or divestiture of a station. The FCC may decline to renew or approve the transfer of a license in certain circumstances and may delay renewals while permitting a licensee to continue operating. Although we have received such renewals and approvals in the past or have been permitted to continue operations when renewal is delayed, there can be no assurance that this will be the case in the future.
•Station ownership limits. The FCC imposes limitations on the number of television stations and radio stations an entity can own in a specific market, on the combined number of television and radio stations an entity can own in a single market and on the aggregate percentage of the national audience that can be reached by television stations. Currently:
◦FCC regulations may restrict our ability to own more than one television station in a market, depending on the size and nature of the market. We do not own more than one television station in any market.
◦Federal statutes permit our television stations in the aggregate to reach a maximum of 39% of the national audience. Pursuant to the most recent decision by the FCC as to how to calculate compliance with this limit, our eight stations reach approximately 20% of the national audience.
•Dual networks. FCC rules currently prohibit any of the four major broadcast television networks — ABC, CBS, Fox and NBC — from being under common ownership or control.
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•Regulation of programming. The FCC regulates broadcast programming by, among other things, banning “indecent” programming, regulating political advertising and imposing commercial time limits during children’s programming. Penalties for broadcasting indecent programming can be over $400,000 per indecent utterance or image per station.
Federal legislation and FCC rules also limit the amount of commercial matter that may be shown on broadcast or cable channels during programming designed for children 12 years of age and younger. In addition, broadcast stations are generally required to provide an average of three hours per week of programming that has as a “significant purpose” meeting the educational and informational needs of children 16 years of age and younger. FCC rules also give television station owners the right to reject or refuse network programming in certain circumstances or to substitute programming that the licensee reasonably believes to be of greater local or national importance.
•Cable and satellite carriage of broadcast television stations. With respect to MVPDs operating within a television station’s Designated Market Area, FCC rules require that every three years each television station elect either “must carry” status, pursuant to which MVPDs generally must carry a local television station in the station’s market, or “retransmission consent” status, pursuant to which the MVPDs must negotiate with the television station to obtain the consent of the television station prior to carrying its signal. The ABC owned television stations have historically elected retransmission consent.
•Cable and satellite carriage of programming. The Communications Act and FCC rules regulate some aspects of negotiations between programmers and distributors regarding the carriage of networks by cable and satellite distribution companies, and some cable and satellite distribution companies have sought regulation of additional aspects of the carriage of programming on their systems. New legislation, court action or regulation in this area could have an impact on the Company’s operations.
The foregoing is a brief summary of certain provisions of the Communications Act, other legislation and specific FCC rules and policies. Reference should be made to the Communications Act, other legislation, FCC rules and public notices and rulings of the FCC for further information concerning the nature and extent of the FCC’s regulatory authority.
FCC laws and regulations are subject to change, and the Company generally cannot predict whether new legislation, court action or regulations, or a change in the extent of application or enforcement of current laws and regulations, would have an adverse impact on our operations.
AVAILABLE INFORMATION
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available without charge on our website, www.disney.com/investors, as soon as reasonably practicable after they are filed electronically with the U.S. Securities and Exchange Commission (SEC). We are providing the address to our internet site solely for the information of investors. We do not intend the address to be an active link or to otherwise incorporate the contents of the website into this report.
ITEM 1A. Risk Factors
For an enterprise as large and complex as the Company, a wide range of factors could materially affect future developments and performance. In addition to the factors affecting specific business operations identified in connection with the description of these operations and the financial results of these operations elsewhere in our filings with the SEC, the most significant factors affecting our business include the following:
BUSINESS, ECONOMIC, MARKET and OPERATING CONDITION RISKS
Declines in U.S., global, and regional economic conditions generally adversely affect the profitability of our businesses.
Declines in economic conditions, such as recession, economic downturn, and/or inflationary conditions in the U.S. and other regions of the world in which we do business, or a failure of conditions to improve as anticipated typically adversely affect demand and/or expenses for one or more of our businesses, reducing our revenue and earnings. Past declines in economic conditions reduced guest spending at our parks and resorts, purchases of and prices for advertising on our broadcast and cable networks and owned stations, performance of our home entertainment releases, and purchases of Company-branded consumer products, and similar impacts can be expected as such conditions recur. Recent inflationary conditions increased certain of our costs. The current economic conditions could also have the effect of reducing attendance at our parks and resorts, prices that MVPDs pay for our cable programming, purchases of and prices for advertising on our DTC products or subscription levels for our cable programming or DTC products, while also continuing to increase the prices we pay for goods, services and labor. Unfavorable economic conditions also impair the ability of those with whom we do business to satisfy their obligations to us. In addition, an increase in price levels generally, or in price levels in a particular sector, could result in a shift in consumer demand away from the entertainment and experiences we offer, which could also adversely affect our revenues and, at the same time, increase our costs. A decline in economic conditions or a failure of conditions to improve as anticipated could impact
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implementation or success of our business plans, such as our plans to increase investment in our Experiences segment, the realignment of our cost structure and plans for our DTC ad-supported services, enhancements, pricing structure and price increases. In addition, actions to reduce inflation, including raising interest rates, increase our cost of borrowing, which in turn make it more difficult to obtain financing for our operations or investments on favorable terms. Further, global economic conditions impact foreign currency exchange rates against the U.S. dollar. The current or continued strength in the value of the U.S. dollar has adversely impacted the U.S. dollar value of revenue we receive and expect to receive from other markets and may reduce international demand for our products and services. Although we hedge exposure to certain foreign currency fluctuations, any such hedging activity may not substantially offset the negative financial impact of exchange rate fluctuations and is not expected to offset all such negative financial impact, particularly in periods of sustained U.S. dollar strength relative to multiple foreign currencies. Further, economic or political conditions in countries outside the U.S. also have reduced, and could continue to reduce, our ability to hedge exposure to currency fluctuations in those countries or our ability to repatriate revenue from those countries. Broader or targeted supply chain delays, such as those that have impacted global distribution from time to time, may further exacerbate inflationary pressures and impact our ability to sell and deliver goods or otherwise disrupt our operations. The adverse impact on our businesses of declines in economic conditions or a failure of conditions to improve as anticipated will depend, in part, on the severity and duration of such economic conditions and our ability to mitigate the impacts of economic conditions on our businesses may be limited.
Changes in technology, in consumer consumption patterns and in how entertainment products are created affect demand for our entertainment products, the revenue we can generate from these products and the cost of producing or distributing these products.
The media entertainment and internet businesses in which we participate increasingly depend on our ability to successfully adapt to new technologies including shifting patterns of content consumption and how entertainment products are generated. New technologies affect the demand for our products, the manner in which our products are distributed to consumers, ways we charge for and receive revenue for our entertainment products and the stability of those revenue streams, the sources and nature of competing content offerings, the time and manner in which consumers acquire and view some of our entertainment products and the options available to advertisers for reaching their desired audiences. These developments have impacted the business model for certain traditional forms of distribution, as evidenced by the industry-wide decline in ratings for broadcast and cable television, the reduction in demand for home entertainment sales of theatrical content, the development of alternative distribution channels for broadcast and cable programming and declines in subscriber levels for traditional cable channels. These trends have decreased advertising and affiliate revenue at some of our linear networks. In addition, theater-going to watch movies currently is, and may continue to be, below pre-COVID-19 levels.
Rules governing new technological developments, such as developments in generative artificial intelligence (AI), remain unsettled, and these developments may affect aspects of our existing business model, including revenue streams for the use of our IP and how we create our entertainment products. In order to respond to the impact of new technologies on our businesses, we regularly consider, and from time to time implement changes to our business models, most recently by developing, investing in and acquiring DTC products, reorganizing our media and entertainment businesses to advance our DTC strategies, and developing new media offerings. There can be no assurance that our DTC offerings, new media offerings and other efforts will successfully respond to technological changes. In addition, declines in certain traditional forms of distribution may increase the cost of content allocable to our DTC offerings, negatively impacting the profitability of our DTC offerings. We expect to forgo revenue from traditional sources, particularly as we expand our DTC offerings. To date our DTC streaming services have experienced significant losses. There can be no assurance that the DTC model and other business models we may develop will ultimately be profitable or as profitable as our existing or historic business models.
We face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products, which impact demand for our entertainment offerings and products and the profitability of any of our businesses.
Our businesses create entertainment, travel and consumer products whose success depends substantially on consumer tastes and preferences that change in often unpredictable ways. The success of our businesses depends on our ability to consistently create compelling content, which may be distributed, among other ways, through broadcast, cable, theaters, internet or mobile technology, and used in theme park attractions, hotels and other resort facilities and travel experiences and consumer products. Such distribution must meet the changing preferences of the broad consumer market and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of content. The success of our theme parks, resorts, cruise ships and experiences, as well as our theatrical releases, depends on demand for public or out-of-home entertainment experiences. Demand for certain out-of-home entertainment experiences, such as theater-going to watch movies, has not returned to pre-pandemic levels. In addition, many of our businesses increasingly depend on acceptance of our offerings and products by consumers outside the U.S. The success of our businesses therefore depends on our ability to successfully predict and adapt to changing consumer tastes and preferences outside as well as inside the U.S. Moreover, we must often invest substantial amounts in content production and acquisition, acquisition of sports rights, launch of new sports-related studio programming, theme park attractions, cruise ships or hotels and other facilities or customer facing platforms before we
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know the extent to which these products will earn consumer acceptance, and these products may be introduced into a significantly different market or economic or social climate from the one we anticipated at the time of the investment decisions. Generally, our revenues and profitability are adversely impacted when our entertainment offerings and products, as well as our methods to make our offerings and products available to consumers, do not achieve sufficient consumer acceptance. Further, consumers’ perceptions of our position on matters of public interest, including our efforts to achieve certain of our environmental and social goals, often differ widely and present risks to our reputation and brands. Consumer tastes and preferences impact, among other items, revenue from advertising sales (which are based in part on ratings for the programs in which advertisements air), affiliate fees, subscription fees, theatrical film receipts, the license of rights to other distributors, theme park admissions, hotel room charges and merchandise, food and beverage sales, sales of licensed consumer products or sales of our other consumer products and services.
The success of our businesses is highly dependent on the existence and maintenance of intellectual property rights in the entertainment products and services we create.
The value to us of our IP is dependent on the scope and duration of our rights as defined by applicable laws in the U.S. and abroad and the manner in which those laws are construed. If those laws are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from our IP may decrease, or the cost of obtaining and maintaining rights may increase. The terms of some copyrights for IP related to some of our products and services have expired and other copyrights will expire in the future. For example, in the United States and countries that look to the United States copyright term when shorter than their own, the copyright term for early works such as the short film Steamboat Willie (1928), and the specific early versions of characters depicted in those works, expires at the end of the 95th calendar year after the date the copyright was originally secured in the United States. As copyrights expire, we expect that revenues generated from such IP will be negatively impacted to some extent.
The unauthorized use of our IP may increase the cost of protecting rights in our IP or reduce our revenues. The convergence of computing, communication and entertainment devices, increased broadband internet speed and penetration, increased availability and speed of mobile data transmission and increasingly sophisticated attempts to obtain unauthorized access to data systems have made the unauthorized digital copying and distribution of our films, television productions and other creative works easier and faster and protection and enforcement of IP rights more challenging. The unauthorized distribution and access to entertainment content generally continues to be a significant challenge for IP rights holders. Inadequate laws or weak enforcement mechanisms to protect entertainment industry IP in one country can adversely affect the results of the Company’s operations worldwide, despite the Company’s efforts to protect its IP rights. Distribution innovations, including in response to COVID-19, have increased opportunities to access content in unauthorized ways. Additionally, negative economic conditions coupled with a shift in government priorities could lead to less enforcement. These developments require us to devote substantial resources to protecting our IP against unlicensed use and present the risk of increased losses of revenue as a result of unlicensed distribution of our content and other commercial misuses of our IP. The legal landscape for some new technologies, including some generative AI, remains uncertain, and development of the law in this area could impact our ability to protect against infringing uses.
With respect to IP developed by the Company and rights acquired by the Company from others, the Company is subject to the risk of challenges to our copyright, trademark and patent rights by third parties. In addition, the availability of copyright protection and other legal protections for IP generated by certain new technologies, such as generative AI, is uncertain. Successful challenges to our rights in IP may result in increased costs for obtaining rights or the loss of the opportunity to earn revenue from or utilize the IP that is the subject of challenged rights. From time to time, the Company has been notified that it may be infringing certain IP rights of third parties. Technological changes in industries in which the Company operates and extensive patent coverage in those areas may increase the risk of such claims being brought and prevailing.
Protection of electronically stored data and other cybersecurity is costly, and if our data or systems are materially compromised in spite of this protection, we may incur additional costs, lost opportunities, damage to our reputation, disruption of service or theft of our assets.
We maintain information necessary to conduct our business, including confidential and proprietary information as well as personal information regarding our customers and employees, in digital form. We also use computer systems to deliver our products and services and operate our businesses. Data maintained in digital form is subject to the risk of unauthorized access, modification, exfiltration, destruction or denial of access and our computer systems are subject to cyberattacks that may result in disruptions in service. We use many third-party systems and software, which are also subject to supply chain and other cyberattacks. We develop and maintain an information security program to identify and mitigate cyber risks but the development and maintenance of this program is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Accordingly, despite our efforts, the risk of unauthorized access, modification, exfiltration, destruction or denial of access with respect to data or systems and other cybersecurity attacks cannot be eliminated entirely, and the risks associated with a potentially material incident remain. In
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addition, we provide confidential, proprietary and personal information to third parties in certain cases, which information is also subject to risk of compromise.
If our information or cyber security systems or data are compromised in a material way, our ability to conduct our business may be impaired, we may lose profitable opportunities or the value of those opportunities may be diminished and, as described above, we may lose revenue as a result of unlicensed use of our intellectual property. If personal information of our customers or employees is misappropriated, our reputation with our customers and employees may be damaged resulting in loss of business or morale, and related remediation of harm to our customers and employees or damages arising from litigation and/or fines or other actions we take with respect to judicial or regulatory actions arising out of an incident create additional costs. Insurance we obtain does not cover all potential losses or damages associated with such attacks or events. Our systems and users and those of third parties with whom we engage are continually attacked, sometimes successfully, and there can be no assurance that future incidents will not have material adverse effects on our operations or financial results.
A variety of uncontrollable events may disrupt our businesses, reduce demand for or consumption of our products and services, impair our ability to provide our products and services or increase the cost or reduce the profitability of providing our products and services.
The operation and profitability of our businesses and demand for and consumption of our products and services, particularly our parks and experiences businesses, are highly dependent on the general environment for travel and tourism, including in the specific regions in which our parks and experiences businesses operate. In addition, we have extensive international operations, including our international theme parks and resorts, which are dependent on domestic and international regulations consistent with trade and investment in those regions. The operation of our businesses and the environment for travel and tourism, as well as demand for and consumption of our other entertainment products, can be significantly adversely affected in the U.S., globally or in specific regions as a result of a variety of factors beyond our control, including: health concerns (including as it has been by COVID-19 and could be by future health outbreaks and pandemics); adverse weather conditions arising from short-term weather patterns or long-term climate change, including longer and more regular excessive heat conditions, catastrophic events or natural disasters (such as excessive heat or rain, hurricanes, typhoons, floods, droughts, tsunamis and earthquakes); international, political or military developments, including trade and other international disputes and social unrest; macroeconomic conditions, including a decline in economic activity, inflation and foreign exchange rates; and terrorist attacks. These events and others, such as fluctuations in travel and energy costs and computer virus attacks, intrusions or other widespread computing or telecommunications failures, may also damage our ability to provide our products and services or to obtain insurance coverage with respect to some of these events. An incident that affected our property directly would have a direct impact on our ability to provide goods and services and could have an extended effect of discouraging consumers from attending our facilities. Moreover, the costs of protecting against such incidents reduces the profitability of our operations.
For example, COVID-19 and measures to prevent its spread impacted our businesses in a number of ways, most significantly at the Experiences segment where our theme parks and resorts were closed and cruise ship sailings and guided tours were suspended. In addition, we delayed, or in some cases, shortened or canceled theatrical releases and experienced disruptions in the production and availability of content. Collectively, our impacted businesses historically have been the source of the majority of our revenue. In addition, hurricanes have impacted the profitability of Walt Disney World Resort and may do so in the future. The Company has paused certain operations in certain regions, including in response to sanctions, trade restrictions and related developments and the profitability of certain operations has been impacted as a result of events in the corresponding regions.
In addition, we derive affiliate fees and royalties from the distribution of our programming, sales of our licensed goods and services by third parties, and the management of businesses operated under brands licensed from the Company, and we are therefore dependent on the successes of those third parties for that portion of our revenue. The profitability of one or more of our businesses could be adversely impacted by the significant contraction of distribution channels for our products and services, including through third-party licensees or sellers of our licensed goods and services. In addition, third-party suppliers provide products and services essential to the operation of a number of our businesses. A wide variety of factors could influence the success of those third parties and if negative factors significantly impacted a sufficient number of those third parties or materially impacted a supplier of a significant product or service, the profitability of one or more of our businesses could be adversely affected. In specific geographic markets, we have experienced delayed and/or partial payments from certain third parties due to liquidity issues.
We obtain insurance against the risk of losses relating to some of these events, generally including certain physical damage to our property and resulting business interruption, certain injuries occurring on our property and some liabilities for alleged breach of legal responsibilities. When insurance is obtained it is subject to deductibles, exclusions, terms, conditions and limits of liability. The types and levels of coverage we obtain vary from time to time depending on our view of the likelihood of specific types and levels of loss in relation to the cost of obtaining coverage for such types and levels of loss and we may experience material losses not covered by our insurance.
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We face risks related to changes in our business strategy or restructuring of our businesses, which have affected and may continue to affect our cost structure, the profitability of our businesses or the value of our assets.
As changes in our business environment occur we have adjusted, continue to adjust and may further adjust our business strategies to meet these changes and we may otherwise decide to further restructure our operations or particular businesses or assets. For example, in fiscal 2023, we reorganized our media and entertainment operations, which had been previously reported in one segment, into two segments, Entertainment and Sports; in fiscal 2023 we announced that we would review content, primarily on our DTC services, for alignment with a strategic change in our approach to content curation, resulting in removal of certain content from our platforms and related impairment charges; in fiscal 2022, we announced plans to introduce an ad-supported Disney+ service, new pricing model and price increases and cost realignment; in fiscal 2021, we announced the closure of a substantial number of our Disney-branded retail stores; and we have announced exploration of a number of new types of businesses. Changes in strategy, such as was the case with the most recent reorganization of our media and entertainment operations, can lead to workforce disruptions. Our new organization and strategies are, among other things, subject to execution risk and may not produce the anticipated benefits, such as supporting our growth strategies and enhancing shareholder value. For example, notwithstanding our announced plans to rationalize costs, the costs of our DTC strategy, and associated losses, may continue to grow or be reduced more slowly than anticipated, which may impact our distribution strategy across businesses/distribution platforms, the types of content we distribute through various businesses/distribution platforms, and the timing and sequencing of content windows. Our new organization and strategies could be less successful than our previous organizational structure and strategies. In addition, external events including changing technology, changing consumer purchasing patterns, acceptance of content offerings and changes in macroeconomic conditions may impair the value of our assets. When these changes or events occur, we have incurred and may continue to incur costs to change our business strategy and have needed and may in the future need to write-down the value of assets. In addition to the content impairment noted above, among other assets, we have impaired goodwill and intangible assets at our linear networks and impaired the value of certain of our retail store assets. We may write down other assets as our strategy evolves to account for the current business environment.
We also make investments in existing or new businesses, including investments in international expansion of our business and in new business lines. For example, in fiscal 2023, we announced that we are developing plans to accelerate and expand investment in our Experiences segment. In addition, in recent years, other investments have included expansion and renovation of certain of our theme parks, expansion of our fleet of cruise ships, the acquisition of TFCF Corporation (TFCF) and investments related to DTC offerings. Some of these and future investments may ultimately result in returns that are negative or low, the ultimate business prospects of the businesses related to these investments are uncertain, and these investments may impact the resources available to, and the profitability of, our other businesses. In addition, our costs may increase, we may have significant charges associated with the write-down of assets, as occurred in connection with the closure of Star Wars: Galactic Starcruiser or returns on new investments may be negative or lower than prior to the change in strategy or restructuring. Even if our strategies are effective in the long term, our new offerings will generally not be profitable in the short term, growth of our new offerings is unlikely to be even quarter over quarter and we may not expand into new markets as or when anticipated. Our ability to forecast for new businesses may be impacted by our lack of experience operating in those new businesses, speed with which the competitive landscape changes, volatility beyond our control (such as the events beyond our control noted above) and our ability to obtain or develop the content and rights on which our projections are based. Accordingly, we may not achieve our forecasted outcomes.
Increased competitive pressures impact our revenues and increase our costs.
We face substantial competition in each of our businesses from alternative providers of the products and services we offer and from other forms of entertainment, lodging, tourism and recreational activities. This includes, among other types, competition for human resources, content and other resources we require in operating our business. For example:
•Our programming and production operations compete to obtain creative, performing, production and business talent, sports and other programming, story properties, advertiser support, production facilities and market share with traditional and new media platforms, including other studio operators, television networks, VOD providers and other sources of broadband delivered content.
•Our television networks and stations and DTC offerings compete for the sale of advertising time with traditional and new media platforms, including other television and VOD services, as well as with newspapers, magazines, billboards and radio stations, and various forms of internet and mobile delivered content, which offer advertising delivery technologies that are more targeted than can be achieved through traditional means.
•Our television networks compete for carriage of their programming with other programming providers.
•Our theme parks and resorts compete for guests with all other forms of entertainment, lodging, tourism and recreation activities and compete for creative, performing and business talent, including with other theme park and resort operators.
•Our content sales/licensing operations compete for customers with all other forms of entertainment.
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•Our consumer products business competes with other licensors and creators of IP.
•Our DTC streaming services compete for customers with an increasing number of competitors’ DTC offerings, all other forms of media and all other forms of entertainment, as well as for technology, creative, performing and business talent and for content.
Competition in each of these areas may further increase as a result of technological developments and changes in market structure, including consolidation of suppliers of resources and distribution channels. Increased competition has increased, and may continue to increase, the cost of programming, including sports and other products and diverts consumers from, or delays their consumption of, our creative or other products, or to other products or other forms of entertainment and experiences, which could reduce our revenue or increase our marketing costs.
Competition for the acquisition of resources can further increase the cost of producing our products and services; change the composition of our offerings, including sports; deprive us of talent needed for our entertainment and experiences businesses, including the talent necessary to produce high quality creative material; increase employee turnover and staffing instability; or increase the cost of compensation for our employees. Such competition may also reduce, or limit growth in, prices for our products and services, including advertising rates and subscription fees at our media networks and DTC offerings, parks and resorts admissions and room rates and prices for consumer products from which we derive license revenues.
Our results may be adversely affected if long-term programming or distribution contracts are not renewed on sufficiently favorable terms.
We enter into long-term contracts for both the acquisition and the distribution of media programming and products, including contracts for the acquisition of programming rights for sporting events and other programs, and contracts for the distribution of our programming to content distributors. As these contracts expire, we must renew or renegotiate the contracts, which from time to time has led to service blackouts when distribution contracts expired before renewal terms were agreed, and if we are unable to renew these contracts on acceptable terms, we may lose programming rights or distribution rights. As a result, our portfolio of programming rights we acquire and the distributors of our programming and the portfolio of programming rights our distributors acquire have changed and may continue to change over time. Even if these contracts are renewed, the cost of obtaining certain programming rights has increased and may continue to increase (or increase at faster rates than our historical experience) and programming distributors, facing pressures resulting from increased subscription fees and alternative distribution challenges, have demanded and may continue to demand terms (including with respect to the pricing for, and the nature and amount of, programming distributed) that reduce our revenue from distribution of programs (or increase revenue at slower rates than our historical experience). For example, a recent carriage agreement renewal includes fewer of our linear networks but provides for certain of our DTC streaming services to be made available to the distributor’s subscribers. Moreover, our ability to renew these contracts on favorable terms may be affected by a number of factors, such as consolidation in the market for program distribution and the entrance of new participants in the market for distribution of content on digital platforms. With respect to the acquisition of programming rights, particularly sports programming rights, the impact of these long-term contracts on our results over the term of the contracts depends on a number of factors, including the strength of advertising markets, subscription levels and programming rights costs increases, effectiveness of marketing efforts and the size of viewer audiences. There can be no assurance that revenues from programming based on these rights will exceed the cost of the rights plus the other costs of producing and distributing the programming.
Regulations applicable to our businesses may impair the profitability of our businesses.
Each of our businesses, including our broadcast networks and television stations, is subject to a variety of U.S. and international regulations, which impact the operations and profitability of our businesses. Some of these regulations include:
•U.S. FCC regulation of our television and radio networks, our national programming networks and our owned television stations. See Item 1 — Federal Regulation - Entertainment and Sports.
•Federal, state and foreign privacy and data protection laws and regulations.
•Regulation of the safety and supply chain of consumer products and theme park operations, including regulation regarding the sourcing, importation and the sale of goods.
•Environmental protection regulations.
•U.S. and international anti-corruption laws, sanction programs, trade restrictions and anti-money laundering laws.
•Restrictions on the manner in which content is currently licensed and distributed, ownership restrictions or film or television content requirements, investment obligations or quotas.
•Domestic and international labor laws, tax laws or currency controls.
New laws and regulations, as well as changes in any of these current laws and regulations or regulator activities in any of these areas, or others, may require us to spend additional amounts to comply with the regulations, or may restrict our ability to offer products and services in ways that are profitable, and create an increasingly unpredictable regulatory landscape. In addition, ongoing and future developments in international political, trade and security policy may lead to new regulations
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limiting international trade and investment and disrupting our operations outside the U.S., including our international theme parks and resorts operations in France, mainland China and Hong Kong. For example, in 2022 the U.S. and other countries implemented a series of sanctions against Russia in response to events in Russia and Ukraine; U.S. agencies have enhanced trade restrictions, including new prohibitions on the importation of goods from certain regions and other jurisdictions are considering similar measures; U.S. state governments have become more active in passing legislation targeted at specific sectors and companies and applying existing laws in novel ways to new technologies, including streaming and online commerce; and in many countries/regions around the world (including but not limited to the EU) regulators are requiring us to broadcast on our linear (or display on our DTC streaming services) programming produced in specific countries as well as invest specified amounts of our revenues in local content productions. In Florida, steps directed at the Company (including the passage of legislation) have been taken and future actions have been threatened, which collectively could negatively impact (and may have already impacted) our ability to execute on our business strategy, our costs and the profitability of our operations in Florida.
Further, in response to the COVID-19 pandemic, public health and other regional, national, state and local regulations and policies impacted most of our businesses. Government requirements could be reinstated and new government requirements may be imposed to address COVID-19 or future health outbreaks or pandemics.
Our operations outside the U.S. may be adversely affected by the operation of laws in those jurisdictions.
Our operations in non-U.S. jurisdictions are in many cases subject to the laws of the jurisdictions in which they operate rather than, or in addition to, U.S. law. Laws in some jurisdictions differ in significant respects from those in the U.S. These differences can affect our ability to react to changes in our business, and our rights or ability to enforce rights may be different than would be expected under U.S. law. Moreover, enforcement of laws in some international jurisdictions can be inconsistent and unpredictable, which can affect both our ability to enforce our rights and to undertake activities that we believe are beneficial to our business. In addition, the business and political climate in some jurisdictions may encourage corruption, which could reduce our ability to compete successfully in those jurisdictions while remaining in compliance with local laws or U.S. anti-corruption laws applicable to our businesses. As a result, our ability to generate revenue and our expenses in non-U.S. jurisdictions may differ from what would be expected if U.S. law alone governed these operations.
Environmental, social and governance matters and any related reporting obligations may impact our businesses.
U.S. and international regulators, investors and other stakeholders are increasingly focused on environmental, social and governance matters. For example, new domestic and international laws and regulations relating to environmental, social and governance matters, including environmental sustainability and climate change, human capital management and cybersecurity, are under consideration or being adopted, which may include specific, target-driven disclosure requirements or obligations. Our response will require increased costs to comply, the implementation of new reporting processes, entailing additional compliance risk, a skilled workforce and other incremental investments.
In addition, we have undertaken or announced a number of related actions and goals, which will require changes to operations and ongoing investment. There is no assurance that our initiatives will achieve their intended outcomes or that we will achieve any of these goals. Consumer, government and other stakeholder perceptions of our efforts to achieve these objectives often differ widely and present risks to our reputation and brands. In addition, our ability to implement some initiatives or achieve some goals is dependent on external factors. For example, our ability to meet certain environmental sustainability goals or initiatives will depend in part on third-party collaboration, the availability of suppliers that can satisfy new requirements, mitigation innovations and/or the availability of economically feasible solutions at scale.
Damage to our reputation or brands may negatively impact our Company across businesses and regions.
Our reputation and globally recognizable brands are integral to the success of our businesses. Because our brands engage consumers across our businesses, damage to our reputation or brands in one business may have an impact on our other businesses. Because some of our brands are globally recognized, brand damage may not be locally contained. Maintenance of the reputation of our Company and brands depends on many factors including the quality of our offerings, maintenance of trust with our customers and our ability to successfully innovate. In addition, we may pursue brand or product integration combining previously separate brands or products targeting different audiences under one brand or pursue other business initiatives inconsistent with one or more of our brands, and there is no assurance that these initiatives will be accepted by our customers and not adversely impact one or more of our brands. Significant negative claims or publicity regarding the Company or its operations, products, management, employees, practices, business partners, business decisions, social responsibility and culture, which may be amplified by social media, adversely impact our brands or reputation, even if such claims are untrue. Damage to our reputation or brands could impact our sales, business opportunities, profitability, recruiting and valuation of our securities.
Various risks may impact the success of our DTC streaming services.
We may not successfully execute on our DTC strategy. The success of our DTC strategy and profitability of our DTC streaming services will be impacted by the success of the reorganization of our media and entertainment business and our ability to advance our DTC strategies, drive subscriber additions and retention based on the attractiveness of our content,
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manage churn in reaction to price increases, achieve the desired financial impact of the Disney+ ad supported service, pricing model and price increases, our ability to execute on cost realignment and the effects of our determinations with regard to distribution for our creative content across windows. The initial costs of marketing campaigns are generally recognized in the business of initial exploitation, and amortization of capitalized production costs and licensed programming rights are generally allocated across businesses based on the estimated relative value of the distribution windows. Accordingly, our distribution determinations impact the costs of each business, including the applicable DTC service. There are a number of competing DTC businesses. Consumers may not be willing to pay for an expanding set of DTC streaming services at increasing prices, potentially exacerbated by an economic downturn. In addition, economic downturns negatively impact the purchase of and price for advertising on our DTC streaming services. We face competition for creative talent and sports and other programming rights and may not be successful in recruiting and retaining talent and obtaining desired programming rights or face increased costs to do so. Acquisition of new subscribers to our DTC streaming services is not linear, and we have experienced net losses of subscribers in some periods. Our content does not always successfully attract and retain subscribers in the quantities that we expect. Our content is subject to cost pressures and may cost more than we expect. We may not successfully manage our costs to meet our profitability goals. Government regulation, including revised foreign content and ownership regulations as well as government-imposed content restrictions, impacts the implementation of our DTC business plans. The highly competitive environment in which we operate puts pricing pressure on our DTC offerings and may require us to lower our prices or not take price increases to attract or retain customers or lead to higher churn rates. These and other risks may impact the profitability and success of our DTC streaming services.
Potential credit ratings actions, increases in interest rates, or volatility in the U.S. and global financial markets could impede access to, or increase the cost of, financing our operations and investments.
Our borrowing costs have been and can be affected by short- and long-term debt ratings assigned by independent ratings agencies that are based, in part, on the Company’s performance as measured by credit metrics such as leverage and interest coverage ratios. As a result of the financial impact of COVID-19 on our businesses, Standard and Poor’s downgraded our long-term debt ratings by two notches to BBB+ and downgraded our short-term debt ratings by one notch to A-2. Fitch downgraded our long- and short-term credit ratings by one notch to A- and F2, respectively. On June 5, 2023, Standard and Poor’s upgraded our long-term debt ratings by one notch to A-. As of September 30, 2023 Moody’s Investors Service’s long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, Standard and Poor’s long- and short-term debt ratings for the Company were A- and A-2 (Positive), respectively, and Fitch’s long- and short-term debt ratings for the Company were A- and F2 (Stable), respectively. Any future downgrades could increase our cost of borrowing and/or make it more difficult for us to obtain financing on acceptable terms.
In addition, increases in interest rates have increased our cost of borrowing and volatility in U.S. and global financial markets could impact our access to, or further increase the cost of, financing. Past disruptions in the U.S. and global credit and equity markets made it more difficult for many businesses to obtain financing on acceptable terms. These conditions tended to increase the cost of borrowing and if they recur, our cost of borrowing could increase and it may be more difficult to obtain financing for our operations or investments.
Elevated indebtedness or leverage ratios could adversely affect us, including by decreasing our business flexibility.
Elevated indebtedness could have the effect of, among other things, reducing our financial flexibility and our ability to respond to changing business and economic conditions and other uncontrollable events. Debt repayment obligations could also reduce funds available for investments, capital expenditures, share repurchases and dividends, and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels. Our leverage ratios increased as the result of COVID-19’s impact on financial performance, which caused certain of the credit ratings agencies to downgrade their assessment of our credit ratings. Downgrades to our debt rating may negatively impact our cost of borrowings and/or make it more difficult for us to obtain financing on acceptable terms.
Labor disputes disrupt our operations and may adversely affect the profitability of one or more of our businesses.
A significant number of employees in various parts of our businesses, including employees of our theme parks, and writers, directors, actors and production personnel for our productions are covered by collective bargaining agreements. In addition, some of our employees outside the U.S. are represented by works councils, trade unions or other employee associations. Further, the employees of licensees who manufacture and retailers who sell our licensed consumer products, and employees of providers of programming content (such as sports leagues) may be covered by labor agreements with their employers. From time to time, collective bargaining agreements and other labor agreements expire, requiring renegotiation of their terms. In general, labor disputes and work stoppages involving our employees; persons employed on our productions; athletes or others employed by, or otherwise connected with, sports leagues or organizers; or the employees of our licensees or retailers who sell our licensed consumer products or providers of programming content may disrupt our operations and reduce our revenues. For example, on May 2, 2023, members of the Writers Guild of America (WGA) commenced a work stoppage, which lasted for almost five months. On July 14, 2023, members of SAG-AFTRA, the union representing television and movie actors, also commenced a work stoppage, which lasted for almost four months. These work stoppages have impacted our
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productions and the pipeline for programming and theatrical releases, which could result in reduced revenue and have an adverse effect on our profitability. The new collective bargaining agreements with the Directors Guild of America, WGA and SAG-AFTRA will lead to increased costs to create content, including as a result of increases in rates, residuals and benefits. Generally, resolution of disputes or negotiation of new agreements, including rate increases and other changes to employee benefits, has in the past increased our costs and may increase our costs in the future.
The seasonality of certain of our businesses and timing of certain of our product offerings could exacerbate negative impacts on our operations.
Each of our businesses is normally subject to seasonal variations and variations in connection with the timing of our product offerings, including as follows:
•Revenues at the Experiences segment fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and leisure activities and seasonal consumer purchasing behavior, which generally results in increased revenues during the Company’s first and fourth fiscal quarters. Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early winter and spring holiday periods. Revenues at the Experiences segment also may fluctuate with changes in theme park attendance and resort occupancy resulting from special celebrations or events that may increase demand in the applicable periods and decrease demand in prior or later periods as guests time their vacations to occur during such special celebrations or events. In addition, licensing revenues fluctuate with the timing and performance of our theatrical releases and cable programming broadcasts.
•Revenues from television networks and stations are subject to seasonal advertising patterns and changes in viewership levels, including related to certain sporting events. In general, domestic general entertainment linear networks advertising revenues are typically somewhat higher during the fall and somewhat lower during the summer months, and sports advertising revenues are impacted by the timing of sports seasons and events, which varies throughout the year or may take place periodically.
•Revenues from content sales/licensing fluctuate due to the timing of content releases across various distribution markets. Release dates and methods are determined by a number of factors, including, among others, competition, and the timing of vacation and holiday periods.
•DTC revenues fluctuate based on: changes in the number of subscribers, mix of subscribers to different offerings and subscriber fees; viewership levels; and the demand for sports and film and television content. Each of these may depend on the availability of content, which varies from time to time throughout the year based on, among other things, sports seasons, content production schedules and sports league work stoppages.
Accordingly, negative impacts on our business occurring during a time of typical high seasonal demand such as our park closures due to COVID-19 restrictions or hurricane damage during the summer travel season or other high seasons, could have a disproportionate effect on the results of that business for the year.
Our operations are impacted by our ability to attract and retain employees and costs of employee wages and health, welfare and pension benefits, including postretirement medical benefits for some employees and retirees, may reduce our profitability.
With approximately 225,000 employees, the success of our businesses is substantially affected by our ability to attract and retain a workforce with the necessary skills for our varied businesses, including executing successfully on succession planning for the talent at all levels necessary to advance the Company’s key objectives and strategies. Further, our profitability is substantially affected by labor costs, including wages and our health, welfare and pension benefits, including the costs of medical benefits for current employees and the costs of postretirement medical benefits for some current employees and retirees. We may experience significant increases in these costs as a result of macroeconomic, regulatory, competitive and other factors. For example, labor costs in our parks and resorts have increased, and we expect will continue to increase, as a result of collective bargaining agreements and wage laws and regulations where we operate. Future health outbreaks and pandemics may lead to an increase in the cost of medical insurance and expenses. In addition, changes in investment returns and discount rates used to calculate pension and postretirement medical expense and related assets and liabilities can be volatile and may have an unfavorable impact on our costs in some years. These macroeconomic factors as well as a decline in the fair value of pension and postretirement medical plan assets may put upward pressure on the cost of providing pension and postretirement medical benefits and may increase future funding requirements. There can be no assurance that we will succeed in attracting and retaining the human resources necessary for the success of our businesses or in limiting cost increases from wages and other employee benefits, which could reduce the profitability of our businesses.
We face risks related to costs and expenses in connection with the acquisition of NBCU’s equity interest in Hulu and the TFCF acquisition.
On November 1, 2023, NBCU exercised its right to require the Company to purchase NBCU’s equity interest in Hulu under a put/call arrangement between the parties. The purchase price for NBCU’s equity interest in Hulu will be determined
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based on NBCU’s equity ownership percentage of the greater of Hulu’s equity fair value as of September 30, 2023, and a guaranteed floor value. Further, the Company will share with NBCU 50% of the Company’s tax benefit from the purchase of NBCU’s interest in Hulu, which payments are expected to be made primarily over a 15-year period. In addition, we may incur significant costs and expenses in connection with the TFCF acquisition, including costs for which we have established reserves or which may lead to reserves in the future. The cost to purchase NBCU’s equity interest in Hulu and related obligations to NBCU and any such other costs could negatively impact the Company’s cash position and result in the Company incurring additional indebtedness.
GENERAL RISKS
The price of our common stock has been, and may continue to be, volatile.
The price of our common stock has experienced substantial volatility and may continue to be volatile. Various factors have impacted, and may continue to impact, the price of our common stock, including, among others, changes in management; variations in our operating results; variations between our actual results and expectations of securities analysts; changes in our estimates, guidance or business plans; changes in financial estimates and recommendations by securities analysts; the activities, operating results or stock price of our competitors or other industry participants in the industries in which we operate; the announcement or completion of significant transactions by us or a competitor; events affecting the stock market generally; and the economic and political conditions in the U.S. and internationally, as well as other factors described in this Item 1A. Some of these factors may adversely impact the price of our common stock, regardless of our operating performance. Further, volatility in the price of our common stock may negatively impact one or more of our businesses, including by increasing cash compensation or stock awards for our employees who participate in our stock incentive programs or limiting our financing options for acquisitions and other business expansion.
The Company’s amended and restated bylaws provide to the fullest extent permitted by law that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between the Company and its stockholders, which could increase costs to bring a claim, discourage claims or limit the ability of the Company’s stockholders to bring a claim in a judicial forum viewed by the stockholders as more favorable for disputes with the Company or the Company’s directors, officers or other employees.
The Company’s amended and restated bylaws provide to the fullest extent permitted by law that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of the Company, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action or proceeding asserting a claim arising pursuant to, or seeking to enforce any right, obligation or remedy under, any provision of the General Corporation Law of the State of Delaware (the “DGCL”), the Certificate of Incorporation or these Bylaws (as each may be amended from time to time), (iv) any action or proceeding as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery of the State of Delaware, (v) or any action or proceeding asserting a claim governed by the internal affairs doctrine. The choice of forum provision may increase costs to bring a claim, discourage claims or limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or the Company’s directors, officers or other employees, which may discourage such lawsuits against the Company or the Company’s directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in the Company’s amended and restated bylaws to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving such action in other jurisdictions. The exclusive forum provision in the Company’s amended and restated bylaws will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the federal securities laws including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or the respective rules and regulations promulgated thereunder.
ITEM 1B. Unresolved Staff Comments
The Company has received no written comments regarding its periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of fiscal 2023 that remain unresolved.
ITEM 2. Properties
Our parks and resorts locations and other properties of the Company and its subsidiaries are described in Item 1 under the caption Experiences. Film and television library properties and television stations owned by the Company are described in Item 1 under the caption Entertainment.
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The Company and its subsidiaries own and lease properties throughout the world. In addition to the properties noted above, the table below provides a brief description of other significant properties and the related business segment.
LocationMary T. BarraProperty /
Approximate Size		UseBusiness Segment
Burbank, CA & surrounding cities(1)
Land (201 acres) & Buildings (4,694,000 ft2)
Owned Office/Production/Warehouse (includes 240,000 ft2 leased to third-party tenants)
Corporate/Entertainment/Experiences
Burbank, CA & surrounding cities(1)
Buildings (1,834,000 ft2)
Leased Office/WarehouseCorporate/Entertainment/Experiences
Los Angeles, CA
Land (22 acres) & Buildings (605,000 ft2)
Owned Office/Production/Technical WarehouseCorporate/Entertainment
Los Angeles, CA
Buildings (2,640,000 ft2)
Leased Office/Production/Technical/TheaterCorporate/Entertainment/Experiences
New York, NY
Buildings (51,000 ft2)
Owned OfficeCorporate/Entertainment/Sports
New York, NY
Buildings (2,190,000 ft2)
Leased Office/Production/Theater/Warehouse (includes 679,000 ft2 leased to third-party tenants)
Corporate/Entertainment/Sports/Experiences
Bristol, CT
Land (117 acres) & Buildings (1,174,000 ft2)
Owned Office/Production/TechnicalSports
Bristol, CT
Buildings (273,000 ft2)
Leased Office/Warehouse/TechnicalSports
Emeryville, CA
Land (20 acres) & Buildings (430,000 ft2)
Owned Office/Production/TechnicalEntertainment
Emeryville, CA
Buildings (97,000 ft2)
Leased Office/StorageEntertainment
San Francisco, CA
Buildings (517,000 ft2)
Leased Office/Production/Technical/Theater (includes 47,000 ft2 leased to third-party tenants)
Corporate/EntertainmentCHAIR AND CHIEF EXECUTIVE OFFICER, GENERAL MOTORS COMPANY
Image_8.jpg
USAAge: 62
Director since:
2017
Committees:
Compensation
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•Ms. Barra has deep experience in strategy, innovation and brand evolution through her role in driving General Motors’ transformation to electric vehicles by prioritizing strategic investments in connectivity and electrification driving technologies, which provides an important perspective on the Board throughout the Company’s own strategic progression and embracing of technological change and shifts in consumer sentiment
•As Chief Executive Officer of General Motors, she provides invaluable insight on large-scale cost rationalization, organizational restructuring and maintaining strong brand leadership
•She brings meaningful experience in human capital management and executive compensation-related matters in her role on the Company’s Compensation Committee, where she focuses on aligning incentive structures with shareholder value creation and execution of long-term strategic priorities
Other Key Skill Sets
•Overseeing and managing diverse and inclusive executive teams and a sizeable global workforce, with an emphasis on development and marketing of technology-based consumer-facing products through her various executive roles at General Motors
•Governance and public policy thought leadership, understanding of worldwide consumer markets and risks facing large public companies with complex retail operations through her previous role as chair of the Business Roundtable
Employment Experience:
2016–Present
Chair and Chief Executive Officer, General Motors Company (an automotive manufacturing company)
2014–2016
Chief Executive Officer, General Motors Company
2013–2014
Executive Vice President, Global Product Development, Purchasing and Supply Chain, General Motors Company
2011–2013
Senior Vice President, Global Product Development, General Motors Company
2009–2011
Vice President, Global Human Resources, General Motors Company
2008–2009
Vice President, Global Manufacturing Engineering, General Motors Company
Other Public Company Directorships:
General Motors Company (2014–Present)

2

Safra A. Catz
CHIEF EXECUTIVE OFFICER, ORACLE CORPORATION
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Age: 62
Director since:
2018
Committees:
Audit
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•Through Ms. Catz’s position as Chief Executive Officer and formerly Chief Financial Officer of Oracle Corporation, she provides invaluable insight to both the leadership team and fellow Board members on long-term strategic planning and execution and large-scale cost rationalization and organizational structure evaluation
•Ms. Catz oversaw the successful acquisition and integration of companies at Oracle and led the company through a period of tremendous growth and innovation, a key skill set to contribute to the Board throughout Disney’s prior acquisition strategies and future development
•Ms. Catz’s executive leadership roles at Oracle also allow her to offer impactful guidance to the Board and leadership team on the rapidly changing technological landscape that affects our businesses
•Her experience leading the financial function of a complex, global technology company strengthens her role on the Audit Committee through the extensive financial and accounting and risk management expertise she brings to the Board and committee
Other Key Skill Sets
•Cybersecurity and artificial intelligence oversight, including the protection of electronically stored data from her executive roles at Oracle and through her experience reviewing advances in artificial intelligence as a commissioner of the National Security Commission on Artificial Intelligence
•Brand management and governance thought leadership developed through the oversight of the strategic direction of Oracle
Employment Experience:
2014–Present
Chief Executive Officer, Oracle Corporation (a computer technology corporation)
2011–2014
President and Chief Financial Officer, Oracle Corporation
2008–2011
President, Oracle Corporation
2005–2008
President and Chief Financial Officer, Oracle Corporation
2004–2005
President, Oracle Corporation
1999–2004
Various positions, Oracle Corporation
Other Public Company Directorships:
Oracle Corporation (2001–Present)
3

Amy L. Chang
FORMER EXECUTIVE VICE PRESIDENT, CISCO SYSTEMS, INC.
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Age: 47
Director since:
2021
Committees:
Governance and Nominating
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•Ms. Chang has developed expertise across the technology sector from her time as an Executive Vice President at Cisco Systems, Inc., leading product development for Google Ads Measurement and Reporting and a founder of a digital startup
•She provides a unique viewpoint of emerging technology trends and their implications for consumer and retail businesses and the implementation of innovative technological business strategies that are particularly important as the company evaluates the impact of, and opportunities presented by, new technologies in content production, our direct-to-consumer businesses and our parks
•Ms. Chang also provides valuable perspective on talent attraction and retention for key technical roles that are vital to Disney’s content creation and digitally driven teams and an understanding of large-scale cost rationalization and analysis of organizational structure from her tenure as a public company director and an executive at Google and Cisco
Other Key Skill Sets
•Risk management oversight experience specific to digital and technology-forward companies, including cybersecurity and artificial intelligence, gained through her tenure at Cisco and Accompany
•Deep understanding of strategic planning, corporate governance, social initiatives and executive management succession planning gained through public company board leadership
Employment Experience:
2018–2020
Executive Vice President and General Manager, Collaboration,
Cisco Systems, Inc. (a networking hardware company)
2013–2018
Founder and Chief Executive Officer, Accompany, Inc. (an artificial intelligence/machine learning-based relationship intelligence platform company)
2005–2012
Global Head of Product, Google Ads Measurement; various additional positions, Google LLC (a technology company)
Other Public Company Directorships:
Procter & CanadaGamble (2017–Present)
Former Public Company Directorships:
Marqeta, Inc. (2021–2022)
Cisco Systems, Inc. (2016–2018)
4

D. Jeremy Darroch
FORMER EXECUTIVE CHAIRMAN AND GROUP CHIEF EXECUTIVE OFFICER, SKY
JeremyDarroch_Circle_web.gif
Age: 61
Director since:
2024
Committees:
Audit
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•As Group Chief Executive Officer of Sky, Mr. Darroch led the company’s tremendous growth and transformation from a linear satellite broadcaster into one of Europe’s largest multi-platform TV providers, providing valuable insights to the Board and management in navigating its strategic expansion of DTC offerings and changing media and entertainment landscapes
•Mr. Darroch’s experience leading Sky’s executive teams and creative content investments and advising MultiChoice Group as senior advisor, provide key perspectives for the Company regarding its content creation, management of creative talent and brand evolution
•As former Chief Financial Officer of Sky, Mr. Darroch’s financial executive experience and extensive finance, accounting and risk management expertise strengthen his role on the Audit Committee
Other Key Skill Sets
•Deep knowledge of management succession planning, global brands and risk management
•Strong experience in governance and sustainability and social impact thought leadership through his experience leading Sky’s corporate responsibility programs and as Chairman of the National Oceanography Centre
Employment Experience:
2021
Executive Chairman, Sky (a media and entertainment company and a division of Comcast Corporation)
2018–2021
Group Chief Executive Officer, Sky
2007–2018
Chief Executive Officer, Sky PLC
2004–2007
Chief Financial Officer, Sky PLC
Other Public Company Directorships: Reckitt Benckiser Group PLC (2022–Present)
Former Public Company Directorships:
Ahren Acquisition Corp. (2021–2023)
Burberry Group plc (2014–2019)
Sky PLC (2004–2018)
5

Francis A. deSouza
LandFORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER, ILLUMINA, INC
desouza.jpg
Age: 53
Director since:
2018
Committees:
Audit
Notable Experience Aligned with Disney’s Strategy and Buildings (Multiple sitesKey Board Contributions
•Mr. deSouza has unique experience with the growth and sizes)maturation of technology businesses, including leading Illumina through a pivotal strategic shift from being a research genomics leader to also serving clinical markets, which are important as the Board considers the Company's efforts to innovate for the future and leverage technology to advance its strategy
•As former Chief Executive Officer of Illumina, Inc. and from his experience in prior senior leadership roles at Symantec Corporation and other technology companies, he provides an understanding of executive management and international business operations, in addition to a strong knowledge of brand management and product development
•Through first-hand experience, he brings deep knowledge of overseeing business operations while incorporating public health considerations, which has served as an invaluable perspective as the Company navigates the continued challenges coming out of the COVID-19 pandemic
Other Key Skill Sets
•Cybersecurity expertise through experience at Symantec
•Knowledge of finance and accounting gained through experience in Chief Executive Officer and other leadership positions
•Oversight of strategic integration and experience with consumer awareness of corporate social responsibility practices through his leadership of and commitment to Illumina’s corporate social responsibility program
Owned and Leased Office/ Production/Transmitter/Theaters/WarehouseExperience:
Corporate/Entertainment/Experiences
2016–2023
President and Chief Executive Officer, Illumina, Inc. (a biotechnology company)
2013–2016
President, Illumina, Inc.
2011–2013
President, Products and Services, Symantec Corporation (a cybersecurity company)
2009–2011
Senior Vice President, Enterprise Security Group, Symantec Corporation
PriorFounder of various technology businesses
Former Public Company Directorships: Illumina, Inc. (2014–2023)
6

Carolyn N. Everson
Europe, Asia, AustraliaFORMER PRESIDENT, INSTACART
Image_12.jpg
Age: 52
Director since:
2022
Committees:
Compensation
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•From her experience leading marketing solutions and global sales teams at Instacart, Meta Platforms, Inc. and Microsoft Corporation and as a former board member of Creative Artists Agency, Ms. Everson offers strong insight to the Board and leadership team on navigating evolving media landscapes and advertising environments as well as branded, consumer-facing technology and its intersection with marketing, which has been critical to the Board's oversight of the Company’s operations and strategy as we continue to expand our customer base
•As a senior advisor for Permira, a private equity firm focused on technology and consumer brands, and a senior advisor for Boston Consulting Group in the Technology, Media & Latin AmericaTelecom and Marketing, Sales & Pricing practice areas, Ms. Everson brings experience evaluating internet and digital media businesses from an investor perspective 
•Through her public company board leadership experience, Ms. Everson maintains an understanding of large-scale cost rationalization and effective organizational structure 
•Ms. Everson further expands the Board’s collective skill sets through her experience in the advertising technology space and enhances its strategic oversight
Other Key Skill Sets
•Understanding of business development and executive management processes gained through leadership of strategy teams at global technology companies 
•Risk management and corporate governance oversight through her public company board experience
The Company entered into a support agreement with Third Point LLC pursuant to which the Company appointed Ms. Everson as a director and agreed to include Ms. Everson as a director nominee for the Annual Meeting, and Third Point LLC agreed to customary standstill, voting and other provisions through the Annual Meeting.
Employment Experience:
2021
President, Instacart (a grocery retail company)
2011–2021
Vice President, Global Marketing Solutions, Meta Platforms, Inc. (a technology company)
2010–2011
Corporate Vice President, Global Advertising Sales, Strategy & Marketing, Microsoft Corporation (a technology corporation)
2004–2010
Various positions (most recently Chief Operating Officer and Executive Vice President, Advertising Sales), MTV Networks Company (a media entertainment company)
2000–2003
Various positions (including Vice President, Classifieds and Direct Response Advertising, and Vice President and General Manager, PriMedia Teen Digital Group), PriMedia, Inc. (an advertising company)
Other Public Company Directorships:
Under Armour, Inc. (2023–Present)
The Coca-Cola Company (2022–Present)
Former Public Company Directorships:
Hertz Global Holdings, Inc. (2016–2018)
7

Michael B. G. Froman
PRESIDENT, COUNCIL ON FOREIGN RELATIONS
Image_13.jpg
Age: 61
Director since:
2018
Committees:
Governance and Nominating
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•Mr. Froman delivers strategic insight to the Board and leadership team on complex international affairs and global issues gained from his experience as President of the Council on Foreign Relations, the Assistant to the President and Deputy National Security Advisor for International Economic Policy, and as the United States Trade Representative
•His roles as President of the Council on Foreign Relations and as former Vice Chairman and President, Strategic Growth, of Mastercard Incorporated, overseeing strategic growth and leveraging technology to expand digital inclusion at Mastercard enable him to offer guidance to the Company on international markets in which we participate, factors affecting international trade and the balance of risks and opportunities in a dynamic marketplace
•Mr. Froman has deep expertise in the complex digital governance and cyber issues facing global companies, including international regulation of digital platforms, cross border data flows and data usage, as well as concerns about privacy protection and cybersecurity
•Mr. Froman’s perspective is particularly impactful given our strategic focus on innovation in changing markets and the global growth of our customer base
Other Key Skill Sets
•International trade, finance, executive and brand management and risk management gained through executive leadership roles
•Meaningful experience with alternative investments business and environmental and social policy implementation
Employment Experience:
2023–Present
President, Council on Foreign Relations (an independent, non-partisan membership organization, think tank, publisher and educational institution that serves as a resource on foreign policy, national security issues and international economic affairs)
Buildings (Multiple sites2018–2023
Vice Chairman and sizes)President, Strategic Growth, Mastercard Incorporated (a financial services company)
Leased Office/Warehouse/Retail/Residential2013–2017
United States Trade Representative, Executive Office of the President
Entertainment/Experiences
2009–2013
Assistant to the President and Deputy National Security Advisor for International Economic Policy, Executive Office of the President 
1999–2009
Various positions (including Chief Executive Officer of CitiInsurance and Chief Operating Officer of alternative investments business), Citigroup (a financial services company)
(1)
8
Surrounding cities include Glendale, CA, North Hollywood, CA and Sun Valley, CA
James P. Gorman
EXECUTIVE CHAIRMAN, MORGAN STANLEY
James-Gorman_Circle_web.gif
Age: 65
Director since:
February 5, 2024
(Incoming)
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•As Executive Chairman and former Chief Executive Officer of Morgan Stanley, Mr. Gorman has an established record driving strategic transformation of a global financial institution with a long-term sustainable business model, bringing important insight for the Company’s strategic progression
•Mr. Gorman successfully executed innovative technological strategies leading Morgan Stanley’s acquisition and integration of online trading platform, E-Trade, providing key perspectives as the Company leverages technology to advance its strategy
•Through his roles at Morgan Stanley and Merrill Lynch and as former president of the Federal Advisory Council to the U.S. Federal Reserve Board, Mr. Gorman has deep finance management, investment and fiduciary expertise evaluating businesses
Other Key Skill Sets
•Successfully oversaw a multi-year CEO succession process and director succession planning
•Managing diverse and inclusive executive teams and a sizeable global workforce
•Brand and risk management and governance and public policy thought leadership developed through his roles at The Business Council, Business Roundtable and the Council on Foreign Relations
Employment Experience:
2024–Present
Executive Chairman, Morgan Stanley (a global financial services firm)
2012–2023
Chairman and Chief Executive Officer, Morgan Stanley
2010–2011
President and Chief Executive Officer, Morgan Stanley
2007–2009
Co-President, Morgan Stanley
2006–2007
Various positions, Morgan Stanley
1999–2005
Various positions, Merrill Lynch & Co., Inc. (a global financial services firm)
Other Public Company Directorships:
Morgan Stanley (2010–Present)
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Robert A. Iger
CHIEF EXECUTIVE OFFICER, THE WALT DISNEY COMPANY
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Age: 72
Director since:
2022; 2000-2021
Committees:
Executive
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•Gained through his experience serving as Chief Executive Officer of Disney for 15 years and former Executive Chairman, Mr. Iger has an unmatched knowledge of the Company and the creative content it produces, and an in-depth understanding of fostering innovation through technology and connecting to audiences in our markets around the world
•Throughout Mr. Iger’s tenure at Disney, he successfully expanded the Company’s geographic presence, identified new revenue streams and initiated the Company’s DTC efforts, expanding the scale and global reach of Disney’s storytelling and streaming services
•Mr. Iger has also furthered Disney’s rich history of storytelling through the successful landmark acquisitions and integration of Pixar, Marvel, Lucasfilm and 21st Century Fox
•His detailed understanding of all facets of the Company, and prior experience leading Disney through various market conditions and implementing successful strategic shifts throughout his career, have uniquely positioned Mr. Iger to serve as Chief Executive Officer of Disney and a member of the Board of Directors at this time
Other Key Skill Sets
•Knowledge of finance and accounting and operational expertise gained through experience in Chief Executive Officer and other leadership positions
•Deep understanding of risk management and corporate governance and social initiatives gained through his public company board experience
The Company has agreed in Mr. Iger’s employment agreement to nominate him for re-election as a member of the Board at the expiration of each term of office during the term of the agreement, and he has agreed to continue to serve on the Board if elected.
Employment Experience:
2022–Present
Chief Executive Officer, The Walt Disney Company
2020–2021
Chairman of the Board and Executive Chairman, The Walt Disney Company
2012–2020
Chairman and Chief Executive Officer, The Walt Disney Company
2005–2012
President and Chief Executive Officer, The Walt Disney Company
2000–2005
President and Chief Operating Officer, The Walt Disney Company
1999–2000
Chairman, ABC Group; President, Walt Disney International
1994–1999
President and Chief Operating Officer, ABC, Inc. (a broadcasting company)
Former Public Company Directorships:
The Walt Disney Company (2000–2021)
Apple Inc. (2011–2019)
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Maria Elena Lagomasino
CHIEF EXECUTIVE OFFICER AND MANAGING PARTNER, WE FAMILY OFFICES
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Age: 74
Director since:
2015
Committees:
Governance and Nominating;
Compensation (Chair)
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•As a founder of the Institute for the Fiduciary Standard and advisory board member of the Millstein Center for Global Markets and Corporate Ownership, Ms. Lagomasino is an expert in the field of governance and social thought leadership
•As an executive leader in private banking industries and as a member of the Council on Foreign Relations, she has deep wealth management, investment and fiduciary expertise and extensive experience in leading complex organizations and evaluating businesses from an investor perspective in a variety of industries with varying size and complexities
•She brings meaningful experience in executive compensation-related matters from her role as Chair of the Company’s Compensation Committee, where she focuses on overseeing the alignment of incentive structures with shareholder value creation and execution of long-term strategic priorities
Other Key Skill Sets
•Extensive experience across domestic and international finance, investment and capital markets through her roles at WE Family Offices and JP Morgan
•Significant knowledge of global brands, business development, executive management succession planning and risk management through experience on public company boards
Employment Experience:
2013–Present
Chief Executive Officer and Managing Partner, WE Family Offices (a wealth management company and registered investment advisor)
2005–2012
Chief Executive Officer, GenSpring Family Offices, LLC, an affiliate of SunTrust Banks, Inc. (a bank holding company)
2001–2005
Chairman and Chief Executive Officer, JP Morgan Private Bank, a division of JP Morgan Chase & Co. (an investment banking company)
1983–2001
Various positions (most recently Managing Director, Global Private Banking Group), The Chase Manhattan Bank (a consumer banking company)
Other Public Company Directorships:
The Coca-Cola Company (2008–Present)
11

Calvin R. McDonald
CHIEF EXECUTIVE OFFICER, LULULEMON ATHLETICA INC.
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Age: 52
Director since:
2021
Committees:
Compensation
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•Mr. McDonald has over 25 years of retail and brand-building experience, bringing powerful insight to the Board on integrating customer experience across multiple channels
•As Chief Executive Officer of lululemon athletica, he has led the company in innovating integrated guest experiences and offers valuable perspective on the growth, development and guest innovation of an international consumer business that is particularly relevant to Disney’s leadership team
•Mr. McDonald is responsible for the growth, development and consumer product operations of lululemon athletica, including overseeing the company’s incorporation and expansion of a DTC offering and creative product design, providing him a fundamental understanding of consumer strategies that support and accelerate customer engagement
Other Key Skill Sets
•Deep understanding of management, leadership and executive management from his experience at lululemon athletica
•Strong knowledge of finance and accounting, risk management and corporate governance and social initiatives gained through his role as a public company chief executive officer
Employment Experience:
2018–Present
Chief Executive Officer, lululemon athletica inc. (an athletic apparel company)
2013–2018
President and Chief Executive Officer, Sephora Americas, a division of the LVMH group of luxury brands
2011–2013
President and Chief Executive Officer, Sears Canada (a department store company)
Other Public Company Directorships:
lululemon athletica inc. (2018–Present)
Former Public Company Directorships:
Sephora Americas (2013–2018)
12

Mark G. Parker
EXECUTIVE CHAIRMAN, NIKE, INC.
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Age: 68
Director since:
2016
Committees:
Governance and Nominating (Chair);
Executive (Chair)
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•As the former President and Chief Executive Officer of NIKE, Mr. Parker has overseen and managed the growth of a complex, global organization, and has experience exercising cost discipline and oversight of organizational structure, as well as successful executive management succession planning, bringing a valuable perspective to fellow directors and the broader leadership team
•Through this experience, Mr. Parker brings first-hand knowledge of workforce and human capital management including managing creative talent and compensation, a critical skill set for Disney’s Board given our continued focus on human capital management oversight
•Mr. Parker offers a unique insight to the Company regarding leading direct-to-consumer expansion and the design, production, marketing and distribution of consumer products, in addition to managing a major international consumer brand through various market evolutions over a more than 40-year time period
Other Key Skill Sets
•Financial and executive management and risk management background gained through roles as President and Chief Executive Officer, as well as Executive Chairman of NIKE
•Experience in integrating environmental and social practices into corporate strategy through his leadership at NIKE as the company integrated sustainable innovation into product development and manufacturing
Employment Experience:
2020–Present
Executive Chairman, NIKE, Inc. (a footwear and apparel company)
2016–2020
Chairman, NIKE, Inc.
2006–2020
President and Chief Executive Officer, NIKE, Inc.
1979–2006
Various positions (including product research, design and development, marketing and brand management), NIKE, Inc.
Other Public Company Directorships:
NIKE, Inc. (2006–Present)
13

Derica W. Rice
FORMER EXECUTIVE VICE PRESIDENT, CVS HEALTH CORPORATION
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Age: 58
Director since:
2019
Committees:
Audit (Chair)
Notable Experience Aligned with Disney’s Strategy and Key Board Contributions
•Mr. Rice offers extensive experience on the alignment of financial and strategic objectives and an understanding of cost discipline and effective organizational structure, a primary focus of the Company’s Board and management team particularly throughout Disney’s strategic evolution, through his experience in key financial and operational roles at global companies, including as Chief Financial Officer of Eli Lilly for more than a decade
•His strong knowledge of large brand-focused organizations gained through experience leading the pharmacy benefits management business of CVS Health and as Chief Financial Officer of Eli Lilly has been a valuable addition to the Board
•Mr. Rice provides expertise in financial oversight and accounting through his financial executive experience, as well his experience on the audit committee of the boards of public companies, enhancing Disney’s Audit Committee oversight of risks that may arise out of financial planning and reporting, internal controls and information technology
Other Key Skill Sets
•Strong understanding of broader risk management oversight and complex, global business operations through senior operation roles at CVS and Eli Lilly
•Deep understanding of strategic planning, corporate governance and social initiatives through service on other public company boards
Employment Experience:
2018–2020
Executive Vice President, CVS Health Corporation (a pharmacy company)
2018–2020
President, CVS Caremark, the pharmacy benefits management business of CVS Health Corporation
2006–2017
Chief Financial Officer and Executive Vice President of Global Services, Eli Lilly and Company (a pharmaceutical company)
2003–2006
Vice President and Controller, Eli Lilly and Company
1990–2005
Various Executive Positions, Eli Lilly and Company
Other Public Company Directorships:
The Carlyle Group Inc. (2021–Present)
Bristol-Myers Squibb Company (2020–Present)
Target Corporation (2007–2018); (2020–Present)
ITEM 3. Legal ProceedingsAudit Committee
As disclosed in Note Members: Safra A. Catz, D. Jeremy Darroch, Francis A. deSouza and Derica W. Rice (Chair)
The Audit Committee is responsible for, among other things, overseeing the Company’s financial statements, internal controls, compliance with legal and regulatory requirements, internal audit function and Company’s relationship with its independent auditor. The Committee also oversees cybersecurity and data security risks and mitigation strategies. The Committee reviews the Company’s policies and practices with respect to risk assessment and risk management. The Committee met 9 times during fiscal 2023. All of the members of the Committee are independent within the meaning of SEC regulations, the listing standards of the New York Stock Exchange and the Company’s Corporate Governance Guidelines. The Board has determined that all members of the Committee, Ms. Catz, Mr. Darroch, Mr. deSouza and Mr. Rice, are qualified as audit committee financial experts within the meaning of SEC regulations and that they have accounting and related financial management expertise within the meaning of the listing standards of the New York Stock Exchange. The Board has
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determined that Mr. Rice’s simultaneous service on the audit committees of more than three public companies will not impair his ability to effectively serve on the Committee. In fiscal 2024, the Board appointed Mr. Darroch to the Consolidated Financial Statements,Committee and, following the Company is engaged in certain legal matters, andAnnual Meeting, Mr. deSouza will no longer be a member of the disclosureBoard.
Corporate Governance Documents
The Board has adopted Corporate Governance Guidelines, which set forth in Note 14 relatinga flexible framework within which the Board, assisted by its committees, directs the affairs of the Company. The Corporate Governance Guidelines address, among other things, the composition and functions of the Board, Director independence, stock ownership by and compensation of Directors, management succession and review, Board leadership, Board committees and selection of new Directors.
The Company has Standards of Business Conduct, which are applicable to certain legal matters is incorporated herein by reference.
ITEM 4. Mine Safety Disclosures
Not applicable.
Information About Our Executive Officers
The executive officersall employees of the Company, including the principal executive officer, the principal financial officer and the principal accounting officer. The Board has a separate Code of Business Conduct and Ethics for Directors, which contains provisions specifically applicable to Directors.
Each standing committee of the Board is governed by a charter adopted by the Board.
The Corporate Governance Guidelines, the Standards of Business Conduct, the Code of Business Conduct and Ethics for Directors and each of the Audit, Compensation and Governance and Nominating Committee charters are elected each yearavailable on the Company’s Investor Relations website under the “Corporate Governance” heading at www.disney.com/investors and in print to any shareholder who requests them from the Company’s Secretary. If the Company amends or waives the Code of Business Conduct and Ethics for Directors or the Standards of Business Conduct with respect to the principal executive officer, principal financial officer or principal accounting officer, it will post the amendment or waiver at the organizational meetingsame location on its website.
Director Selection Process
Working closely with the full Board, the Governance and Nominating Committee develops criteria for open Board positions. Applying these criteria, the Committee considers candidates for Board membership suggested by Committee members, other Board members, management and shareholders. The Committee retains third-party executive search firms to identify and review candidates and generate candidate pools consistent with the criteria below, upon request of the Committee from time to time.
Once the Committee has identified a prospective nominee — including prospective nominees recommended by shareholders — it determines whether to conduct a full evaluation. The Committee may request the third-party search firm to gather additional information about the prospective nominee’s background and experience and to report its findings. The Committee then evaluates the prospective nominee against the specific criteria that it has established for the position, as well as the standards and qualifications set out in the Company’s Corporate Governance Guidelines, including but not limited to:
•the ability of the prospective nominee to represent the interests of the shareholders of the Company;
•the ability of the prospective nominee to dedicate sufficient time, energy and attention to ensure the diligent performance of the prospective nominee’s duties, including by attending shareholder meetings and meetings of the Board and committees of the Board of which such prospective nominee would be a member, and by reviewing in advance all meeting materials;
•the extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board; and
•the extent to which the prospective nominee helps the Board reflect the diversity of the Company’s shareholders, employees, customers and guests and the communities in which it operates.
After completing this evaluation and an interview, the Committee makes a recommendation to the full Board, which makes the final determination whether to nominate or appoint the new director after considering the Committee’s report.
In selecting director nominees, the Board seeks to achieve a mix of members who together bring experience and personal backgrounds relevant to the Company’s strategic priorities and the scope and complexity of the Company’s business. The current nominees’ qualifications set forth in their individual biographies under the section titled “Directors” sets out how each of the current nominees (comprised of all current Directors, other than Mr. deSouza, and Mr. Gorman) contributes to the mix of experience and qualifications the Board seeks. The Board also considers the tenure policy under the Corporate Governance Guidelines, pursuant to which followsthe Board will not nominate for re-election any non-management Director that completed fifteen years of service as a member of the Board on or prior to the date of election or that turned 75 years of age or older in the calendar year preceding the related annual meeting, in each case, unless the Board concludes that such Director’s continuing service would better serve the best interests of the shareholders. In addition, the Board seeks candidates whose service on other boards will not adversely affect their ability to dedicate the requisite time to service on the Board. The Board believes that Directors who are executive officers of public companies should not serve on more than two public company boards (including the Board of the Company) at a time, and that other Directors should not serve on more than four public company boards (including the Board of the Company).
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The Committee regularly assesses the composition of the Board and considers the extent to which the Board continues to reflect the criteria set forth above. The Committee identifies any gaps in skill sets to inform the search process. Based on such assessment, the Committee will recommend to the Board the nomination for election or re-election of existing Directors at the annual meetingshareholders meeting. The Board will review the Committee’s recommendation and evaluate which candidates to nominate for election or re-election.
As a result of a comprehensive search for directors that reflect its selection criteria discussed above, the Board appointed two new directors: James Gorman and Jeremy Darroch. Recommendations: Those who identified Mr. Gorman for consideration as a candidate included a third-party search firm and a non-management director. Those who identified Mr. Darroch for consideration as a candidate included a third-party search firm, a non-management director, the Chief Executive Officer (“CEO”) and another executive officer.
A shareholder who wishes to recommend a prospective nominee for the Board should notify the Company’s Secretary or any member of the Governance and Nominating Committee in writing with whatever supporting material the shareholder considers appropriate. The Governance and Nominating Committee will also consider whether to nominate any person nominated by a shareholder pursuant to the provisions of the Company’s Bylaws relating to shareholder nominations.
Delinquent Section 16(a) Reports
Based solely on a review of the reports filed for fiscal year 2023 and related written representations from reporting persons, we are not aware of any late or delinquent filings under Section 16(a) of the Securities Exchange Act of 1934, except (i) a Form 4 for each of Ms. Chang, Mr. deSouza, Mr. McDonald and Mr. Parker that was filed one day late due to a filing software error on October 5, 2022, in each case reporting one transaction; and (ii) a Form 4 for Ms. Coleman that was filed late due to an administrative oversight on August 3, 2023, with respect to the vesting of a portion of two previously granted restricted stock unit awards and related exempt dispositions of some of such vested shares to the Company to satisfy the tax withholding obligations, reporting four transactions.
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ITEM 11. Executive Compensation
Director Compensation
Elements of Director Compensation
The elements of annual Director compensation for fiscal 2023 were as follows:
Annual Board retainer$115,000
Annual committee retainer (except Executive Committee)1
$10,000
Annual Governance and Nominating Committee chair retainer2
$20,000
Annual Compensation Committee chair retainer2
$25,000
Annual Audit Committee chair retainer2
$27,500
Annual deferred stock unit grant$240,000
Annual retainer for independent Chairman3
$145,000
1Per committee.
2This is in addition to the annual committee retainer the Director receives for serving on the committee.
3This is in addition to the annual Board retainer, annual committee retainer and annual deferred stock unit grant and at least 50% must be paid in stock.
To encourage Directors to experience the Company’s products, services and entertainment offerings personally, each non-employee Director may receive Company products and services up to a maximum of $15,000 in fair market value per calendar year plus reimbursement of associated tax liabilities. Each first-year non-employee Director may receive Company products and services up to a maximum of $25,000 in fair market value plus reimbursement of associated tax liabilities for one year following their respective start date. Such first-year non-employee Directors will have an additional allowance of $15,000 prorated to reflect the balance of the calendar year remaining after the first anniversary of their start date. Directors’ spouses, children and grandchildren may also participate in this benefit within each Director’s limit.
Family members of Directors may accompany Directors traveling on Company aircraft for business purposes on a space-available basis.
Directors participate in the Company’s employee gift matching program. Under this program, the Company matches contributions of up to $20,000 per calendar year per Director to charitable and educational institutions meeting the Company’s criteria.
Directors who are also employees of the Company receive no additional compensation for service as a Director.
Under the Company’s Corporate Governance Guidelines, non-employee Director compensation is determined annually by the Board acting on the recommendation of the Governance and Nominating Committee. In formulating its recommendation, the Governance and Nominating Committee receives input from the third-party compensation consultant retained by the Compensation Committee regarding market practices for Director compensation.
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Director Compensation for Fiscal 2023
The following table sets forth compensation earned during fiscal 2023 by each person who served as a non-employee Director during the year.
Fees Earned or Paid In CashStock AwardsAll Other CompensationTotal
Susan E. Arnold$109,945 $159,976 $28,876 $298,797 
Mary T. Barra125,000 240,767 — 365,767 
Safra A. Catz138,901 240,767 — 379,668 
Amy L. Chang125,000 240,767 54,061 419,828 
Francis A. deSouza125,000 240,767 16,274 382,041 
Carolyn N. Everson91,280 208,439 20,000 319,719 
Michael B.G. Froman125,000 240,767 13,394 379,161 
Maria Elena Lagomasino160,000 240,767 7,903 408,670 
Calvin R. McDonald125,000 240,767 13,652 379,419 
Mark G. Parker168,242 276,384 7,533 452,159 
Derica W. Rice138,599 240,767 29,224 408,590 
Fees Earned or Paid in Cash. “Fees Earned or Paid in Cash” includes the annual Board retainer and annual committee and committee-chair retainers, whether paid currently or deferred by the Director to be paid in cash or shares after service ends. Directors are permitted to elect each year to receive all or part of their retainers in Disney stock and, whether paid in cash or stock, to defer all or part of their retainers until after service as a Director ends. Directors who elect to receive deferred compensation in cash receive a credit each quarter and the balance in their deferred cash account earns interest at an annual rate equal to 120% of the Applicable Long-Term Federal Interest Rate, as determined from time to time by the United States Internal Revenue Service. For fiscal 2023, the average interest rate was 5.30%.
The following table sets forth the form of fees received by each Director. The number of stock units awarded is equal to the dollar amount of fees accruing each quarter divided by the average over the last ten trading days of the quarter of the average of the high and low trading price for shares of Company common stock on each day in the ten-day period. Stock units distributed currently were accumulated throughout the year and distributed as shares following December 31, 2023.
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CashStock Units
Paid
Currently
Deferred
Value Distributed
Currently
Value
Deferred
Number of Units
      
Susan E. Arnold$109,945 — — — — 
Mary T. Barra— — — $125,0001,417
Safra A. Catz— — $138,901— 1,569
Amy L. Chang125,000 — — — —
Francis A. deSouza— — 125,000 — 1,417
Carolyn N. Everson13,040 — 39,120 39,120 886
Michael B.G. Froman— — 125,000 — 1,417
Maria Elena Lagomasino— — — 160,000 1,814
Calvin R. McDonald— — 125,000 — 1,417
Mark G. Parker— — — 168,242 1,923
Derica W. Rice— — — 138,599 1,576
Stock Awards. “Stock Awards” sets forth the market value of the deferred stock unit grants to Directors and the amount reported is equal to the market value of the Company’s common stock on the date of the award times the number of shares underlying the units. Units are awarded at the end of each quarter and the number of units is determined by dividing the amount payable with respect to the quarter by the average over the last ten trading days of the quarter of the average of the high and low trading price for shares of the Company common stock on each day in the ten-day period. Each Director other than Ms. Everson, Mr. Parker and Ms. Arnold was awarded 2,721 units in fiscal 2023. Ms. Everson was awarded 2,346 units as she served only a portion of fiscal 2023. Mr. Parker and Ms. Arnold, who both served as independent Chairman for a portion of fiscal 2023, were awarded 3,141 units and 1,731 units, respectively, in fiscal 2023 due to the annual retainer for independent Chairman.
Unless a Director elects to defer receipt of shares until after the Director’s service ends, shares with respect to annual deferred stock unit grants are normally distributed to the Director on the second anniversary of the award date, whether or not the Director is still a Director on the date of distribution.
At the end of any quarter in which dividends are distributed to shareholders, Directors receive additional stock units with a value (based on the average of the high and low trading prices of the Company common stock averaged over the last ten trading days of the quarter) equal to the amount of dividends they would have received on all stock units held by them at the end of the prior quarter. Shares with respect to these additional units are distributed when the underlying units are distributed. Units awarded in respect of dividends are included in the fair value of the stock units when the units are initially awarded and therefore are not included in the tables above, but they are included in the total units held at the end of the fiscal year in the table below.
The following table sets forth all stock units held by each non-management Director serving during fiscal 2023, as of the end of fiscal 2023. All stock units are fully vested when granted, but shares are distributed with respect to the units only later, as described above. Stock units in this table are included in the stock ownership table in Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters — “Stock Ownership” except to the extent they may have been distributed as shares and sold prior to the date of the stock ownership table.
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Stock Units
Susan E. Arnold4,276
Mary T. Barra17,181
Safra A. Catz5,895
Amy L. Chang5,138
Francis A. deSouza8,809
Carolyn N. Everson3,175
Michael B.G. Froman5,822
Maria Elena Lagomasino23,868
Calvin R. McDonald6,196
Mark G. Parker22,827
Derica W. Rice12,830
The Company’s Corporate Governance Guidelines encourage Directors to own or acquire, within three years of first becoming a Director, shares of Company common stock (including stock units received as Director compensation) having a market value of at least five times the amount of the annual Board retainer for the Director. Unless the Board exempts a Director, each Director is also required to retain stock representing no less than 50% of the after-tax value of exercised options and shares received upon distribution of deferred stock units until such Director meets the stock holding guideline described above.
All Other Compensation. “All Other Compensation” includes:
•The incremental cost to the Company of perquisites and other personal benefits for Ms. Arnold, including security charges and product familiarization and travel benefits. In fiscal 2023, the Company provided security services and equipment to Ms. Arnold totaling $20,185. Except for Ms. Arnold, the value of perquisites and other benefits, including product familiarization and travel benefits, for each Director is not included in the table as permitted by SEC rules because the aggregate incremental cost to the Company did not exceed $10,000 for such Director.
•Reimbursement of tax liabilities associated with the product familiarization and travel benefits. The reimbursement of associated tax liabilities was $1,681 for Ms. Arnold, $34,061 for Ms. Chang, $16,274 for Mr. deSouza, $13,394 for Mr. Froman, $7,903 for Ms. Lagomasino, $13,652 for Mr. McDonald, $7,533 for Mr. Parker and $9,224 for Mr. Rice.
•Interest earned on deferred cash compensation, which was less than $10,000 for each Director.
•The matching charitable contribution of the Company, which was $20,000 for Ms. Chang, $20,000 for Ms. Everson and $20,000 for Mr. Rice.
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Executive Compensation
Compensation Discussion and Analysis
Fiscal 2023 Performance Highlights
As described in more detail under “Executive Compensation — Compensation Discussion and Analysis — Individual Compensation Decisions” below, our named executive officers (“NEOs”) who remain with the Company showed strong performance and leadership both in managing the Company and in driving a transformation of our businesses, building long-term value. Over the past century, we have built a strong foundation of creative excellence and innovation, which has only been reinforced by the important restructuring and cost efficiency work we’ve done this year. Our new structure is restoring creativity to the center of our Company. Our results reflect the significant progress we’ve made on our priorities over the past year and while we still have work to do to continue improving performance, our progress has allowed us to move beyond this period of fixing and begin building our businesses again.
•Revenues increased 7% year over year to $88.9 billion
•Cash provided by continuing operations increased 64% year over year to $9.9 billion.
Fiscal 2023 share price performance was challenging for the Company. As we look forward, our leadership team remains focused on building long-term value for our shareholders, and our Compensation Committee remains committed to an executive compensation program that motivates executives to achieve these goals and aligns pay outcomes with Company performance.
Fiscal 2023 Compensation Practices
EXECUTIVE COMPENSATION OBJECTIVES AND METHODS
We maintain an integrated approach to attract and retain high-caliber executives in a competitive market for talent, while adhering to key corporate governance best practices summarized below.
Shareholder engagement and responsiveness
Independent members of the Board and Investor Relations regularly engage in investor outreach. With regard to executive compensation, the Compensation Committee has addressed shareholder feedback and made changes to compensation for fiscal 2023, including:
•Upon hire, set the CEO's total direct compensation below the market median of our peers. In connection with his contract extension, Mr. Iger’s target bonus increased to 500% of base salary, in order to align his target total direct compensation with the median.
•Utilized the structure of 60% of the CEO’s fiscal 2023 equity award as performance-based restricted stock units (“PBUs”), in response to feedback to prioritize pay for performance.
•As financial uncertainties related to the pandemic have decreased, the portion of fiscal 2023 PBUs vesting subject to return on invested capital (“ROIC”) performance have a single 3-year performance period. In fiscal 2020 - 2022, PBUs vesting subject to ROIC performance had three 1-year performance periods.
•For the fiscal 2023 annual bonus plan, significantly increased the required adjusted revenue, adjusted segment operating income and adjusted after-tax free cash flow amounts to achieve target-level payouts year-over-year. Specifically, targets were raised 10%, 35% and more than 100%, respectively. In addition, performance ranges were adjusted to further incentivize performance.
•The Compensation Committee adopted a cash severance policy pursuant to which any cash severance payment will not exceed 2.99 times the sum of base salary plus target bonus for Section 16 officers without shareholder approval of such payment.
Incentive plan non-financial metricsFiscal 2023 bonus plan maintains incorporation of diversity and inclusion, creativity and innovation and collaboration as key strategic objectives.
Equity retention guidelinesNEOs must hold a meaningful amount of the Company’s stock. The CEO must hold equity valued at five times his salary within five years of becoming CEO. Other NEOs must hold equity valued at three times their salary within five years of becoming an executive officer.
Compensation at riskA majority of NEO compensation is tied to either short- or long-term Company performance. For Mr. Iger in fiscal 2023, 96% of his total target compensation (including 60% of his annual equity grant, comprised of PBUs) was tied to financial performance, contributions towards organization goals, equity compensation or stock price performance.
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Annual risk assessmentEach year, the Compensation Committee’s compensation consultant completes a risk assessment of the Company’s compensation programs. Based on this assessment for fiscal 2023, the Compensation Committee determined that risks arising from the Company’s policies and practices are not reasonably likely to have a material adverse effect on the Company.
Clawback policiesThe Company is required to recoup certain incentive-based compensation erroneously awarded to a current or former NEO or other Section 16 officers based on financial reporting measures that are required to be restated. In addition, under the 2011 Stock Incentive Plan, equity awards pursuant to the plan may be clawed back where there is reputational or financial harm to the Company.
Disallow hedging and pledgingBoard members, NEOs and all other Section 16 filers are prohibited from hedging and pledging the Company’s securities.
No option re-pricing or cash buyouts
The Company does not allow re-pricing or cash buyouts of underwater stock options without shareholder approval.
No excise tax gross-upsThe Company does not provide excise tax gross-ups.
Independent compensation consultantThe Compensation Committee has retained a compensation consultant whose relationship with the Company was confirmed to be independent for fiscal 2023.
CEO Security & Aircraft UsageGiven the unique security risks posed by the position, the Company pays the cost of security services and equipment for the CEO in an amount that the Board believes is reasonable in light of the security needs and, in the interest of security, requires the CEO to use corporate aircraft for all personal travel.
Executive Compensation Program Structure — Objectives and Methods
We design our executive compensation program to drive the creation of long-term shareholder value. We do this by linking compensation payouts to the achievement of preset performance goals that promote the creation of sustainable shareholder value and by designing compensation to attract and retain high-caliber executives in a competitive market for talent. We aim to provide compensation opportunities that take into account compensation levels and practices of our peers. For a more detailed description of the peer groups we use for compensation purposes, see the discussion under the heading, “Executive Compensation — Other Compensation Information — Peer Groups,” set forth below. Total direct compensation comprises a mix of variable and fixed compensation that is heavily weighted toward variable performance-based compensation. Our performance-based compensation includes a short-term annual performance-based bonus and longer-term equity awards that deliver value based on stock price performance. Our performance-based compensation also includes PBUs, which vest only upon meeting performance targets. As prospective performance targets are central to our business strategy, for competitive reasons we do not publicly disclose them for either the short-term annual performance-based bonus plan or the long-term incentive plan. The Company enters into employment agreements with our senior executives when the Compensation Committee determines that it is appropriate to attract or retain an executive or where an employment agreement is consistent with our practices with respect to other similarly situated executives.
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The following table sets forth the elements of total direct compensation in fiscal 2023 and the objectives and key features of each element:
OBJECTIVES AND KEY FEATURES
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SALARY
Objectives:
The Compensation Committee sets salaries to reflect job responsibilities and to provide competitive fixed pay to balance performance-based risks.
Key Features:
•Minimum salaries set in employment agreement
•Committee discretion to adjust annually based on changes in experience, nature and responsibility of the position, competitive considerations and CEO recommendation (except in the case of the CEO)
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PERFORMANCE-BASED BONUS
Objectives:
The Compensation Committee structures the bonus program to incentivize performance at the high end of the financial performance measure ranges that it establishes each year. The Committee believes that incentivizing performance in this fashion will lead to long-term, sustainable gains in shareholder value.
Key Features:
•Target bonus for each NEO set by the Committee early in the fiscal year in light of employment agreement provisions, competitive considerations, CEO recommendation (except targets for the CEO) and other factors the Committee deems appropriate; bonus opportunity normally limited to 200% of target bonus
•Unless otherwise adjusted downward by the Committee, payout on 70% of target is formulaic and determined by performance against financial performance ranges developed by the Committee early in the fiscal year
•Unless otherwise determined by the Committee, payout on 30% of target determined by Company-wide Other Performance Factors and the Committee’s assessment of individual performance based both on other performance objectives and on CEO recommendation (except the payouts for the CEO)
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EQUITY AWARDS
Objectives:
The Compensation Committee structures equity awards to directly reward long-term gains in shareholder value. Equity awards carry vesting terms that now extend for three years and include PBUs whose value depends on Company performance, including performance relative to the S&P 500. These awards provide incentives to create and sustain long-term growth in shareholder value.
Key Features:
•Combined value of options, performance units and time-based units determined by the Committee in light of employment agreement provisions, competitive market conditions, evaluation of executive’s performance and CEO recommendation (except awards for the CEO)
•Allocation of annual awards for CEO: 60% PBUs and 40% stock options
•Allocation of annual awards for other NEOs (other than the Interim CFO and Senior Executive Vice President & Chief Human Resources Officer, as their awards relate to their prior roles) in fiscal 2023 (based on award value): 50% PBUs; 25% time-based restricted stock units; 25% stock options
ANNUAL PERFORMANCE-BASED RESTRICTED STOCK UNITS
Key Features:
•PBUs reward executives only if preset performance targets are met
•PBUs vest subject to the level of achievement under multi-year performance tests. Starting with fiscal 2022 awards, payout ranges from 0% if performance is under threshold to up to 200% if performance is at maximum
•Half of awards vest based on three-year cumulative total shareholder return (“TSR”) relative to the S&P 500 (two years for Mr. Iger in fiscal 2023); the other half vest based on three-year ROIC performance (two years for Mr. Iger in fiscal 2023). Awards as described in the section titled “Executive Compensation — Compensation Tables — Fiscal 2023 Grants of Plan Based Awards Table”
STOCK OPTION AWARDS
Key Features:
•Exercise price equal to average of the high and low trading prices on day of award
•Option re-pricing without shareholder approval is prohibited
•Ten-year term
•Vest one-third per year
ANNUAL TIME-BASED RESTRICTED STOCK UNITS
Key Features:
•Vest one-third per year
•For fiscal 2023, Mr. Iger did not receive time-based RSUs
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COMPENSATION AT RISK
The Compensation Committee believes that most of the compensation for NEOs should be at risk and tied to a combination of long-term and short-term Company performance. In fiscal 2023, our NEOs consisted of Mr. Iger, Mr. Lansberry, Mr. Gutierrez, Ms. Schake, Ms. Coleman, Mr. Chapek and Ms. McCarthy.
In establishing a mix of fixed to variable compensation, the composition of equity awards, target bonus levels, grant date equity award values and performance ranges, the Committee seeks to maintain its goal of making compensation overwhelmingly tied to performance, while also providing compensation opportunities that are competitive with alternatives available to the executive. In particular, the Committee expects that performance at the high-end of ranges will result in overall compensation that is sufficiently attractive relative to compensation available at successful competitors and that performance at the low-end of ranges will result in overall compensation that is less than that available from competitors with more successful performance.
The following charts show the percentage of the target total direct annual compensation for first, Mr. Iger, and second, all NEOs other Boardthan Mr. Iger and Mr. Chapek, that is variable or at risk versus being fixed with respect to fiscal 2023. At risk compensation includes both the target performance-based cash bonus and equity awards while the only fixed component of Directors meetings,pay is base salary.
CEO – MR. IGER*Non-CEO NEOs**
33163317
CEO – MR. IGER*Non-CEO NEOs**
33213322
*Target mix for fiscal 2023 compensation, including the proration of Mr. Iger’s fiscal 2023 target annual incentive. Mr. Iger’s target fiscal 2024 compensation will be 97% at risk compensation: 3% base salary, 16% target annual incentive, 49% PBUs and 32% stock options.
** Target mix for fiscal 2023 compensation. Includes target compensation for all NEOs other than Mr. Iger and Mr. Chapek.
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Beginning in fiscal 2022, the Compensation Committee determined to increase PBUs from 30% to 50% of the overall long-term incentive grant value for the NEOs other than the CEO, who already had 50% in the form of PBUs (and who has 60% in the form of PBUs for fiscal 2023). This shift reflects a meaningful increase in performance-based compensation and was directly responsive to shareholder feedback. The below table reflects the annual PBU grants vesting over the last five years, all of which resulted in below target payouts:
Vested In
December 2019		Vested In
December 2020		Vested In
December 2021		Vested In
December 2022		Vested In
December 2023
      
% of Target Payout96%62%48%50%67%
Value of a $100.00 PBU Grant, as of Vest Date1
$133.58$95.87$64.37$30.49$35.85
1Assumes stock purchase was made at the closing price of the grant date and sold on the third anniversary of grant date (or the nearest trading date if third anniversary falls on a non-trading day) and then adjusted for the actual % payout. Awards vested in 2019 were granted on December 21, 2016; awards vested in 2020 were granted on December 19, 2017; awards vested in 2021 were granted on December 19, 2018; awards vested in 2022 were granted on December 17, 2019; awards vested in 2023 were granted on December 17, 2020.
For awards granted in fiscal 2021 (December 2020) and vested in fiscal 2024 (December 2023), TSR performance relative to the S&P 500 was below threshold and therefore no payout was earned for 50% of the award. For the 50% of the award that vested subject to ROIC performance, there were three one-year performance periods for fiscal 2021, fiscal 2022 and fiscal 2023 with payout at the following percentages:
•Fiscal 2021: 150% of target
•Fiscal 2022: 148.05% of target
•Fiscal 2023: 103.38% of target
Fiscal 2023 had a threshold, target and maximum of 3.1%, 5.6% and 6.9%, respectively. Actual fiscal 2023 performance was just over 5.7%, resulting in a 103.38% payout for the fiscal 2023 portion. Overall, the fiscal 2021 PBUs vested at 66.9%, underscoring the Committee’s belief that this PBU structure strongly aligns pay and performance.
The fiscal 2023 ROIC test also applied to the outstanding PBU grants made in fiscal 2022 (December 2021). For these awards, maximum payout increased from 150% to 200% of target, consistent with market practice. Actual fiscal 2023 ROIC performance was just over 5.7%, which resulted in a 106.75% payout for the fiscal 2023 portion of the December 2021 ROIC test.
ROIC for the Company is calculated by dividing Annual After-Tax Operating Performance by the average of Invested Capital at the end of such fiscal year and the end of the immediately prior fiscal year. Annual After-Tax Operating Performance is calculated as appropriate. Eachthe sum of segment operating income for each segment and corporate and unallocated shared expenses, minus tax at 21% on segment operating income and corporate and unallocated shared expenses. Invested Capital is defined as the remainder of Disney’s total assets at fiscal year end minus the sum of: (i) Disney’s cash, cash equivalents and restricted cash as the last day of the fiscal year, (ii) Disney’s deferred tax assets and (iii) Disney’s Non-Interest Bearing Liabilities. ROIC for the Company is adjusted (i) to exclude the effect of extraordinary, unusual and/or nonrecurring items and (ii) to reflect such other factors, as the Committee deems appropriate to fairly reflect ROIC for the applicable fiscal year.
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COMPENSATION PROCESS
The following table outlines the process for determining annual compensation awards for NEOs:
SALARIESPERFORMANCE-BASED BONUS
•Annually at the end of the calendar year, the CEO recommends salaries for NEOs other than himself for the following calendar year
•Compensation Committee reviews proposed salary changes with input from its consultant (described under “Executive Compensation — Compensation Discussion and Analysis — Executive Compensation Program Structure—Objectives and Methods — Compensation Consultant”)
•Committee determines annual salaries for all NEOs
•Committee reviews determinations with the other non-management directors
•Compensation Committee participates in regular Board of Director review of operating plans and results and review of annual operating plan at the beginning of the fiscal year
•Management recommends financial and other performance measures, weightings and ranges
•Early in the fiscal year, the Committee reviews proposed performance measures and ranges with input from its consultant and develops performance measures and ranges that it believes establish appropriate goals
•CEO recommends bonus targets for NEOs other than himself
•Early in the fiscal year, the Committee reviews bonus measure ranges with input from its consultant and in light of the targets established by employment agreements and competitive conditions and determines bonus target opportunity as a percentage of fiscal year-end salary for each NEO
•After the end of the fiscal year, management presents financial results to the Committee
•CEO recommends Other Performance Factor multipliers for NEOs other than himself
•Committee reviews the results and determines whether to make any adjustments to financial results, determines other performance factor multipliers and establishes bonus
•Committee reviews determinations with the other non-management directors and, in the case of the CEO, seeks their concurrence in the Committee’s determination
EQUITY AWARDS
•In the first fiscal quarter, the CEO recommends grant date fair value of awards for NEOs other than himself
•Compensation Committee reviews proposed awards with input from its consultant and reviews with other non-management directors
•Committee determines the dollar values of awards
•Exercise price and number of options and restricted stock units are determined by formula based on market price of common shares on the date of award
MANAGEMENT INPUT
In addition to the CEO recommendations described above, management regularly:
•provides data, analysis and recommendations to the Compensation Committee regarding the Company’s executive compensation programs and policies;
•administers those programs and policies as directed by the Committee;
•provides an ongoing review of the effectiveness of the compensation programs, including competitiveness and alignment with the Company’s objectives; and
•recommends changes to compensation programs if needed to help achieve program objectives.
The Committee meets regularly in executive session without management present to discuss compensation decisions and matters relating to the design and operation of the executive officerscompensation program.
COMPENSATION CONSULTANT
The Compensation Committee retained Pay Governance LLC as the compensation consultant for fiscal 2023. The consultant assists the Committee’s development and evaluation of compensation policies and practices and the Committee’s determinations of compensation awards through various services, including providing third-party data, advice and expertise on proposed executive compensation awards and plan designs; reviewing briefing materials prepared by management and outside advisers; and advising the Committee on the matters included in these materials and preparing its own analysis of compensation matters.
The Committee considers input from the consultant as one factor in making decisions on compensation matters, along with information and analyses it receives from management and its own judgment and experience.
The Committee has been employedadopted a policy requiring its consultant to be independent of Company management. The Committee performs an annual assessment of the consultant’s independence to determine whether the consultant is independent. The Committee assessed Pay Governance LLC’s independence in November 2023 and confirmed that the firm’s work has not raised any conflict of interest and the firm is independent. Pay Governance LLC does not provide any services to the Company other than the services provided to the Compensation Committee.
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Fiscal 2023 Compensation Decisions
This section discusses the specific decisions made by the Compensation Committee in fiscal 2023. These decisions were made taking into consideration shareholder feedback received as members of management and the Board engaged in outreach to shareholders. The Board took several actions in response to the shareholder feedback received.
2023 ANNUAL INCENTIVE PLAN
PERFORMANCE GOALS
The Compensation Committee normally develops performance goals for each fiscal year early in that year and evaluates performance against those goals after the fiscal year has ended to arrive at its compensation decisions.
ANNUAL INCENTIVE GOALS
Annual Incentive Financial Performance
In November 2022, the Compensation Committee reviewed the annual performance-based bonus program. The Committee determined to retain the financial measures and relative weights for calculating the portion of the NEOs bonuses that is based on financial performance as follows:
•adjusted segment operating income—50%
•adjusted revenue—25%
•adjusted after-tax free cash flow—25%
The Committee also developed performance ranges for each of the measures in November 2022. These ranges are used to determine the multiplier that is applied to 70% of each NEO’s target bonus. The overall financial performance multiple is equal to the weighted average of the performance multiples for each of these three measures. The performance multiple for each measure is zero if performance is below the bottom of the range and varies from 35% at the low end of the range to a maximum of 200% at the top end of the range. The Committee believes the top of each range represents extraordinary performance and the bottom represents satisfactory performance, below which no award would be provided. In addition, 30% of each NEO’s target bonus is based on performance against key strategic goals for the Company, called “Other Performance Factors.” We believe the mix between key financial and strategic factors is appropriate, given the majority of the bonus opportunity is focused on Company financial performance, while still recognizing the importance that Other Performance Factors have on establishing a successful culture that supports the Company’s strategic goals.
With our desire to deliver strong results for our shareholders for fiscal 2023, the Committee meaningfully increased performance targets year-over-year for all three financial metrics (increases were 10% for adjusted revenue, 35% for adjusted segment operating income and more than 100% for adjusted after-tax free cash flow). In addition, in order to further drive performance in fiscal 2023, the position or positions indicatedCommittee: (i) expanded the width of the performance range (i.e., the difference between the maximum performance and threshold performance) for adjusted after-tax free cash flow and (ii) increased the maximum performance and threshold performance for adjusted segment operating income and adjusted revenue, respectively. The following table shows the performance ranges approved by the Committee for fiscal 2023 and actual performance (dollars in millions):
Fiscal 2023 Performance ThresholdFiscal 2023 Performance TargetFiscal 2023 Performance MaximumFiscal 2023 Actual PerformanceFiscal 2023 Actual Performance Payout as % of Target
Adjusted Segment Operating Income*$9,957 $13,257 $16,300 $12,863 92%
Adjusted Revenue82,857 91,927 97,973 88,898 78%
Adjusted After-Tax Free Cash Flow**(1,552)1,448 4,448 2,449 133%
*    For purposes of the listannual performance-based bonuses, “adjusted segment operating income” was defined as total segment operating income and pertinent notesreflects adjustments, if any, described under “Evaluating Performance” below. "Total segment operating income” consists of the total of segment operating income from each of our segments, which is equivalent to income from continuing operations before income taxes, adjusted for corporate and unallocated shared expenses, restructuring and impairment charges, A+E gain, net other income, net interest expense and amortization of TFCF Corporation (“TFCF”) and Hulu intangible assets and fair value step-up on film and television costs.
**    For purposes of the annual performance-based bonuses, “adjusted after-tax free cash flow” was defined as cash provided by operations less investments in parks, resorts and other properties, all on a consolidated basis and reflects the adjustments described under “Evaluating Performance” below.
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TABLE OF CONTENTS
Other Performance Factors
For fiscal 2023, the Other Performance Factors for the fiscal 2023 annual bonus, developed by the Compensation Committee during the fiscal year, continued to emphasize the importance of diversity and inclusion, which had the highest weighting among the Other Performance Factors. The executive officersCommittee established the following factors based on the strategic objectives of the Company:
•Diversity & Inclusion – Actively engage in creating a culture of respect for everyone, everywhere, at every level. Work to grow the diversity of our executives and managers to reflect the guests and audiences we serve. Support broadly resonant entertainment and experiences that reflect the world around us and help us develop meaningful relationships with our consumers.
•Collaboration on strategic priorities – Actively promote collaboration and synergy on key strategic priorities of the Company are:with a one-company mindset and drive clear accountabilities and partnership across all lines of business, in support of developing content and product for our key franchises, accelerating our direct-to-consumer initiatives and enabling the success of creative, operating and corporate teams.
NameAgeTitleExecutive
Officer Since
Robert A. Iger72
Chief Executive Officer(1)
2022
Kevin A. Lansberry60
Interim Chief Financial Officer(2)
2023
Horacio E. Gutierrez58
Senior Executive Vice President, General Counsel and Chief Compliance Officer(3)
2022
Sonia L. Coleman51
Senior Executive Vice President and Chief Human Resources Officer(4)
2023
Kristina K. Schake53
Senior Executive Vice President and Chief Communications Officer(5)
2022
(1)•Efforts towards creativity & innovation – Drive Company growth through innovation and the creation of potential new sources of revenue while ensuring strong controls on costs and operational efficiencies.
Evaluating Performance
The Compensation Committee reviewed the overall operating results of the Company in fiscal 2023, evaluating them against the bonus plan performance ranges developed by the Committee early in the fiscal year. The Compensation Committee approved no adjustments to actual fiscal 2023 total segment operating income and revenue. After-tax free cash flow performance for incentive purposes was overall adjusted downward to exclude the content spend benefit of the Writers Guild of America and SAG-AFTRA work stoppages and the deferral in the timing of income tax payments as well as non-recurring items, such as restructuring payments.
In fiscal 2023, the Company achieved strong financial growth for all three financial metrics, even after ranges were significantly increased for fiscal 2023 and after-tax free cash flow was adjusted as discussed above. The financial performance achieved included: total segment operating income of $12,863 million, revenue of $88,898 million and adjusted after-tax free cash flow of $2,449 million. Based on these adjusted results and due to the increase in targets, the weighted financial performance factor was 99% in fiscal 2023 compared to a weighted financial performance factor of 159% in fiscal 2022. As referenced above, and in order to responsibly assess performance, management suggested, and the Committee decided, to adjust after-tax free cash flow downward to exclude the content spend benefit of the Writers Guild of America and SAG-AFTRA work stoppages and the deferral in the timing of income tax payments. Had the Committee not opted to adjust for these one-time events, after-tax free cash flow would have been $5,209 million and that portion of the bonus plan would have paid out at 200%. Overall, the weighted financial performance factor would have been 116%. Additional details regarding the performance of the Company are set forth in our Annual Report on Form 10-K for fiscal 2023.
With respect to the Other Performance Factors, the Committee recognizes that while we still have more work ahead of us, the NEOs delivered results on these key strategic objectives, including:
Diversity & Inclusion
•Adjusted pay ratios were over 99% for base pay for U.S. women and people of color. For more details on the adjusted pay ratio analysis and our commitment to expand pay ratio analyses further going forward, please see our Pay Ratio Dashboard on the “ESG Reporting” page of our Impact website.
•The Company expanded efforts to increase diverse representation, which helped produce year-over-year growth, especially at the executive and management levels. Representation for women increased 0.1 and 0.5 percentage points at the executive and management levels, respectively. Representation for people of color increased 1.0 percentage points at each of the executive and management levels. For more detailed results, please see our Diversity Dashboard on the “ESG Reporting” page of our Impact website. The Diversity Dashboard includes our commitment to further disclosures in the future.
•With the continuation of Disney Aspire, growth in a diverse talent pipeline of employees and leaders continues. In fiscal 2023, the Company promoted over 1,250 employees who were Aspire participants, with 59% being women and 41% being people of color.
•Continued to create and promote content with diversity both in front of and behind the camera such as Avatar: The Way of Water, Black Panther: Wakanda Forever, Guardians of the Galaxy Vol. 3, The Little Mermaid, Chevalier, Flamin’ Hot, Elemental and The Bear.
Collaboration on strategic priorities
•Successfully increased subscribers at Disney+ Core (+9.7M), Hulu (+1.3M) and ESPN+ (+1.7M) during fiscal 2023, which reflected strong technology and content collaboration.
•Drove a restructuring plan of $5.5 billion in target efficiencies, which required strong collaboration throughout the entire organization.
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•Avatar: The Way of Water generated $2.3 billion in worldwide box office, is the third highest grossing film of all time, and garnered strong viewership on Disney+. In addition, in fiscal 2023 Experiences announced an Avatar experience planned for Disneyland.
•Launched Disney+ domestic ad tier, increasing ad sales revenue with strong subscriber usage of the tier, reflecting technology, advertising and content collaboration.
Efforts towards creativity & innovation
•Launched several new innovative attractions, including TRON Lightcycle at Walt Disney World, as well as Mickey & Minnie’s Runaway Railway, Toontown refresh and San Fransokyo Square at Disneyland Resort.
•Finalized a 10-year licensing deal with PENN Entertainment for the launch of an ESPN-branded sports betting platform, ESPN Bet, with an aim to increase fan engagement, brand loyalty and monetization.
•Launched first-ever, fully animated, live NHL game simulcast leveraging Disney Channel’s Big City Greens.
See tabular disclosure for each NEO below under “Executive Compensation — Compensation Discussion and Analysis — Individual Compensation Decisions” for additional information regarding key contributions and accomplishments of each NEO.
2023 EQUITY AWARDS
The Compensation Committee structures equity awards to directly reward long-term gains in shareholder value. Equity awards carry vesting terms that now extend for three years and include PBUs whose value depends on Company performance, including performance relative to the S&P 500. These awards provide incentives to create and sustain long-term growth in shareholder value.
Key Features:
•Combined value of options, performance units and time-based units determined by the Committee in light of employment agreement provisions, competitive market conditions, evaluation of executive’s performance and CEO recommendation (except awards for the CEO)
•Allocation of annual awards for CEO: 60% PBUs and 40% stock options
•Allocation of annual awards for other NEOs in fiscal 2023 (based on award value): 50% PBUs; 25% time-based restricted stock units (“RSUs”); 25% stock options. For most equity recipients other than the executive officers, the fiscal 2023 annual grant was split into two equal installments, with the first half being granted on December 15, 2022 and the second half being granted on July 17, 2023. As both Mr. Lansberry and Ms. Coleman were not serving as executive officers at the time of the first installment of the annual grant, consistent with the treatment for most equity recipients other than the executive officers, they received their fiscal 2023 equity awards in two equal installments. As fiscal 2023 awards relate to time in their prior roles, Mr. Lansberry and Ms. Coleman received their equity in the allocation typical of executives at their respective levels. Mr. Lansberry’s award was allocated as 70% RSUs and 30% stock options (i.e. the standard Executive Vice President allocation) and Ms. Coleman’s award was allocated as 100% RSUs (i.e. the standard Senior Vice President allocation). Ms. Coleman received a promotion award in June in connection with her promotion to Senior Executive Vice President and Chief Human Resources Officer, which was delivered with the same allocation as other NEOs: 50% PBUs; 25% RSUs; 25% stock options.
Time-Based Restricted Stock Units
•RSUs provide retention value to our senior executives and align interests with our shareholders.
•RSUs vest one-third per year.
•In fiscal 2023, Mr. Iger did not receive RSUs as part of his equity allocation. Other NEOs receive 25% of their total equity value in RSUs.
Stock Options
•Stock options incentivize sustained growth in long-term stock appreciation and align interests with our shareholders.
•Exercise price equal to average of the high and low trading prices on day of award.
•Option re-pricing without shareholder approval is prohibited.
•Options have a ten-year term from the grant date.
•Options vest one-third per year.
•Mr. Iger receives 40% of his total equity value in stock options. Other NEOs receive 25% of their total equity value in Stock Options.
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Performance-Based Restricted Stock Units
•PBUs align pay and performance by ensuring that shares are only earned when certain performance criteria are met. 50% of PBUs vest based on TSR performance relative to the S&P 500; 50% of PBUs vest based on ROIC performance.
•Performance is measured over a three-year performance period (two-year performance period for Mr. Iger in fiscal 2023). As financial uncertainties related to the pandemic have mostly abated, the portion of fiscal 2023 PBUs vesting subject to ROIC performance have a single 3-year performance period. In fiscal 2020 - 2022, PBUs vesting subject to ROIC performance had three 1-year performance periods.
•Starting with fiscal 2022 awards, payout ranges from 0% if performance is under threshold to up to 200% if performance is at maximum.
•For the portion vesting subject to TSR relative to the S&P 500, payout at target requires performance at the 55th percentile of the S&P 500.
Payout as a % of TargetPerformance - TSR Percentile Relative to S&P 500
200%75th Percentile or Above
100%55th Percentile
50%25th Percentile
0%Below 25th Percentile
•PBUs are denominated and settled in shares of Company stock.
•As pay-for-performance alignment is key to the Committee, PBUs are weighted the highest of the three equity vehicles. Mr. Iger receives 60% of his total equity value in PBUs. Other NEOs receive 50% of their total equity value in PBUs.
Recent PBU Payout Detail
PBUs Vested in Fiscal 2023
For awards granted in fiscal 2020 (December 2019) and vested in fiscal 2023 (December 2022), TSR performance relative to the S&P 500 was below threshold and therefore no payout was earned for 50% of the award. For the 50% of the award that vested subject to ROIC performance, there were three one-year performance periods for fiscal 2020, fiscal 2021 and fiscal 2022. Overall, fiscal 2020 PBUs paid out at:
•TSR Relative to S&P 500 Payout: 0% of target
•ROIC Payout: 99.35% of target
•Total Payout: 49.7% of target
The below-target payout underscores the Committee’s belief that this PBU structure strongly aligns pay and performance.
PBUs Vested in Fiscal 2024
For awards granted in fiscal 2021 (December 2020) and vested in fiscal 2024 (December 2023), TSR performance relative to the S&P 500 was below threshold and therefore no payout was earned for 50% of the award. For the 50% of the award that vested subject to ROIC performance, there were three one-year performance periods for fiscal 2021, fiscal 2022 and fiscal 2023. Overall, fiscal 2021 PBUs paid out at:
•TSR Relative to S&P 500 Payout: 0% of target
•ROIC Payout: 133.81% of target
•Total Payout: 66.9% of target
The below-target payout underscores the Committee’s belief that this PBU structure strongly aligns pay and performance.
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Individual Compensation Decisions
ANNUAL COMPENSATION DECISIONS
The following table summarizes annual compensation decisions made by the Compensation Committee with respect to each of the NEOs. The Committee established the salary and performance-based bonus target multiple of salary for each of the NEOs early in the fiscal year following the processes described above. The final bonus award was calculated after the fiscal year ended using the financial performance factor of 99% described above. Given the enterprise-wide nature of the Other Performance Factors and the contributions of each currently employed NEO, the Committee established an Other Performance Factor for the NEOs listed in the following table below.
Severance for Mr. Chapek, who separated from the Company on November 20, 2022, conforms to the terms of his employment agreement. For more discussion of Mr. Chapek’s separation, including the rationale, see the section titled “Executive Compensation — Compensation Tables — Potential Payments and Rights on Termination or Change in Control.”
SalaryPerformance-Based BonusEquity Awards
Fiscal Year End 2023 Annual SalaryTarget
Financial Performance Factor1
Other Performance Factor2
Award Amount
Value3
Target Performance Units3,4
Time-Based Units4
Options4
          
Robert A. Iger5
$1,000,000 $1,900,000 99%145%$2,140,000$26,103,448181,592—278,699
Kevin A. Lansberry6
1,000,000 588,561 99%N/A1,000,0001,976,257—15,51018,281
Horacio E. Gutierrez1,330,000 2,660,000 99%145%3,000,0007,206,86238,81918,14748,292
Kristina K. Schake780,000 1,170,000 99%125%1,250,0001,852,5379,2055,04513,426
Sonia L. Coleman7
750,000 1,125,000 99%139%1,250,0002,036,2794,89315,8316,654
Christine M. McCarthy8
2,070,000 3,105,000 99%91%3,000,00012,953,94969,51632,74587,143
1Multiplied by 70% of the target amount.
2Multiplied by 30% of the target amount.
3Includes ROIC portions of fiscal 2021 and 2022 PBUs.
4The number of restricted stock units and options was calculated from the value of the award as described in the table in the section titled “Executive Compensation — Compensation Tables — Fiscal 2023 Grants of Plan Based Awards Table.”
5Mr. Iger was appointed Chief Executive Officer effective November 20, 2022. He previously served as Executive ChairmanIn connection with his July 12, 2023 extension, Mr. Iger’s annual bonus target increased from 100% to 500% of base salary to further incentivize Company performance. For fiscal 2023, Mr. Iger’s target bonus was based on the sum of the Company from February 2020 through December 2021pro-rated target bonus opportunity previously in effect and as Chief Executive Officerthe pro-rated amended target bonus opportunity, which has been calculated to be 190% of the Company from September 2005 to February 2020.base salary.
(2)6Mr. Lansberry was appointed Interim Chief Financial Officer effective July 1, 2023. He was previously Executive Vice PresidentBase salary reflects annualized Interim amount approved by the Committee, while target bonus is prorated between Mr. Lansberry’s previous bonus target and his Interim Chief Financial Officer of the Company’s Parks, Experiences and Products segment from March 2018 and Executive Vice President and Chief Financial Officer, Walt Disney Parks and Resorts from May 2017. Overtarget. The decision on his more than 35 years with the Company, Mr. Lansberry has held a wide range of roles in the Company’s parks and experiences businesses, including in finance, business development, alliances and operations.performance-based bonus took into account his exemplary performance as Interim CFO.
(3)Mr. Gutierrez was appointed Senior Executive Vice President and General Counsel effective February 1, 2022 and appointed Chief Compliance Officer effective March 27, 2023. Prior to joining the Company, he served as Head of Global Affairs and Chief Legal Officer for Spotify Technology S.A. (Spotify) from November 2019 to January 2022, where he led a global, multi-disciplinary team of business, corporate communications and public affairs, government relations, licensing, operations and legal professionals responsible for the company’s work in areas including industry relations, content partnerships, public policy, and trust & safety. He was previously Spotify’s General Counsel - Vice President, Business & Legal Affairs from April 2016 to November 2019.
(4)7Ms. Coleman was appointed Senior Executive Vice President and Chief Human Resources Officer effective April 8, 2023. She was previously Senior Vice President, Human Resources at Disney General Entertainment and ESPN from August 2021. Ms. Coleman served as Senior Vice President, Human Resources for Disney General Entertainment from April 2017, Vice President, Human Resources for the Company from May 2016 and Vice President, Human Resources, Disney Consumer Products from May 2010.
(5)8Ms. Schake was appointed Senior Executive Vice PresidentMcCarthy began a leave of absence and Chief Communications Officer effective June 29, 2022. Previously, she served as Executive Vice President, Global Communications from April 2022. Priorceased to joining the Company, she was appointed by the President of the United States as Counselor for Strategic Communications to the Secretary of the U.S. Department of Health and Human Services, leading a nationwide public education campaign from March 2021 to December 2021. Prior to that, she served as Global Communications Director for Instagram, a product of Meta Platforms, Inc., from March 2017 to March 2019, where she oversaw the communications teams in North America, Latin America, Europe and Asia.
On November 2, 2023, the Company appointed Hugh F. Johnston, 62,serve as Senior Executive Vice President and Chief Financial Officer commencing on December 4,effective July 1, 2023. Mr. Johnston currently servesMs. McCarthy’s target bonus has been pro-rated to reflect the three quarters she served as Senior Executive Vice President and Chief Financial Officer, from 2010,Officer. For more discussion of the terms of Ms. McCarthy’s leave of absence, see the section titled “Executive Compensation — Compensation Tables — Potential Payments and Vice Chairman, from 2015, of PepsiCo, Inc. (“PepsiCo”). In addition to providing strategic financial leadership for PepsiCoRights on Termination or Change in these roles, Mr. Johnston’s portfolio has included a variety of responsibilities, including leadership of PepsiCo’s information technology function from 2015, PepsiCo’s global e-commerce business from 2015 to 2019, and the Quaker Foods North America division from 2014 to 2016. He also held a number of other leadership roles during his PepsiCo career, having served as Executive Vice President, Global Operations from 2009 to 2010, President of Pepsi-Cola North America from 2007 to 2009, Executive Vice President, Operations from 2006 to 2007 and Senior Vice President, Transformation from 2005 to 2006. Prior to that, he served as Senior Vice President and Chief Financial Officer of PepsiCo Beverages and Foods from 2002 through 2005, and as PepsiCo’s Senior Vice President of Mergers and Acquisitions in 2002. Mr. Johnston joined PepsiCo in 1987 as a Business Planner and held various finance positions until 1999 when he left to join Merck & Co., Inc. as Vice President, Retail, a position which he held until he rejoined PepsiCo in 2002.
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PART II
ITEM 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s common stock is listed oncompensation set forth above and described below differs from the New York Stock Exchange undertotal compensation reported in the ticker symbol “DIS”.
As of September 30, 2023, the approximate number of common shareholders of record was 768,000.
ITEM 6. [Reserved]
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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CONSOLIDATED RESULTS
($ in millions, except per share data)
 
% Change
Better (Worse)
 2023202220212023
vs.
2022		2022
vs.
2021
Revenues:
Services$79,562  $74,200  $61,768  7  %20  %
Products9,336  8,522  5,650  10  %51  %
Total revenues88,898  82,722  67,418  7  %23  %
Costs and expenses:
Cost of services (exclusive of depreciation and amortization)(53,139) (48,962) (41,129) (9) %(19) %
Cost of products (exclusive of depreciation and amortization)(6,062) (5,439) (4,002) (11) %(36) %
Selling, general, administrative and other(15,336) (16,388) (13,517) 6  %(21) %
Depreciation and amortization(5,369) (5,163) (5,111) (4) %(1) %
Total costs and expenses(79,906) (75,952) (63,759) (5) %(19) %
Restructuring and impairment charges(3,892) (237) (654) >(100) %64  %
Other income (expense), net96  (667) 201  nmnm
Interest expense, net(1,209) (1,397) (1,406) 13  %1  %
Equity in the income of investees, net782  816  761  (4) %7  %
Income from continuing operations before income taxes4,769  5,285  2,561  (10) %>100  %
Income taxes from continuing operations(1,379) (1,732) (25) 20  %>(100) %
Net income from continuing operations3,390  3,553  2,536  (5) %40  %
Loss from discontinued operations, net of income tax benefit of $0, $14 and $9, respectively—  (48) (29) 100  %(66) %
Net income3,390  3,505  2,507  (3) %40  %
Net income from continuing operations attributable to noncontrolling and redeemable noncontrolling interests(1,036) (360) (512) >(100) %30  %
Net income attributable to Disney$2,354  $3,145  $1,995  (25) %58  %
Diluted earnings per share attributable to Disney$1.29  $1.75  $1.11(26) %58  %
Organization of Information
Management’s Discussion and Analysis provides a narrative on 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 and Non-Segment Items
•Business Segment Results
•Corporate and Unallocated Shared Expenses
•Restructuring Activities
•Liquidity and Capital Resources
•Critical Accounting Policies and Estimates
•DTC Product Descriptions, Key Definitions and Supplemental Information
•Supplemental Guarantor Financial Information
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CONSOLIDATED RESULTS AND NON-SEGMENT ITEMS
In fiscal 2023, the Company reorganized into three business segments: Entertainment, Sports and Experiences (renamed from Disney Parks, Experiences and Products). Fiscal 2022 and 2021 segment financial information has been recast for the following:Summary Compensation Table as follows:
•The prior Disney Mediacompensation set forth above does not include the change in pension value and Entertainment Distribution segment has been reorganized intonon-qualified deferred compensation earnings, as these items do not reflect decisions made by the Entertainment and Sports segmentsCommittee during the fiscal year.
•A portion of Consumer Products revenues is recognized at the Entertainment segment, which is meant toThe compensation set forth above does not include perquisites and benefits and other compensation, as these items are generally determined by contract and do not reflect royalties on merchandise licensing revenues generated on IP createddecisions made by the Entertainment segment
2023 vs. 2022
Revenues forCommittee during the fiscal 2023 increased 7%, or $6.2 billion, to $88.9 billion; net income attributable to Disney decreased $0.8 billion to income of $2.4 billion compared to $3.1 billion in the prior year; and diluted earnings per share (EPS) from continuing operations attributable to Disney decreased to $1.29 compared to $1.75 in the prior year. In the prior year, the Company recorded a reduction in revenue of $1.0 billion for amounts to early terminate certain license agreements with a customer for film and television content, which was delivered in previous years, in order for the Company to use the content primarily at our Entertainment Direct-to-Consumer services (Content License Early Termination). The EPS decrease was due to higher restructuring and impairment charges and lower operating income at Entertainment. These decreases were partially offset by the comparison to the impact of the Content License Early Termination, higher operating income at Experiences in the current year compared to the prior year and investment gains in the current year compared to investment losses in the prior year.
Revenues
Service revenues for fiscal 2023 increased 7%, or $5.4 billion, to $79.6 billion, due to growth at our theme parks and resorts, higher subscription revenue, an increase in theatrical distribution revenue and the comparison to the revenue reduction for the Content License Early Termination in the prior year. These increases were partially offset by decreases in advertising revenue, TV/VOD distribution sales and affiliate revenue. Growth at theme parks and resorts was due to higher volumes and guest spending. The increase in subscription revenue was due to subscriber growth and higher rates. Service revenues reflected an approximate 1 percentage point decrease due to an unfavorable movement of the U.S. dollar against major currencies including the impact of our hedging program (Foreign Exchange Impact).
Product revenues for fiscal 2023 increased 10%, or $0.8 billion, to $9.3 billion, due to higher sales volumes of merchandise, food and beverage at our theme parks and resorts, partially offset by lower home entertainment volumes. Product revenues reflected an approximate 2 percent point decrease due to an unfavorable Foreign Exchange Impact.
Costs and expenses
Cost of services for fiscal 2023 increased 9%, or $4.2 billion, to $53.1 billion, due to higher programming and production costs, inflation and increased volumes at our theme parks and resorts and, to a lesser extent, higher technology and distribution costs at Entertainment Direct-to-Consumer. The increase in programming and production costs was due to higher costs at Entertainment Direct-to-Consumer and increased production cost amortization resulting from higher theatrical revenue, partially offset by a decrease in production cost amortization due to lower TV/VOD distribution sales. Costs of services reflected an approximate 1 percentage point decrease due to a favorable Foreign Exchange Impact.
Cost of products for fiscal 2023 increased 11%, or $0.6 billion, to $6.1 billion, due to higher sales volumes of merchandise, food and beverage and cost inflation at our theme parks and resorts. Cost of products reflected an approximate 1 percent point decrease due to a favorable Foreign Exchange Impact.
Selling, general, administrative and other costs for fiscal 2023 decreased 6%, or $1.1 billion, to $15.3 billion, primarily due to lower marketing costs at Entertainment Direct-to-Consumer. These decreases were partially offset by higher theatrical marketing costs and an increase in marketing costs at theme parks and resorts. Selling, general, administrative and other costs reflected an approximate 1 percentage point decrease due to a favorable Foreign Exchange Impact.
Depreciation and amortization increased 4 %, or $0.2 billion, to $5.4 billion due to higher depreciation at our domestic parks and resorts including accelerated depreciation related to the closure of Star Wars: Galactic Starcruiser and depreciation for the Disney Wish, which launched in the fourth quarter of the prior year, partially offset by lower amortization of intangible assets from the acquisition of TFCF and Hulu.
Restructuring and Impairment Charges
Restructuring and impairment charges in fiscal 2023 were $3,892 million comprising:
•$2,577 million for the Content Impairment charge (see Note 18 of the Consolidated Financial Statements)
•$721 million of goodwill impairments (see Note 18 of the Consolidated Financial Statements)
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•$357 million for severance
•$141 million for an impairmentThe Compensation Committee’s determination on each of an equity investment
•$96 million for exiting our businesses in Russia and other charges
Restructuring and impairment charges in fiscal 2022 were $237 million primarily due tothese matters was based on the impairmentrecommendation of an intangible and other assets related to exiting our businesses in Russia.
Other Income (expense), net
($ in millions)20232022% Change
Better (Worse)
DraftKings gain (loss)$169   $(663)  nm
Other, net(73)  (4)  >(100) %
Other income (expense), net$96   $(667)  nm
In fiscal 2023, the Company recognized a gain of $169 million on its investment in DraftKings, Inc. (DraftKings), which was soldMr. Iger (except in the current fiscal year.
case of his own compensation), the parameters established by the executive’s employment agreement and the factors described below. In fiscal 2022,determining equity awards, the Company recognized a non-cash loss of $663 million from the adjustment ofCommittee considered its investment in DraftKings to fair value.
Interest Expense, net
($ in millions)20232022% Change
Better (Worse)
Interest expense$(1,973)  $(1,549)  (27) %
Interest income, investment income and other764 152 >100  %
Interest expense, net$(1,209)  $(1,397)  13  %
The increase in interest expense was due to higher average rates, partially offset by lower average debt balances and higher capitalized interest.
The increase in interest income, investment income and other resulted from higher interest income on cash balances,overall long-term incentive guidelines for all executives, which, reflected an increase in interest rates, and a larger benefit from pension and postretirement benefit costs, other than service cost.
Equity in the Incomecontext of Investees
Equity in the incomecompetitive market for executive talent, attempt to balance the benefits of investees decreased $34 millionincentive compensation tied to $782 million inperformance of the current year primarily due to lower income from A+E.
Effective Income Tax Rate
($ in millions)20232022
Income from continuing operations before income taxes$4,769      $5,285     
Income tax expense on continuing operations1,379      1,732     
Effective income tax rate - continuing operations28.9%32.8%
The decrease inCompany’s common stock with the effective income tax rate was due to the following:
•A lower effective tax rate on foreign earnings in the current year compared to the prior year;
•A favorable comparison from adjustments related to previous year’s tax matters, which was a benefit in the current year and a detriment in the prior year; partially offset by
•New tax regulations issued in the prior year that limited our ability to use certain accumulated foreign tax credits;
•An unfavorable impact in the current year from goodwill impairments, which were not tax deductible; and
•An unfavorable impact in the current year compared to a favorable impact in the prior year for the taxdilutive effect of employee share-basedequity compensation awards.
MR. IGER
SALARYMr. Iger’s 2023 annual salary was equal to the amount set in his employment agreement.
PERFORMANCE-BASED BONUS
Target Bonus
When Mr. Iger was hired by the Company on November 20, 2022, his annual bonus target was set at an amount equal to his base salary. In connection with his July 12, 2023 extension, Mr. Iger’s annual bonus target increased to five times his base salary to further incentivize Company performance. For fiscal 2023, Mr. Iger’s target bonus was based on the sum of the pro-rated target bonus opportunity previously in effect and the pro-rated amended target bonus opportunity, which has been calculated to be 1.9 times his base salary.
Other Performance Factor
The Compensation Committee applied a factor of 145% with respect to Other Performance Factors for Mr. Iger in fiscal 2023.
Performance Highlights:
•In fiscal 2023, we restructured the Company to restore creativity to the heart of the business. We implemented financial discipline across all of our operations, including over-achieving our target of identifying cost savings of $5.5 billion.
•Studio led the global box office in calendar 2023, with four of the top 10 highest grossing films of the year. In fiscal 2023, Avatar: The Way of Water generated $2.3 billion in worldwide box office, the third highest box office of all time.
•Mr. Iger created a Chief Brand Officer position, significantly enhancing the efficiency and effectiveness of our brand management process.
•Mr. Iger assisted the Succession Planning Committee in ongoing leadership succession planning.
•Disney was named one of “America’s Most Trustworthy Public Companies” by Newsweek and was #1 in a “Brand Intimacy Study” recognizing our power in building bonds with consumers. The Company was also named one of the “World’s Most Admired Companies” by Fortune, and Fast Company ranked Disney as one of the “Most Innovative Companies."
EQUITY AWARD VALUEThe annual equity award value for Mr. Iger of $26,103,448 reflects 83% of his total annual compensation for fiscal 2023. Mr. Iger’s fiscal 2023 award was awarded 60% as PBUs and 40% as stock options. The annual equity award value includes the fiscal 2023 ROIC portion of Mr. Iger’s fiscal 2021 and 2022 awards.
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Noncontrolling Interests
($ in millions)20232022% Change
Better (Worse)
Net income from continuing operations attributable to noncontrolling interests$(1,036)$(360)>(100) %
The increase in net income from continuing operations attributable to noncontrolling interests was due to improved results at our Asia Theme Parks and higher accretion of NBC Universal’s interest in Hulu.
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 Year
Results for fiscal 2023 were impacted by the following:
•TFCF and Hulu acquisition amortization of $1,998 million
•Other income of $96 million due to the DraftKings gain of $169 million
•Restructuring and impairment charges of $3,892 million
Results for fiscal 2022 were impacted by the following:
•TFCF and Hulu acquisition amortization of $2,353 million
•A $1.0 billion reduction in revenue for the Content License Early Termination
•Other expense of $667 million due to the DraftKings loss of $663 million
•Restructuring and impairment charges of $237 million
A summary of the impact of these items on EPS is as follows:
($ in millions, except per share data)Pre-Tax Income (Loss)
Tax Benefit (Expense)(1)
After-Tax Income (Loss)
EPS Favorable (Adverse)(2)
Year Ended September 30, 2023:
Restructuring and impairment charges(3)
$(3,836)  $717   $(3,119)  $(1.69)
TFCF and Hulu acquisition amortization(4)
(1,998)  465(1,533)  (0.82)
Other income (expense), net96   (13)83   0.05 
Total$(5,738)  $1,169   $(4,569)  $(2.46)  
Year Ended October 1, 2022:
TFCF and Hulu acquisition amortization(4)
$(2,353)  $549   $(1,804)  $(0.97)
Contract License Early Termination(1,023)  238(785)  (0.43)
Other income (expense), net(667)  156(511)  (0.28)
Restructuring and impairment charges(237)  55(182)  (0.10)
Total$(4,280)  $998   $(3,282)  $(1.78)  
(1)Tax benefit (expense) is determined using the tax rate applicable to the individual item.
(2)EPS is net of noncontrolling interest, where applicable. Total may not equal the sum of the column due to rounding.
(3)Restructuring and impairment charges include the impact of a content license agreement termination with A+E, which generated a gain at A+E. The Company’s 50% interest in this gain was $56 million (A+E gain) and is included in Restructuring and impairment charges in this table.
(4)Includes amortization of intangibles related to TFCF equity investees.
2022 vs. 2021
Revenues for fiscal 2022 increased 23%, or $15.3 billion, to $82.7 billion; net income attributable to Disney increased $1.2 billion, to income of $3.1 billion compared to $2.0 billion in fiscal 2021; and EPS from continuing operations attributable to Disney increased to $1.75 compared to $1.11 in fiscal 2021. The EPS increase was due to growth at Experiences, partially offset by lower operating results at Entertainment, higher income tax expense and the Content License Early Termination.
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Revenues
Service revenues for fiscal 2022 increased 20%, or $12.4 billion, to $74.2 billion, due to increased revenues at our theme parks and resorts, subscription revenue growth and, to a lesser extent, higher theatrical distribution and advertising revenue. These increases were partially offset by the Content License Early Termination. The increase at theme parks and resorts was due to higher volumes, which generally reflected the impact of operating with capacity restrictions in fiscal 2021 as a result of COVID-19, and higher average per capita ticket revenue. The increase in subscription revenue was due to subscriber growth and higher average rates. Service revenues reflected an approximate 1 percent point decrease due to an unfavorable Foreign Exchange Impact.
Product revenues for fiscal 2022 increased 51%, or $2.9 billion, to $8.5 billion, due to higher sales volumes of merchandise, food and beverage at our theme parks and resorts.
Costs and expenses
Cost of services for fiscal 2022 increased 19%, or $7.8 billion, to $49.0 billion, due to higher programming and production costs, increased volumes at our theme parks and resorts and higher technology and distribution costs at Entertainment Direct-to-Consumer. The increase in programming and production costs was due to higher costs at Entertainment Direct-to-Consumer, an increase in sports right costs and higher production cost amortization due to theatrical revenue growth. These increases were partially offset by lower programming and production costs as a result of international channel closures.
Cost of products for fiscal 2022 increased 36%, or $1.4 billion, to $5.4 billion, due to higher merchandise, food and beverage sales at our theme parks and resorts.
Selling, general, administrative and other costs for fiscal 2022 increased 21%, or $2.9 billion, to $16.4 billion, primarily due to higher marketing costs at Entertainment Direct-to-Consumer and, to a lesser extent, our theatrical distribution and parks and experiences businesses.
Restructuring and Impairment Charges
Restructuring and impairment charges in fiscal 2022 were $0.2 billion primarily due to the impairment of an intangible and other assets related to exiting our businesses in Russia.
Restructuring and impairment charges in fiscal 2021 were $0.7 billion comprising:
•$0.4 billion of asset impairments and severance costs related to the shut-down of an animation studio and the closure of a substantial number of Disney-branded retail stores in North America and Europe
•$0.3 billion of severance and other costs in connection with the integration of TFCF and workforce reductions at Experiences
Other Income (expense), net
($ in millions)20222021% Change
Better (Worse)
fuboTV gain$—   $186   (100) %
German FTA gain—   126   (100) %
DraftKings loss(663)  (111)  >(100) %
Other, net(4)  —   nm
Other income (expense), net$(667)  $201   nm
In fiscal 2022, the Company recognized a non-cash loss of $663 million from the adjustment of our investment in DraftKings to fair value.
In fiscal 2021, the Company recognized a $186 million gain from the sale of our investment in fuboTV Inc. (fuboTV gain), a $126 million gain on the sale of our 50% interest in a German free-to-air (FTA) television network (German FTA gain) and a non-cash loss of $111 million from the adjustment of our investment in DraftKings to fair value.
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Interest Expense, net
($ in millions)20222021% Change
Better (Worse)
Interest expense$(1,549)  $(1,546)  —  %
Interest income, investment income and other152 140 9  %
Interest expense, net$(1,397)  $(1,406)  1  %
Interest expense in fiscal 2022 was comparable to fiscal 2021 as the impact of higher average interest rates was offset by the impact of lower 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, which was a net benefit in fiscal 2022 and an expense in fiscal 2021. This increase was partially offset by investment losses in fiscal 2022 compared to investment gains in fiscal 2021.
Equity in the Income of Investees
Equity in the income of investees increased $55 million to $816 million in fiscal 2022 due to higher income from A+E and the comparison to investment impairments in fiscal 2021.
Effective Income Tax Rate
($ in millions)20222021
Income from continuing operations before income taxes$5,285     $2,561     
Income tax expense on continuing operations1,732     25     
Effective income tax rate - continuing operations32.8%1.0%
The effective income tax rate in fiscal 2022 was higher than the U.S. statutory rate primarily due to higher effective tax rates on foreign earnings. The effective income tax rate in fiscal 2021 was lower than the U.S. statutory rate due to favorable adjustments related to prior years and excess tax benefits on employee share-based awards, partially offset by higher effective tax rates on foreign earnings. Higher effective tax rates on foreign earnings in both fiscal 2022 and 2021 reflected the impact of foreign losses and, to a lesser extent, foreign tax credits for which we are unable to recognize a tax benefit.
Noncontrolling Interests
($ in millions)20222021% Change
Better (Worse)
Net income from continuing operations attributable to noncontrolling interests$(360)$(512)30  %
The decrease in net income from continuing operations attributable to noncontrolling interests was primarily due to higher losses at Shanghai Disney Resort and at our DTC sports business, partially offset by higher results for ESPN.
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 Year
Results for fiscal 2022 were impacted by the following:
•TFCF and Hulu acquisition amortization of $2,353 million
•A $1.0 billion reduction in revenue for the Content License Early Termination
•Other expense of $667 million due to the DraftKings loss of $663 million
•Restructuring and impairment charges of $237 million
Results for fiscal 2021 were impacted by the following:
•TFCF and Hulu acquisition amortization of $2,418 million
•Restructuring and impairment charges of $654 million
•Other income of $201 million due to the fuboTV gain of $186 million and the German FTA gain of $126 million, partially offset by the DraftKings loss of $111 million
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A summary of the impact of these items on EPS is as follows:
($ in millions, except per share data)Pre-Tax Income (Loss)
Tax Benefit (Expense)(1)
After-Tax Income (Loss)
EPS Favorable (Adverse)(2)
Year Ended October 1, 2022:
TFCF and Hulu acquisition amortization(3)
$(2,353)  $549   $(1,804)  $(0.97)
Contract License Early Termination(1,023)  238(785)  (0.43)
Other income (expense), net(667)  156(511)  (0.28)
Restructuring and impairment charges(237)  55(182)  (0.10)
Total$(4,280)  $998   $(3,282)  $(1.78)  
Year Ended October 2, 2021:
TFCF and Hulu acquisition amortization(3)
$(2,418)  $562   $(1,856)  $(1.00)  
Restructuring and impairment charges(654)  152   (502)  (0.27)  
Other income (expense), net201 (46)155   0.08   
Total$(2,871)  $668   $(2,203)  $(1.18)  
(1)Tax benefit (expense) is determined using the tax rate applicable to the individual item.
(2)EPS is net of noncontrolling interest, where applicable. Total may not equal the sum of the column due to rounding.
(3)Includes amortization of intangibles related to TFCF equity investees.
BUSINESS SEGMENT RESULTS
The Company evaluates the performance of its operating segments based on segment revenue and segment operating income.
Below is a discussion of the major revenue and expense categories for our business segments. Costs and expenses for each segment consist of operating expenses, selling, general, administrative and other costs, and depreciation and amortization. Selling, general, administrative and other costs include third-party and internal marketing expenses.
The Entertainment segment comprises three significant lines of business:
•Linear Networks, which primarily generates revenue from affiliate fees and advertising. In recent years, revenues from affiliate fees have declined due to fewer subscribers to MVPD services that carry our linear networks. We anticipate this trend to continue, although the extent and duration is uncertain. In addition, these revenues will be impacted and may be further impacted in the future from the lapse of carriage agreements to certain networks.
•Direct-to-Consumer, which primarily generates revenue from subscription fees and advertising
•Content Sales/Licensing, which primarily generates revenue from the sale of film and episodic content in the TV/VOD and home entertainment markets, distribution of films in the theatrical market, licensing of our music rights, sales of tickets to stage play performances and licensing of our IP for use in stage plays. Revenues also include an intersegment allocation of revenues from the Experiences segment, which is meant to reflect royalties on consumer products merchandise licensing revenues generated on IP created by the Entertainment segment.
Operating expenses at the Entertainment segment primarily consist of programming and production costs, technology support costs, operating labor, distribution costs and cost of sales. Programming and production costs include the following:
•Amortization of capitalized production costs and licensed programming rights
•Subscriber-based fees for programming the Hulu Live service, including fees paid by Hulu to the Sports segment and other Entertainment segment businesses for the right to air their linear networks on Hulu Live
•Production costs related to live programming (primarily news)
•Amortization of participations and residual obligations
•Fees paid to the Sports segment to program ESPN on ABC and certain sports content on Star+
Amortization of capitalized production costs and licensed programming rights is generally allocated across Entertainment’s businesses based on the estimated relative value of the distribution windows. The initial costs of marketing campaigns are generally recognized in the business of initial exploitation.
The Sports segment primarily generates revenue from affiliate fees, advertising, subscription fees, pay-per-view fees and sub-licensing of sports rights. Linear sports channels are experiencing declines in subscribers that are directionally consistent with those at the linear networks in the Entertainment segment. Operating expenses consist primarily of programming and
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production costs, technology support costs, operating labor and distribution costs. Programming and production costs include amortization of licensed sports rights and production costs related to live sports and other programming.
The Experiences segment primarily generates revenue from the sale of admissions to theme parks, the sale of food, beverage and merchandise at our theme parks and resorts, charges for room nights at hotels, sales of cruise vacations, sales and rentals of vacation club properties, royalties from licensing our IP for use on consumer goods and the sale of branded merchandise. Revenues are also generated from sponsorships and co-branding opportunities, real estate rent and sales, and royalties from Tokyo Disney Resort. Significant expenses include operating labor, costs of goods sold, infrastructure costs, depreciation and other operating expenses. Infrastructure costs include technology support costs, repairs and maintenance, utilities and fuel, property taxes, retail occupancy costs, insurance and transportation. Other operating expenses include costs for such items as supplies, commissions and entertainment offerings.
The following transactions are recognized in segment revenues and eliminated in total Company revenue:
•Fees paid by Hulu to the Sports segment and other Entertainment segment businesses for the right to air their linear networks on Hulu Live
•Fees paid by the Entertainment segment to the Sports segment to program ESPN on ABC and certain sports content on Star+
BUSINESS SEGMENT RESULTS - 2023 vs. 2022
The following table presents revenues from our operating segments and other components of revenues:
($ in millions)20232022% Change
Better (Worse)
Entertainment$40,635  $39,569  3  %
Sports17,111  17,270  (1) %
Experiences32,549  28,085  16  %
Eliminations(1,397) (1,179) (18) %
Content License Early Termination—  (1,023) 100  %
Revenues$88,898  $82,722  7  %
The following table presents income from our operating segments and other components of income from continuing operations before income taxes:
($ in millions)20232022% Change
Better (Worse)
Entertainment operating income$1,444   $2,126   (32) %
Sports operating income2,465   2,710   (9) %
Experiences operating income8,954   7,285   23  %
Content License Early Termination— (1,023)100  %
Corporate and unallocated shared expenses(1,147)  (1,159)  1  %
Restructuring and impairment charges(1)
(3,836)  (237)  >(100) %
Other income (expense), net96   (667)nm
Interest expense, net(1,209)  (1,397)  13  %
TFCF and Hulu acquisition amortization(1,998)  (2,353)  15  %
Income from continuing operations before income taxes$4,769   $5,285   (10) %
(1) Includes the A+E gain.
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Entertainment
Revenue and operating results for Entertainment are as follows:
($ in millions)20232022% Change
Better (Worse)
Revenues:
Linear Networks$11,701   $12,828   (9) %
Direct-to-Consumer19,886 17,975 11  %
Content Sales/Licensing and Other9,048 8,766 3  %
$40,635 $39,569 3  %
Segment operating income (loss):
Linear Networks$4,119 $5,198 (21) %
Direct-to-Consumer(2,496) (3,424)27  %
Content Sales/Licensing and Other(179)352 nm
$1,444 $2,126 (32) %
Linear Networks
Operating results for Linear Networks are as follows:
($ in millions)20232022% Change
Better (Worse)
Revenues
Affiliate fees$7,369   $7,739   (5) %
Advertising4,159   4,877   (15) %
Other173   212   (18) %
Total revenues11,701   12,828   (9) %
Operating expenses(5,577)  (5,777)  3  %
Selling, general, administrative and other(2,641)  (2,571)  (3) %
Depreciation and amortization(54)  (65)  17  %
Equity in the income of investees690   783   (12) %
Operating Income$4,119   $5,198   (21) %
Revenues
Affiliate fees are as follows:
($ in millions)20232022% Change
Better (Worse)
Domestic$6,136 $6,257 (2) %
International1,233 1,482 (17) %
$7,369   $7,739   (5) %
The decrease in domestic affiliate fees reflected a decrease of 5% from fewer subscribers, partially offset by an increase of 4% from higher contractual rates.
Lower international affiliate fees were attributable to decreases of 8% from fewer subscribers driven by channel closures, 4% from lower contractual rates and 4% from an unfavorable Foreign Exchange Impact.
Advertising revenue is as follows:
($ in millions)20232022% Change
Better (Worse)
Domestic$3,178 $3,716 (14) %
International981   1,161   (16) %
$4,159 $4,877 (15) %
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The decrease in domestic advertising revenue was due to decreases of 12% from fewer impressions and 2% from lower rates. The decrease in impressions was due to lower average viewership.
Lower international advertising revenue was due to decreases of 9% from an unfavorable Foreign Exchange Impact, 6% from fewer impressions and 1% from a decrease in rates. Lower impressions reflected a decrease in average viewership, which included the impact of channel closures.
Other revenue decreased $39 million, to $173 million from $212 million, driven by an unfavorable Foreign Exchange Impact.
Costs and Expenses
Operating expenses are as follows:
($ in millions)20232022% Change
Better (Worse)
Programming and production costs
Domestic$(3,858)  $(3,894)  1  %
International(712)  (796)  11  %
Total programming and production costs(4,570)  (4,690)  3  %
Other operating expenses(1,007)  (1,087)  7  %
$(5,577)  $(5,777)  3  %
The decrease in domestic programming and production costs was due to a lower average cost mix of programming, partially offset by an increase in programming fees for ESPN on ABC and higher program write-offs.
International programming and production costs decreased primarily due to a favorable Foreign Exchange Impact and the impact of channel closures.
The decrease in other operating expenses was due to the realignment of certain costs primarily to selling, general and administrative costs, lower technology and distribution costs and a favorable Foreign Exchange Impact.
Selling, general administrative and other costs increased $70 million, to $2,641 million from $2,571 million. The increase includes the realignment of certain costs previously primarily reported in other operating expenses and higher labor-related costs, partially offset by lower marketing costs.
Equity in the Income of Investees
Income from equity investees decreased $93 million, to $690 million from $783 million, due to lower income from A+E attributable to decreases in advertising and affiliate revenue, partially offset by higher program sales income.
Operating Income from Linear Networks
Operating income decreased 21%, to $4,119 million from $5,198 million due to lower results both domestically and internationally.
The following table provides supplemental revenue and operating income detail for Linear Networks:
($ in millions)20232022% Change
Better (Worse)
Supplemental revenue detail
Domestic$9,406 $10,073 (7) %
International2,295 2,755 (17) %
$11,701 $12,828 (9) %
Supplemental operating income detail
Domestic$2,735 $3,358 (19) %
International694 1,057 (34) %
Equity in the income of investees690 783 (12) %
$4,119   $5,198   (21) %
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Direct-to-Consumer
Operating results for Direct-to-Consumer are as follows:
($ in millions)20232022% Change
Better (Worse)
Revenues
Subscription fees$16,420   $14,178   16  %
Advertising3,260   3,614   (10) %
Other206   183   13  %
Total revenues19,886   17,975   11  %
Operating expenses(17,859)  (15,641)  (14) %
Selling, general, administrative and other(4,168)  (5,395)  23  %
Depreciation and amortization(355)  (363)  2  %
Operating Loss$(2,496)  $(3,424)  27  %
Revenues
The increase in subscription fees reflected increases of 11% from more subscribers, due to growth at Disney+ Core and, to a lesser extent, Hulu, and 7% from higher average rates due to increases in retail pricing, partially offset by a decrease of 2% from an unfavorable Foreign Exchange Impact.
Lower advertising revenue reflected a decrease of 9% from fewer impressions due to declines at Hulu and, to a lesser extent, at Disney+, partially offset by growth of 2% from higher rates at Hulu. The decrease in impressions at Disney+ was due to the comparison to Indian Premier League (IPL) cricket programming on Disney+ Hotstar in the prior year, as we did not renew the digital rights beginning with the 2023 season. The decrease was partially offset by the U.S. launch of ad-supported Disney+ in the first quarter of the current fiscal year.
The following table presents additional information about Disney+ and Hulu(1).
Paid subscribers(1) as of:
(in millions)September 30, 2023October 1, 2022% Change
Better (Worse)
Disney+
Domestic (U.S. and Canada)46.5 46.4 —  %
International (excluding Disney+ Hotstar)(1)
66.1 56.5 17  %
Disney+ Core(2)
112.6 102.9 9  %
Disney+ Hotstar37.6 61.3 (39) %
Hulu
SVOD Only43.9 42.8 3  %
Live TV + SVOD4.6 4.4 5  %
Total Hulu(2)
48.5 47.2 3  %
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Average Monthly Revenue Per Paid Subscriber(1) for the fiscal year ended:
20232022% Change
Better (Worse)
Disney+
Domestic (U.S. and Canada)$6.97$6.3410  %
International (excluding Disney+ Hotstar)(1)
5.936.10(3) %
Disney+ Core6.396.223  %
Disney+ Hotstar0.660.88(25) %
Hulu
SVOD Only12.1712.72(4) %
Live TV + SVOD90.5287.623  %
(1)See discussion on page 66—DTC Product Descriptions, Key Definitions and Supplemental Information
(2)Total may not equal the sum of the column due to rounding.
Domestic Disney+ average monthly revenue per paid subscriber increased from $6.34 to $6.97 due to an increase in average retail pricing and higher advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.
International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber decreased from $6.10 to $5.93 due to a higher mix of subscribers from lower-priced markets and an unfavorable Foreign Exchange Impact, partially offset by an increase in average retail pricing, a lower mix of wholesale subscribers and an increase in wholesale pricing.
Disney+ Hotstar average monthly revenue per paid subscriber decreased from $0.88 to $0.66 due to lower advertising revenue, partially offset by a lower mix of wholesale subscribers.
Hulu SVOD Only average monthly revenue per paid subscriber decreased from $12.72 to $12.17 due to lower advertising revenue, a higher mix of subscribers to multi-product offerings and lower per-subscriber premium and feature add-on revenue, partially offset by an increase in average retail pricing.
Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $87.62 to $90.52 due to an increase in average retail pricing, partially offset by lower advertising revenue, a higher mix of subscribers to multi-product offerings and lower per-subscriber premium and feature add-on revenue.
Costs and Expenses
Operating expenses are as follows:
($ in millions)20232022% Change
Better (Worse)
Programming and production costs
Disney+$(5,674) $(4,466) (27) %
Hulu(8,265) (7,564) (9) %
Other(20) (25) 20  %
Total programming and production costs(13,959) (12,055) (16) %
Other operating expense(3,900) (3,586) (9) %
$(17,859) $(15,641) (14) %
The increase in programming and production costs at Disney+ was attributable to more content provided on the service and higher costs per hour of non-sports content available on the service, partially offset by a decrease in sports programming costs reflecting the comparison to IPL cricket programming in the prior year.
The increase in programming and production costs at Hulu was due to higher subscriber-based fees for programming the Live TV service and higher costs per hour of content available on the service. Higher subscriber-based fees for programming the Live TV service resulted from rate increases and an increase in the number of subscribers.
Other operating expenses increased primarily due to higher technology and distribution costs at Disney+.
Selling, general, administrative and other costs decreased $1,227 million, to $4,168 million from $5,395 million, primarily attributable to lower marketing costs at Disney+ and, to a lesser extent, Hulu.
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Operating Loss from Direct-to-Consumer
Operating loss from Direct-to-Consumer decreased $928 million, to $2,496 million from $3,424 million due to a lower loss at Disney+ and, to a lesser extent, higher operating income at Hulu.
Content Sales/Licensing and Other
Operating results for Content Sales/Licensing and Other are as follows:
($ in millions)20232022% Change
Better (Worse)
Revenues
TV/VOD distribution$2,618   $3,520   (26) %
Theatrical distribution3,174   1,875   69  %
Home entertainment distribution931   1,083   (14) %
Other2,325   2,288   2  %
Total revenues9,048   8,766   3  %
Operating expenses(6,280)  (5,508)  (14) %
Selling, general, administrative and other(2,595)  (2,610)  1  %
Depreciation and amortization(347)  (296)  (17) %
Equity in the income (loss) of investees(5)  —   nm
Operating Income (Loss)$(179)  $352   nm
Revenues
The decrease in TV/VOD distribution revenue was due to lower sales volumes of both episodic and film content, in part driven by the impact of the shift from licensing our content to third parties to distributing it on our Entertainment Direct-to-Consumer streaming services.
The increase in theatrical distribution revenue was due to the performance of Avatar: The Way of Water in the current year. The current year also included the Marvel titles: Black Panther: Wakanda Forever;Guardians of the Galaxy Vol. 3; and Ant-Man and the Wasp: Quantumania, the Disney live action title: The Little Mermaid, the Lucasfilm title: Indiana Jones and the Dial of Destiny and two animation titles. The prior year included the Marvel titles: Doctor Strange in the Multiverse of Madness;Thor: Love and Thunder;Eternals; and the co-produced title Spider-Man: No Way Home, along with two animation titles.
The decrease in home entertainment distribution revenue was due to lower sales volumes.
The increase in other revenue was due to higher revenue from stage plays, resulting from improved performance, partially offset by an unfavorable Foreign Exchange Impact.
Operating expenses are as follows:
($ in millions)20232022% Change
Better (Worse)
Programming and production costs$(5,383)$(4,688)(15)  %
Distribution costs and cost of goods sold(897)(820)(9)  %
$(6,280)$(5,508)(14)  %
The increase in programming and production costs was due to higher production cost amortization attributable to the increase in theatrical revenue, partially offset by a decrease as a result of lower TV/VOD distribution revenues.
Higher distribution costs and cost of goods sold were due to the realignment of certain costs previously reported in general and administrative costs and increased theatrical distribution costs.
Selling, general, administrative and other costs decreased $15 million, to $2,595 million from $2,610 million, due to the realignment of certain costs to distribution costs and cost of goods sold, a favorable Foreign Exchange Impact and lower home entertainment overhead and marketing costs, largely offset by higher theatrical marketing costs.
Depreciation and amortization increased $51 million, to $347 million from $296 million, primarily due to increased investment in technology assets.    
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Operating Income (Loss) from Content Sales/Licensing and Other
Operating results from Content Sales/Licensing and Other decreased $531 million, to a loss of $179 million from income of $352 million, primarily due to lower TV/VOD distribution results.
Items Excluded from Segment Operating Income Related to Entertainment
The following table presents supplemental information for items related to Entertainment that are excluded from segment operating income:
($ in millions)20232022% Change Better (Worse)
Restructuring and impairment charges(1)
$(3,431)  $(228)   >(100) %
TFCF and Hulu acquisition amortization(2)
(1,602)  (1,946)   18  %
Content License Early Termination—   (1,023)   100  %
Gain on sale of a business28   —    nm
(1)Fiscal 2023 includes $2,521 million for the Content Impairment Charge (net of the A+E gain), $425 million for a goodwill impairment, $248 million of severance, a $141 million impairment of an equity investment and $96 million primarily related to exiting our businesses in Russia. Fiscal 2022 includes impairments of assets related to exiting our businesses in Russia.
(2)In fiscal 2023, amortization of step-up on film and television costs was $439 million and amortization of intangible assets was $1,151 million. In fiscal 2022, amortization of step-up on film and television costs was $634 million and amortization of intangible assets was $1,300 million.
Sports
Operating results for Sports are as follows:
($ in millions)20232022% Change
Better (Worse)
Revenues
Affiliate fees$10,590   $10,796   (2) %
Advertising3,920   4,370   (10) %
Subscription fees1,517   1,113   36  %
Other1,084   991   9  %
Total revenues17,111   17,270   (1) %
Operating expenses(13,314)  (13,084)  (2) %
Selling, general, administrative and other(1,314)  (1,441)  9  %
Depreciation and amortization(73)  (90)  19  %
Equity in the income of investees55   55   — %
Operating Income$2,465   $2,710   (9) %
Revenues
Affiliate fees are as follows:
($ in millions)20232022% Change
Better (Worse)
ESPN
Domestic$9,267   $9,437 (2) %
International1,051 1,084 (3) %
10,318 10,521   (2) %
Star (India)272 275 (1) %
$10,590   $10,796   (2) %
The decrease in domestic ESPN affiliate fees was due to decreases of 7% from fewer subscribers and 1% from the temporary suspension of carriage with an affiliate, partially offset by an increase of 5% from higher contractual rates.
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Lower international ESPN affiliate fees were attributable to decreases of 14% from an unfavorable Foreign Exchange Impact and 3% from fewer subscribers, partially offset by an increase of 14% from higher contractual rates.
Advertising revenue is as follows:
($ in millions)20232022% Change
Better (Worse)
ESPN
Domestic$3,413 $3,424 —  %
International189   173   9  %
3,602 3,597 —  %
Star (India)318 773 (59) %
$3,920   $4,370   (10) %
Domestic ESPN advertising revenue was comparable to the prior year reflecting a modest decrease in rates, largely offset by a slight increase in impressions.
The increase in international ESPN advertising revenue was due to an increase of 16% from higher impressions, partially offset by a decrease of 6% from an unfavorable Foreign Exchange Impact. The increase in impressions was attributable to higher average viewership.
Lower Star advertising revenue was due to decreases of 38% from fewer impressions, 14% from lower rates and 7% from an unfavorable Foreign Exchange Impact. Fewer impressions reflected a decrease in average units delivered and, to a lesser extent, fewer IPL matches aired in the current year compared to the prior year as matches from the 2021 season shifted into fiscal 2022 due to COVID-19.
Growth in subscription fees reflected increases of 19% from higher rates and 18% from more subscribers.
The increase in other revenue was primarily due to higher fees received for programming ESPN on ABC.
The following table presents additional information about ESPN+:
September 30, 2023October 1, 2022% Change
Better (Worse)
Paid subscribers at fiscal year end (in millions)26.0  24.3  7  %
Average Monthly Revenue per Paid Subscriber for the fiscal year$5.49  $4.80  14  %
ESPN+ average monthly revenue per paid subscriber increased from $4.80 to $5.49 due to an increase in retail pricing, partially offset by a higher mix of subscribers to multi-product offerings.
Costs and Expenses
Operating expenses are as follows:
($ in millions)20232022% Change
Better (Worse)
Programming and production costs
ESPN
Domestic$(10,221)  $(10,003)  (2) %
International(1,127)  (998)  (13) %
(11,348)  (11,001)  (3) %
Star (India)(1,025)  (1,284)  20  %
(12,373)  (12,285)  (1) %
Other operating expenses(941)  (799)  (18) %
$(13,314)  $(13,084)  (2) %
The increase in domestic ESPN programming and production costs was due to contractual rate increases for NBA and College Football Playoffs (CFP) programming, new motor sports programming and higher costs for NFL and Ultimate Fighting Championship (UFC) programming. These increases were partially offset by lower costs for college football programming (excluding CFP) due to the non-renewal of certain contracts. NFL programming costs increased as a result of airing one additional regular season game on our linear networks in the current year compared to the prior year, partially offset by lower
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costs per game. The increase in UFC programming costs was due to airing two more events in the current year compared to the prior year and higher contractual rates.
Higher international ESPN programming and production costs were driven by the impact of inflation on soccer rights costs and production costs, partially offset by a favorable Foreign Exchange Impact.
The decrease in Star programming and production costs was due to lower costs for cricket programming and a favorable Foreign Exchange Impact. The decrease in cricket programming costs was attributable to fewer IPL matches in the current year compared to prior year and lower average costs per match for IPL and International Cricket Council (ICC) T20 World Cup matches.
Other operating expenses increased $142 million, to $941 million from $799 million, driven by higher technology and distribution costs and the realignment of certain costs previously reported in selling, general and administrative costs.
Selling, general, administrative and other costs decreased $127 million, to $1,314 million from $1,441 million, due to lower marketing spend and a realignment of certain costs to other operating expenses.
Operating Income
Operating income decreased 9%, to $2,465 million from $2,710 million due to decreases at Star and international ESPN, partially offset by an increase at domestic ESPN.
The following table provides supplemental revenue and operating income detail for Sports:
($ in millions)20232022% Change
Better (Worse)
Supplemental revenue detail
ESPN
Domestic$14,945   $14,636     2  %
International1,437   1,434     —  %
16,382   16,070   2  %
Star (India)729 1,200 (39) %
$17,111   $17,270   (1) %
Supplemental operating income (loss) detail
ESPN
Domestic$2,881   $2,814   2  %
International(39)  78   nm
2,842   2,892   (2) %
Star (India)(432)(237)  (82) %
Equity in the income of investees55   55     —  %
$2,465   $2,710   (9) %
Items Excluded from Segment Operating Income Related to Sports
The following table presents supplemental information for items related to Sports that are excluded from segment operating income:
($ in millions)20232022% Change
Better (Worse)
TFCF acquisition amortization(1)
$(388)  $(399)  3  %
Restructuring and impairment charges(2)
(346)  (1)  >(100) %
(1)Represents amortization of intangible assets.
(2)Fiscal 2023 includes $296 million for a goodwill impairment and $50 million for severance.
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Experiences
Operating results for Experiences are as follows:
($ in millions)20232022% Change
Better (Worse)
Revenues
Theme park admissions$10,423   $8,602   21  %
Resorts and vacations7,949   6,410   24  %
Parks & Experiences merchandise, food and beverage7,712   6,579   17  %
Merchandise licensing and retail4,358   4,609   (5) %
Parks licensing and other2,107   1,885   12  %
Total revenues32,549   28,085   16  %
Operating expenses(17,129)  (14,936)  (15) %
Selling, general, administrative and other(3,675)  (3,403)  (8) %
Depreciation and amortization(2,789)  (2,451)  (14) %
Equity in the loss of investees(2)  (10)  80  %
Operating Income$8,954   $7,285   23  %
Revenues
The increase in theme park admissions revenue was due to increases of 12% from attendance growth and 10% from higher average per capita ticket revenue.
Growth in resorts and vacations revenue was due to increases of 14% from additional passenger cruise days, 4% from higher occupied hotel room nights and 3% growth from guided tours.
Parks & Experiences merchandise, food and beverage revenue growth was attributable to increases of 12% from higher volumes and 3% from higher average guest spending.
Lower merchandise licensing and retail revenue was due to decreases of 2% from licensing, 2% from retail and 1% from an unfavorable Foreign Exchange Impact. The decrease in licensing revenue was due to lower sales of merchandise based on Star Wars, Frozen, Toy Story and Mickey and Friends, partially offset by higher minimum guarantee shortfall recognition. Lower retail revenue was primarily due to a decrease in online sales.
The increase in parks licensing and other revenue was attributable to an increase in royalties from Tokyo Disney Resort and higher co-branding and sponsorship revenues, partially offset by lower real estate sales.
In addition to revenue, costs and operating income, management uses the following key metrics to analyze trends and evaluate the overall performance of our theme parks and resorts, and we believe these metrics are useful to investors in analyzing the business:
 Domestic
International(1)
Total
 202320222023202220232022
Parks
Increase (decrease)
Attendance(2)
6 %>100 %55 %54 %17 %87 %
Per Capita Guest Spending(3)
3 %13 %21 %24 %2 %18 %
Hotels
Occupancy(4)
85 %82 %74 %56 %83 %76 %
Available Room Nights (in thousands)(5)
10,09610,0733,1783,17913,27413,252
Change in Per Room Guest Spending(6)
— %19 %14 %(7) %1 %15 %
(1)Per capita guest spending growth rate and per room guest spending growth rate exclude the impact of changes in foreign currency exchange rates.
(2)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
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complimentary entries but excludes entries by children under the age of three.
(3)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.
(4)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.
(5)Available hotel room nights are defined as the total number of room nights that are available at our hotels and at 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.
(6)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. In the current year, the Company revised its method of allocating revenue on the sales of Disneyland Paris vacation packages between hotel room revenue and admissions revenue. The new method resulted in a decrease in the percentage of revenue allocated to hotel rooms. If we had applied the new method in the prior year, the impact would have been a decrease of approximately $50 million in the prior year.
Costs and Expenses
Operating expenses are as follows:
($ in millions)20232022% Change Better (Worse)
Operating labor$(7,550)  $(6,577)(15)  %
Infrastructure costs(3,127)(2,766)(13)  %
Cost of goods sold and distribution costs(3,357)(2,938)(14)  %
Other operating expenses(3,095)(2,655)(17)  %
$(17,129)$(14,936)  (15)  %
The increase in operating labor was due to inflation, higher volumes and increased costs for new guest offerings. Higher cost of goods sold and distribution costs were due to increased volumes, while the increase in infrastructure costs was due to higher operations support costs, increased costs for new guest offerings and higher technology spending. Other operating expenses increased due to higher volumes and inflation.
Selling, general, administrative and other costs increased $272 million from $3,403 million to $3,675 million, driven by higher marketing spend and a loss on the disposal of our ownership interest in Villages Nature.
Depreciation and amortization increased $338 million from $2,451 million to $2,789 million, due to accelerated depreciation related to the closure of Star Wars: Galactic Starcruiser and depreciation for the Disney Wish, which launched in the fourth quarter of the prior year.
Segment Operating Income
Segment operating income increased $1,669 million, to $8,954 million due to growth at our international and domestic parks and experiences, partially offset by a decrease at our consumer products business.
The following table presents supplemental revenue and operating income detail for the Experiences segment:
($ in millions)20232022% Change
Better (Worse)
Supplemental revenue detail
Parks & Experiences
Domestic$22,677   $20,131   13  %
International5,475   3,297   66  %
Consumer Products4,397   4,657   (6) %
$32,549   $28,085   16  %
Supplemental operating income (loss) detail
Parks & Experiences
Domestic$5,876   $5,332   10  %
International1,104   (237)  nm
Consumer Products1,974   2,190   (10) %
$8,954   $7,285   23  %
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Items Excluded from Segment Operating Income Related to Experiences
The following table presents supplemental information for items related to Experiences that are excluded from segment operating income:
($ in millions)20232022% Change
Better (Worse)
Charge related to a legal ruling$(101)  $—   nm
Restructuring and impairment charges(1)
(25)  —   nm
TFCF acquisition amortization(8)  (8)  —  %
(1)Charges for the current year were due to severance.
BUSINESS SEGMENT RESULTS - 2022 vs. 2021
The following table presents revenues from our operating segments and other components of revenues:
($ in millions)20222021% Change
Better (Worse)
Entertainment$39,569   $36,489   8  %
Sports17,270 15,960 8  %
Experiences28,085 15,961 76  %
Eliminations(1,179)(992)(19) %
Content License Early Termination(1,023)— nm
Revenues$82,722 $67,418 23  %
The following table presents income (loss) from our operating segments and other components of income from continuing operations before income taxes:
($ in millions)20222021% Change
Better (Worse)
Entertainment operating income$2,126   $5,196 (59) %
Sports operating income2,710   2,690 1  %
Experiences operating income (loss)7,285   (120)nm
Content License Early Termination(1,023)— nm
Corporate and unallocated shared expenses(1,159)  (928)  (25) %
Restructuring and impairment charges(237)  (654)  64  %
Other income (expense), net(667)  201   nm
Interest expense, net(1,397)  (1,406)  1  %
TFCF and Hulu acquisition amortization(2,353)(2,418)  3  %
Income from continuing operations before income taxes$5,285   $2,561   >100  %
Entertainment
Revenue and operating results for Entertainment are as follows:
($ in millions)20222021% Change
Better (Worse)
Revenues:
Linear Networks$12,828   $13,516   (5) %
Direct-to-Consumer17,975 15,036 20  %
Content Sales/Licensing and Other8,766 7,937 10  %
$39,569 $36,489 8  %
Operating income (loss):
Linear Networks$5,198 $5,271 (1) %
Direct-to-Consumer(3,424) (1,252)>(100) %
Content Sales/Licensing and Other352 1,177 (70) %
$2,126 $5,196 (59) %
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Linear Networks
Operating results for Linear Networks are as follows:
($ in millions)20222021% Change
Better (Worse)
Revenues
Affiliate fees$7,739   $8,043   (4) %
Advertising4,877   5,215   (6) %
Other212   258   (18) %
Total revenues12,828   13,516   (5) %
Operating expenses(5,777)  (6,250)  8  %
Selling, general, administrative and other(2,571)  (2,647)  3  %
Depreciation and amortization(65)  (78)  17  %
Equity in the income of investees783   730   7  %
Operating Income$5,198   $5,271   (1) %
Revenues
Affiliate fees are as follows:
($ in millions)20222021% Change
Better (Worse)
Domestic$6,257   $6,045 4  %
International1,482 1,998 (26) %
$7,739 $8,043   (4) %
Growth in domestic affiliate fees was due to an increase of 7% from higher contractual rates, partially offset by a decrease of 3% from fewer subscribers.
The decline in international affiliate fees was due to decreases of 17% from fewer subscribers driven by channel closures, 5% from an unfavorable Foreign Exchange Impact and 2% from lower contractual rates.
Advertising revenue is as follows:
($ in millions)20222021% Change
Better (Worse)
Domestic$3,716   $4,021   (8) %
International1,161   1,194   (3) %
$4,877 $5,215 (6) %
The decline in domestic advertising revenue was due to a decrease of 14% from fewer impressions, reflecting lower average viewership, partially offset by an increase of 7% from higher rates.
Lower international advertising revenue reflected decreases of 8% from an unfavorable Foreign Exchange Impact and 6% from fewer impressions driven by channel closures, partially offset by an increase of 12% from higher rates.
Costs and Expenses
Operating expenses are as follows:
($ in millions)20222021% Change
Better (Worse)
Programming and production costs
Domestic$(3,894)  $(3,940)  1  %
International(796)  (1,165)  32  %
(4,690)(5,105)8  %
Other operating expenses(1,087)(1,145)5  %
$(5,777)$(6,250)8  %
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The decrease in domestic programming and production costs was due to a lower cost mix of programming at FX Channels, partially offset by an increase in programming and production costs at the ABC Network. The increase at the ABC Network was due to higher costs for non-primetime news programming and an increase in programming fees for ESPN on ABC, partially offset by a lower cost mix of primetime programming.
Lower international programming and production costs were due to the impact of channel closures and, to a lesser extent, a favorable Foreign Exchange Impact.
Selling, general administrative and other costs decreased $76 million, to $2,571 million from $2,647 million, due to lower marketing costs.
Equity in the Income of Investees
Income from equity investees increased $53 million, to $783 million from $730 million, due to higher income from A+E and the comparison to impairments in fiscal 2021. The increase at A+E resulted from lower programming costs, partially offset by decreases in affiliate and advertising revenue and higher marketing costs.
Operating Income from Linear Networks
Operating income decreased 1%, to $5,198 million from $5,271 million due to lower domestic results, partially offset by higher income from our equity investees and an increase in international results.
The following table provides supplemental revenue and operating income detail for Linear Networks:
($ in millions)20222021% Change
Better (Worse)
Supplemental revenue detail
Domestic$10,073 $10,223 (1) %
International2,755 3,293 (16) %
$12,828 $13,516 (5) %
Supplemental operating income detail
Domestic$3,358   $3,537   (5) %
International1,057   1,004   5  %
Equity in the income of investees783   730   7  %
$5,198   $5,271   (1) %
Direct-to-Consumer
Operating results for Direct-to-Consumer are as follows:
($ in millions)20222021% Change
Better (Worse)
Revenues
Subscription fees$14,178   $11,295   26  %
Advertising3,614   3,284   10  %
Other183   457   (60) %
Total revenues17,975   15,036   20  %
Operating expenses(15,641)  (11,906)  (31) %
Selling, general, administrative and other(5,395)  (4,067)  (33) %
Depreciation and amortization(363)  (315)  (15) %
Operating Loss$(3,424)  $(1,252)  >(100) %
Revenues
Higher subscription fees reflected increases of 18% from subscriber growth and 9% from higher average rates due to increases in retail pricing, partially offset by a decrease of 2% from an unfavorable Foreign Exchange Impact.
Advertising revenue growth reflected increases of 7% from higher rates due to increases at Hulu, and to a lesser extent, at Disney+, and 3% from higher impressions primarily attributable to Disney+ Hotstar. The increase in impressions at Disney+ Hotstar was primarily due to airing the ICC T20 World Cup and Asia Cricket Council (ACC) Asia Cup in fiscal 2022, neither of which were aired in fiscal 2021. The ICC T20 World Cup generally occurs every two years and was not held in fiscal 2021 due to COVID-19. The ACC Asia Cup was rescheduled from fiscal 2020 to fiscal 2022 as a result of COVID-19.
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The decrease in other revenue was due to Disney+ Premier Access revenue in fiscal 2021 compared to none in fiscal 2022, partially offset by a favorable Foreign Exchange Impact. Disney+ Premier Access titles in fiscal 2021 included Black Widow, Raya and the Last Dragon, Jungle Cruise and Cruella.
The following table presents additional information about our Disney+ and Hulu product offerings.
Paid subscribers as of:
(in millions)October 1, 2022October 2, 2021% Change
Better (Worse)
Disney+
Domestic (U.S. and Canada)46.438.820  %
International (excluding Disney+ Hotstar)56.536.057  %
Disney+ Core(1)
102.974.838  %
Disney+ Hotstar61.343.342  %
Hulu
SVOD Only42.839.78  %
Live TV + SVOD4.44.010  %
Total Hulu(1)
47.243.78  %
Average Monthly Revenue Per Paid Subscriber for the fiscal year ended:
20222021% Change
Better (Worse)
Disney+
Domestic (U.S. and Canada)$6.34$6.33—  %
International (excluding Disney+ Hotstar)6.105.3115  %
Disney+ Core6.225.876  %
Disney+ Hotstar0.880.6829  %
Hulu
SVOD Only12.7212.86(1) %
Live TV + SVOD87.6281.358  %
(1)Total may not equal the sum of the column due to rounding
Domestic Disney+ average monthly revenue per paid subscriber was comparable to fiscal 2021, as an increase in retail pricing and a lower mix of wholesale subscribers was essentially offset by a higher mix of subscribers to multi-product offerings.
International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber increased from $5.31 to $6.10 due to an increase in average retail pricing, partially offset by an unfavorable Foreign Exchange Impact.
Disney+ Hotstar average monthly revenue per paid subscriber increased from $0.68 to $0.88 driven by higher advertising revenue and increases in retail pricing, partially offset by a higher mix of wholesale subscribers.
Hulu SVOD Only average monthly revenue per paid subscriber decreased from $12.86 to $12.72 driven by lower per-subscriber advertising revenue, a higher mix of subscribers to multi-product offerings and, to a lesser extent, to promotional offerings, partially offset by an increase in average retail pricing.
Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $81.35 to $87.62 driven by an increase in average retail pricing and higher advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.
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Costs and Expenses
Operating expenses are as follows:
($ in millions)20222021% Change
Better (Worse)
Programming and production costs
Disney+$(4,466) $(2,536) (76) %
Hulu(7,564) (6,680) (13) %
Other(25) (31) 19  %
Total programming and production costs(12,055) (9,247) (30) %
Other operating expense(3,586) (2,659) (35) %
$(15,641) $(11,906) (31) %
The increase in programming and production costs at Disney+ was attributable to more content provided on the service and, to a lesser extent, higher average cost programming, which reflected an increased mix of original content.
The increase in programming and production costs at Hulu was due to more content provided on the service and higher subscriber-based fees for programming the Live TV service, which reflected rate increases and an increase in the number of subscribers.
Other operating expenses increased due to higher technology and distribution costs at Disney+ reflecting growth in existing markets and, to a lesser extent, expansion to new markets.
Selling, general, administrative and other costs increased $1,328 million, to $5,395 million from $4,067 million, attributable to higher marketing costs.
Depreciation and amortization increased $48 million, to $363 million from $315 million, primarily due to increased investment in technology assets at Disney+.
Operating Loss from Direct-to-Consumer
Operating loss from Direct-to-Consumer increased $2,172 million, to $3,424 million from $1,252 million due to a higher loss at Disney+ and, to a lesser extent, lower operating income at Hulu.
Content Sales/Licensing and Other
Operating results for Content Sales/Licensing and Other are as follows:
($ in millions)20222021% Change
Better (Worse)
Revenues
TV/VOD distribution$3,520   $3,925   (10) %
Theatrical distribution1,875   920   >100  %
Home entertainment distribution1,083   1,297   (16) %
Other2,288   1,795   27  %
Total revenues8,766   7,937   10  %
Operating expenses(5,508)  (4,536)  (21) %
Selling, general, administrative and other(2,610)  (1,944)  (34) %
Depreciation and amortization(296)  (294)  (1) %
Equity in the income of investees—   14   (100) %
Operating Income$352   $1,177   (70) %
Revenues
The decrease in TV/VOD distribution revenue reflected lower sales volumes, which included the impact of the shift from licensing our content to third parties to distributing it on our Entertainment Direct-to-Consumer streaming services.
The increase in theatrical distribution revenue was due to more titles released in fiscal 2022 compared to fiscal 2021 and revenue in fiscal 2022 from the co-production of Marvel’s Spider-Man: No Way Home. Although COVID-19 continued to impact our theatrical distribution business in certain markets in fiscal 2022, the impact in fiscal 2021 was more significant. Titles released in fiscal 2022 included Doctor Strange in The Multiverse of Madness, Thor: Love and Thunder, Eternals,
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Encanto and Lightyear. Titles released in fiscal 2021 included Shang-Chi and the Legend of the Ten Rings, Black Widow and Free Guy.
The decrease in home entertainment distribution revenue was attributable to lower unit sales despite the benefit of more new release titles in fiscal 2022. Net effective pricing was comparable to fiscal 2021 as lower unit pricing was offset by a higher mix of new release titles, which have a higher sales price than catalog titles.
The increase in other revenue was due to more stage play performances in fiscal 2022 as productions were generally shut down in fiscal 2021 due to COVID-19.
Costs and Expenses
Operating expenses are as follows:
($ in millions)20222021% Change
Better (Worse)
Programming and production costs$(4,688)$(3,770)(24) %
Distribution costs and cost of goods sold(820)(766)(7) %
$(5,508)$(4,536)(21) %
The increase in programming and production costs was due to higher production cost amortization driven by more theatrical releases, the increased number of stage play performances in fiscal 2022 and higher film cost impairments.
The increase in distribution costs and cost of goods sold was primarily due to increased theatrical distribution costs.
Selling, general, administrative and other costs increased $666 million, to $2,610 million from $1,944 million, due to higher theatrical marketing costs as more titles were released in fiscal 2022 compared to fiscal 2021.
Operating Income from Content Sales/Licensing and Other
Operating income from Content Sales/Licensing and Other decreased 70% to $352 million from $1,177 million, due to lower TV/VOD and home entertainment distribution results, higher film cost impairments and lower theatrical distribution results, partially offset by higher stage play results.
Items Excluded from Segment Operating Income Related to Entertainment
The following table presents supplemental information for items related to Entertainment that are excluded from segment operating income:
($ in millions)20222021% Change Better (Worse)
TFCF and Hulu acquisition amortization(1)
$(1,946)  $(2,006)3  %
Content License Early Termination(1,023)  —   nm
Restructuring and impairment charges(2)
(228)  (300)  24  %
German FTA gain—   126   (100) %
(1)In fiscal 2022, amortization of step-up on film and episodic costs was $634 million and amortization of intangible assets was $1,300 million. In fiscal 2021, amortization of step-up on film and episodic costs was $646 million and amortization of intangible assets was $1,345 million.
(2)Fiscal 2022 includes impairments of assets related to exiting our businesses in Russia. Fiscal 2021 includes impairments and severance costs related to the closure of an animation studio and severance costs and contract termination charges in connection with the integration of TFCF.
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Sports
Operating results for Sports are as follows:
($ in millions)20222021% Change
Better (Worse)
Revenues
Affiliate fees$10,796   $10,609   2  %
Advertising4,370   3,720   17  %
Subscription fees1,113   725   54  %
Other991   906   9  %
Total revenues17,270   15,960   8  %
Operating expenses(13,084)  (11,986)  (9) %
Selling, general, administrative and other(1,441)  (1,231)  (17) %
Depreciation and amortization(90)  (104)  13  %
Equity in the income of investees55   51   8  %
Operating Income$2,710   $2,690   1  %
Revenues
Affiliate fees are as follows:
($ in millions)20222021% Change
Better (Worse)
ESPN
Domestic$9,437   $9,199 3  %
International1,084 1,114 (3) %
10,521 10,313 2  %
Star (India)275 296   (7) %
$10,796 $10,609 2  %
The increase in domestic ESPN affiliate fees was primarily due to an increase of 5% from higher contractual rates, partially offset by a decrease of 4% from fewer subscribers.
The decrease in international ESPN affiliate fees was attributable to decreases of 8% from fewer subscribers driven by channel closures, and 7% from an unfavorable Foreign Exchange Impact, partially offset by an increase of 11% from higher contractual rates.
The decrease in Star affiliate fees was due to decreases of 5% from an unfavorable Foreign Exchange Impact and 1% from fewer subscribers.
Advertising revenue is as follows:
($ in millions)20222021% Change
Better (Worse)
ESPN
Domestic$3,424 $2,981 15  %
International173   150   15  %
3,597 3,131 15  %
Star (India)773   589 31  %
$4,370 $3,720 17  %
The increase in domestic ESPN advertising revenue was due to increases of 11% from higher impressions and 5% from higher rates. The increase in impressions reflected higher average viewership and, to a lesser extent, an increase in units delivered.
Higher international ESPN advertising revenue was primarily due to increases of 11% from higher average viewership and 7% from higher rates, partially offset by a decrease of 6% from an unfavorable Foreign Exchange Impact.
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Growth in Star advertising revenue was due to an increase of 37% from higher average viewership, partially offset by decreases of 3% from an unfavorable Foreign Exchange Impact and 3% from lower rates. The increase in average viewership reflected the airing of more cricket matches in fiscal 2022. Fiscal 2022 included the ICC T20 World Cup, more Board of Control for Cricket in India (BCCI) matches and the ACC Asia Cup, partially offset by fewer IPL matches compared to fiscal 2021. The ICC T20 World Cup and the ACC Asia Cup were not held in fiscal 2021. The increase in BCCI matches in fiscal 2022 was driven by COVID-19-related cancellations in fiscal 2021.
The increase in subscription fees was due to ESPN+ subscriber growth.
The increase in other revenue was due to higher sub-licensing fees and higher fees received for programming ESPN on ABC, partially offset by lower UFC pay-per-view fees due to lower average buys per event. The increase in sub-licensing fees was due to fees from ICC T20 World Cup matches in fiscal 2022 and higher fees from BCCI cricket matches.
The following table presents additional information about ESPN+.
(in millions)October 1, 2022October 2, 2021% Change
Better (Worse)
Paid subscribers at fiscal year end (in millions)24.3   17.1   42  %
Average Monthly Revenue per Paid Subscriber for the fiscal year$4.80   $4.57   5  %
ESPN+ average monthly revenue per paid subscriber increased from $4.57 to $4.80 primarily due to an increase in retail pricing, a lower mix of annual subscribers and higher advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.
Costs and Expenses
Operating expenses are as follows:
($ in millions)20222021% Change
Better (Worse)
Programming and production costs
ESPN
Domestic$(10,003) $(9,370) (7) %
International(998)  (1,094)  9  %
(11,001)(10,464)(5) %
Star (India)(1,284)(766)(68) %
(12,285)(11,230)(9) %
Other operating expenses(799)(756)(6) %
$(13,084)$(11,986)(9) %
The increase in domestic ESPN programming and production costs was due to new NHL programming, higher rights costs for NFL and CFP and an increase in production costs reflecting the return of ESPN-hosted events, which were canceled in fiscal 2021 due to COVID-19, and more ESPN films in fiscal 2022. These increases were partially offset by lower rights costs for MLB and NBA programming. Higher NFL programming costs were due to airing four additional regular season games in fiscal 2022 compared to fiscal 2021 and contractual rate increases. The increase in CFP rights costs was due to higher contractual rates. Lower MLB programming costs were due to airing 29 games of the 2022 regular season under our new contract and one 2021 season playoff game in fiscal 2022 compared to 92 games of the 2021 regular season in fiscal 2021. The decrease in NBA programming costs was due to the comparison to airing four games of the 2020 NBA Finals in the first quarter of fiscal 2021 due to COVID-19, partially offset by contractual rate increases. Fiscal 2021 also included the 2021 NBA Finals and fiscal 2022 included the 2022 NBA finals.
The decrease in international programming and production costs was due to channel closures in fiscal 2021, the impact of shifting exclusive soccer matches from Sports to Star+ in fiscal 2022 and a favorable Foreign Exchange Impact, partially offset by higher production costs.
The increase in Star programming and production costs was due to more cricket matches in fiscal 2022 and higher average costs per match for BCCI and IPL cricket matches.
Selling, general, administrative and other costs increased $210 million, to $1,441 million from $1,231 million, driven by higher marketing costs.
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Operating Income
Operating income increased 1%, to $2,710 million from $2,690 million due to an increase at ESPN, partially offset by a decrease at Star.
The following table provides supplemental revenue and operating income (loss) detail for Sports:
($ in millions)20222021% Change
Better (Worse)
Supplemental revenue detail
ESPN
Domestic$14,636   $13,623   7  %
International1,434   1,390   3  %
16,070   15,013   7  %
Star (India)1,200   947   27  %
$17,270   $15,960   8  %
Supplemental operating income (loss) detail
ESPN
Domestic$2,814   $2,610   8  %
International78   (14)  nm
2,892   2,596   11  %
Star (India)(237)  43   nm
Equity in the income of investees55   51   8  %
$2,710   $2,690   1  %
Items Excluded from Segment Operating Income Related to Sports
The following table presents supplemental information for items related to Sports that are excluded from segment operating income:
(in millions)20222021% Change
Better (Worse)
TFCF acquisition amortization(1)
$(399)  $(404)  1  %
Restructuring and impairment charges(1)  (15)  93  %
(1)Represents amortization of intangible assets.
Experiences
Operating results for Experiences are as follows:
($ in millions)20222021% Change
Better (Worse)
Revenues
Theme park admissions$8,602   $3,848   >100  %
Resorts and vacations6,410   2,701   >100  %
Parks & Experiences merchandise, food and beverage6,579   3,299   99  %
Merchandise licensing and retail4,609   4,650   (1) %
Parks licensing and other1,885   1,463   29  %
Total revenues28,085   15,961   76  %
Operating expenses(14,936)  (10,799)  (38) %
Selling, general, administrative and other(3,403)  (2,886)  (18) %
Depreciation and amortization(2,451)  (2,377)  (3) %
Equity in the loss of investees(10)  (19)  47  %
Operating Income (loss)$7,285   $(120)  nm
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COVID-19
Revenues at Experiences benefited from fewer closures and operating capacity restrictions in fiscal 2022 compared to fiscal 2021 as a result of COVID-19. The following table summarizes the approximate number of weeks of operations in fiscal 2022 and fiscal 2021:
Weeks of Operation
20222021
Walt Disney World Resort52   52   
Disneyland Resort52   22   
Disneyland Paris52   19   
Hong Kong Disneyland Resort37   40   
Shanghai Disney Resort37   52   
Revenues
The increase in theme park admissions revenue was due to attendance growth and higher average per capita ticket revenue. Higher attendance reflected increases at Disneyland Resort, Walt Disney World Resort and, to a lesser extent, Disneyland Paris, partially offset by a decrease at Shanghai Disney Resort. Growth in average per capita ticket revenue was due to the introduction of Genie+ and Lightning Lane at our domestic parks in the first quarter of fiscal 2022 and higher average ticket prices at Walt Disney World Resort and Disneyland Paris, partially offset by lower average ticket prices at Disneyland Resort and Shanghai Disney Resort.
Growth in resorts and vacations revenue was primarily due to increases of 51% from higher occupied hotel room nights, 32% from an increase in passenger cruise days and 17% from higher average daily hotel room rates.
Parks & Experiences merchandise, food and beverage revenue growth was due to increases of 82% from higher volumes and 9% from higher average guest spending.
Merchandise licensing and retail revenue was comparable to the prior year, as a decrease of 8% from retail was offset by an increase of 8% from licensing. The decrease in retail revenues was due to the closure of a substantial number of Disney-branded retail stores in North America and Europe in the second half of fiscal 2021. The revenue growth at licensing was primarily due to higher sales of merchandise based on Mickey and Friends, Star Wars, Encanto, Spider-Man and Disney Princesses, partially offset by a decrease in revenues from merchandise based on Frozen.
The increase in parks licensing and other revenue was primarily due to higher sponsorship revenues and an increase in royalties from Tokyo Disney Resort.
In addition to revenue, costs and operating income, management uses the following key metrics to analyze trends and evaluate the overall performance of our theme parks and resorts, and we believe these metrics are useful to investors in analyzing the business:
 Domestic
International(1)
Total
 202220212022202120222021
Parks
Increase (decrease)
Attendance>100  %(17) %54  %(4) %87  %(14) %
Per Capita Guest Spending13  %17  %24  %(3) %18  %11  %
Hotels
Occupancy82  %42  %56  %21  %76  %37  %
Available Room Nights (in thousands)10,07310,4513,1793,17913,25213,630
Change in Per Room Guest Spending(1)
19  %1  %(7) %22  %15  %4  %
(1)In fiscal 2023, the Company revised its method of allocating revenue on the sales of Disneyland Paris vacation packages between hotel room revenue and admissions revenue. The new method resulted in a decrease in the percentage of revenue allocated to hotel rooms. If we had applied the new method in fiscal 2022, the impact would have been a decrease of approximately $50 million. There is no impact to fiscal 2021 due to this change.
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Costs and Expenses
Operating expenses are as follows:
($ in millions)20222021% Change Better (Worse)
Operating labor$(6,577)  $(4,711)(40)  %
Infrastructure costs(2,766)(2,308)(20)  %
Cost of goods sold and distribution costs(2,938)(2,086)(41)  %
Other operating expenses(2,655)(1,694)(57)  %
$(14,936)$(10,799)  (38)  %
The increases in operating labor, cost of goods sold and distribution costs and other operating expenses were due to higher volumes, while the increase in infrastructure costs was due to higher volumes and increased technology spending.
Selling, general, administrative and other costs increased $517 million from $2,886 million to $3,403 million due to higher marketing spend and inflation.
Depreciation and amortization increased $74 million from $2,377 million to $2,451 million, primarily due to new attractions at our domestic parks and resorts.
Segment Operating Income (loss)
Segment operating results increased $7,405 million, to income of $7,285 million from a loss of $120 million due to growth at our domestic parks and experiences and, to a lesser extent, at our international parks and experiences and consumer products business.
The following table presents supplemental revenue and operating income (loss) detail for the Experiences segment:
($ in millions)20222021% Change
Better (Worse)
Supplemental revenue detail
Parks & Experiences
Domestic$20,131   $9,353   >100  %
International3,297   1,859   77  %
Consumer Products4,657   4,749   (2) %
$28,085   $15,961   76  %
Supplemental operating income (loss) detail
Parks & Experiences
Domestic$5,332   $(1,139)  nm
International(237)  (1,074)  78  %
Consumer Products2,190   2,093   5  %
$7,285   $(120)  nm
Items Excluded from Segment Operating Income Related to Experiences
The following table presents supplemental information for items related to Experiences that are excluded from segment operating income:
($ in millions)20222021% Change
Better (Worse)
Restructuring and impairment charges(1)
$—   $(327)  100  %
TFCF acquisition amortization(8)  (8)  —  %
(1)Fiscal 2021 included asset impairments and severance costs related to the closure of a substantial number of our Disney-branded retail stores in North America and Europe and severance costs related to other workforce reductions.
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CORPORATE AND UNALLOCATED SHARED EXPENSES
Corporate and unallocated shared expenses are as follows:
% Change
Better (Worse)
($ in millions)2023202220212023
vs.
2022		2022
vs.
2021
Corporate and unallocated shared expenses$(1,147)$(1,159)$(928)1  %(25) %
From fiscal 2022 to fiscal 2023, the decrease in corporate and unallocated shared expenses was driven by lower compensation and human resource-related costs, partially offset by increases in rent expense and technology costs. From fiscal 2021 to fiscal 2022, the increase in corporate and unallocated shared expenses was driven by higher compensation and human resource-related costs.
RESTRUCTURING ACTIVITIES
See Note 18 to the Consolidated Financial Statements for information regarding the Company’s restructuring activities.
LIQUIDITY AND CAPITAL RESOURCES
The change in cash, cash equivalents and restricted cash is as follows:
($ in millions)202320222021
Cash provided by operations - continuing operations$9,866  $6,002  $5,566  
Cash used in investing activities - continuing operations(4,641) (5,008) (3,171) 
Cash used in financing activities - continuing operations(2,724) (4,729) (4,385) 
Cash (used in) provided by discontinued operations—  (4) 9  
Impact of exchange rates on cash, cash equivalents and restricted cash73  (603) 30  
Change in cash, cash equivalents and restricted cash$2,574  $(4,342) $(1,951) 
Operating Activities
Cash provided by operating activities of $9.9 billion for fiscal 2023 increased 64% or $3.9 billion compared to $6.0 billion in fiscal 2022 due to lower spending on film and episodic content at Entertainment and higher operating cash flow at Experiences, partially offset by higher spending on sports content. The decrease in spending on film and episodic content at Entertainment included the impact of the WGA and SAG-AFTRA work stoppages. The increase in operating cash flow at Experiences was due to higher operating cash receipts driven by higher revenue, partially offset by an increase in operating cash disbursements due to higher operating expenses. The decrease in operating cash flow at Sports was due to the timing of payments for sports content.
Cash provided by operating activities of $6.0 billion for fiscal 2022 increased 8% or $436 million compared to $5.6 billion in fiscal 2021 due to higher operating cash flow at Experiences and, to a lesser extent, lower income tax payments and pension contributions, partially offset by lower operating cash flow at Entertainment and, to a lesser extent, a partial payment for the Content License Early Termination. The increase in operating cash flow at Experiences was due to higher operating cash receipts driven by higher revenue, partially offset by an increase in operating cash disbursements due to higher operating expenses. The decrease in operating cash flow at Entertainment was due to higher operating cash disbursements and higher spending on film and episodic content, partially offset by higher operating cash receipts. Higher operating cash disbursements were driven by increased operating expenses while higher operating cash receipts were due to revenue growth.
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Depreciation expense is as follows:
($ in millions)202320222021
Entertainment$669$560$513
Sports7390100
Experiences
Domestic2,0111,6801,551
International669662718
Total Experiences2,6802,3422,269
Corporate204191186
Total depreciation expense$3,626$3,183$3,068
Amortization of intangible assets is as follows:
($ in millions)202320222021
Entertainment$87$164$174
Sports——4
Experiences109109108
TFCF and Hulu1,5471,7071,757
Total amortization of intangible assets$1,743$1,980$2,043
Produced and licensed content costs
The Entertainment and Sports segments incur costs to produce and license film, episodic, sports and other content. Production costs include spend on content internally produced at our studios such as live-action and animated films, episodic series, specials, shorts and theatrical stage plays. Production costs also include original content commissioned from third-party studios. Programming costs include content rights licensed from third parties for use on the Company’s sports and general entertainment networks and DTC streaming services. Programming assets are generally recorded when the programming becomes available to us with a corresponding increase in programming liabilities.
The Company’s production and programming activity for fiscal 2023, 2022 and 2021 are as follows:
($ in millions)202320222021
Beginning balances:
Production and programming assets$37,667  $31,732  $27,193  
Programming liabilities(3,940) (4,113) (4,099) 
33,727  27,619  23,094  
Spending:
Licensed programming and rights14,851  13,316  12,412  
Produced content12,323  16,611  12,848  
27,174  29,927  25,260  
Amortization:
Licensed programming and rights(13,405) (13,432) (12,784) 
Produced content(11,861) (10,224) (8,175) 
(25,266) (23,656) (20,959) 
Change in production and programming costs1,908  6,271  4,301  
Content Impairment(2,266) —  —  
Other non-cash activity(568) (163) 224  
Ending balances:
Production and programming assets36,593  37,667  31,732  
Programming liabilities(3,792) (3,940) (4,113) 
$32,801  $33,727  $27,619  
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The Company currently expects its fiscal 2024 spend on produced and licensed content to be approximately $25 billion, with sports rights expected to account for over 40% of spend. See Note 14 to the Consolidated Financial Statements for information regarding the Company’s contractual commitments to acquire sports and broadcast programming.
Commitments and guarantees
The Company has various commitments and guarantees, such as long-term leases, purchase commitments and other executory contracts, that are disclosed in the footnotes to the financial statements. See Notes 14 and 15 to the Consolidated Financial Statements for further information regarding these commitments.
Legal and Tax Matters
As disclosed in Notes 9 and 14 to the Consolidated Financial Statements, the Company has exposure for certain tax and legal matters.
Investing Activities
Continuing operations
Investing activities consist principally of investments in parks, resorts and other property and acquisition and divestiture activity. The Company’s investments in parks, resorts and other property for fiscal 2023, 2022 and 2021 are as follows:
($ in millions)202320222021
Entertainment$1,032 $802 $838 
Sports15 8 24 
Experiences
Domestic2,203 2,680 1,597 
International822 767 675 
Total Experiences3,025  3,447  2,272  
Corporate897 686 444 
$4,969  $4,943  $3,578  
Capital expenditures at Entertainment 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 fiscal 2023 compared to fiscal 2022 was driven by higher technology spending to support our streaming services.
Capital expenditures at Experiences are principally for theme park and resort expansion, new attractions, cruise ships, capital improvements and systems infrastructure. The decrease in capital expenditures in fiscal 2023 compared to fiscal 2022 was due to lower spending on cruise ship fleet expansion. The increase in capital expenditures in fiscal 2022 compared to fiscal 2021 was due to cruise ship fleet expansion.
Capital expenditures at Corporate primarily reflect investments in facilities, information technology infrastructure and equipment. The increases in fiscal 2023 compared to fiscal 2022 and in fiscal 2022 compared to fiscal 2021 were both due to higher spending on facilities.
The Company currently expects its fiscal 2024 capital expenditures to total approximately $6 billion compared to fiscal 2023 capital expenditures of $5 billion. The increase in capital expenditures is primarily due to higher spending at Experiences, in part due to continued investment in our Disney Cruise Line business.
Financing Activities
Financing activities for fiscal 2023, 2022 and 2021 are as follows:
($ in millions)202320222021
Change in borrowings$(1,783)$(4,017)$(3,699)
Activities related to noncontrolling and redeemable noncontrolling interests(707)(507)(874)
Cash used in other financing activities, net(1)
(234)(205)188 
Cash used in financing activities - continuing operations$(2,724) $(4,729) $(4,385) 
(1) Primarily consists of equity award activity.
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Borrowings activities and other
During the year ended September 30, 2023, the Company’s borrowing activity was as follows:
($ in millions)October 1, 2022BorrowingsPaymentsOther
Activity		September 30, 2023
Commercial paper with original maturities less than three months(1)
$50  $238  $—  $1  $289  
Commercial paper with original maturities greater than three months1,612  3,603  (4,032) 4  1,187  
U.S. dollar denominated notes(2)
45,091  —  (1,450) (137) 43,504  
Asia Theme Parks borrowings(3)
1,425  83  (225) 25  1,308  
Foreign currency denominated debt and other(4)
191  —  —  (48) 143  
$48,369  $3,924  $(5,707) $(155) $46,431  
(1)Borrowings and reductions of borrowings are reported net.
(2)The other activity is primarily due to the amortization of purchase accounting adjustments and debt issuance fees.
(3)See Note 6 to the Consolidated Financial Statements for information regarding commitments to fund the Asia Theme Parks.
(4)The other activity is due to market value adjustments for debt with qualifying hedges.
See Note 8 to the Consolidated Financial Statements for information regarding the Company’s bank facilities and debt maturities. The Company may use 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.
In November 2023, NBCU exercised its put right to require the Company to purchase NBCU’s interest in Hulu for the greater of approximately $9 billion or NBCU’s share of fair value (see Note 2 of the Consolidated Financial Statements for additional information).
The Company did not declare or pay a dividend or repurchase any of its shares in fiscal 2023, 2022 and 2021.
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 continuing to not declare dividends; raising financing; reducing capital spending; reducing film and episodic content investments; or implementing furloughs or reductions in force.
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 September 30, 2023, Moody’s Investors Service’s long- and short-term debt ratings for the Company were A2 and P-1 (Stable), respectively, Standard and Poor’s long- and short-term debt ratings for the Company were A- and A-2 (Positive), respectively, and Fitch’s long- and short-term debt ratings for the Company were A- and F2 (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 September 30, 2023, the Company met this covenant by a significant margin. The Company’s bank facilities also specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants or events of default.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We believe that the application of the following accounting policies, which are important to our financial position and results of operations, require significant judgments and estimates on the part of management. For a summary of our significant accounting policies, including the accounting policies discussed below, see Note 2 to the Consolidated Financial Statements.
Produced and Acquired/Licensed Content Costs
We amortize and test for impairment capitalized film and television production costs based on whether the content is predominantly monetized individually or as a group. See Note 2 to the Consolidated Financial Statements for further discussion.
Production costs that are classified as individual are amortized based upon the ratio of the current period’s revenues to the estimated remaining total revenues (Ultimate Revenues).
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With respect to produced films intended for theatrical release, the most sensitive factor affecting our estimate of Ultimate Revenues is theatrical performance. Revenues derived from other markets subsequent to the theatrical release are generally highly correlated with theatrical performance. Theatrical performance varies primarily based upon the public interest and demand for a particular film, the popularity of competing films at the time of release and the level of marketing effort. Upon a film’s release and determination of the theatrical performance, the Company’s estimates of revenues from succeeding windows and markets, which may include imputed license fees for content that is used on our DTC streaming services, are revised based on historical relationships and an analysis of current market trends.
With respect to capitalized television production costs that are classified as individual, the most sensitive factor affecting estimates of Ultimate Revenues is program ratings of the content on our licensees’ platforms. Program ratings, which are an indication of market acceptance, directly affect the program’s ability to generate advertising and subscriber revenues and are correlated with the license fees we can charge for the content in subsequent windows and for subsequent seasons.
Ultimate Revenues are reassessed each reporting period and the impact of any changes on amortization of production cost is accounted for as if the change occurred at the beginning of the current fiscal year. If our estimate of Ultimate Revenues decreases, amortization of costs may be accelerated or result in an impairment. Conversely, if our estimate of Ultimate Revenues increases, cost amortization may be slowed.
Production costs classified as individual are tested for impairment at the individual title level by comparing that title’s unamortized costs to the present value of discounted cash flows directly attributable to the title. To the extent the title’s unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess.
Produced content costs that are part of a group and acquired/licensed content costs are amortized based on projected usage, typically resulting in an accelerated or straight-line amortization pattern. The determination of projected usage requires judgment and is reviewed on a regular basis for changes. Adjustments to projected usage are applied prospectively in the period of the change. Historical viewing patterns are the most significant input into determining the projected usage, and significant judgment is required in using historical viewing patterns to derive projected usage. If projected usage changes we may need to accelerate or slow the recognition of amortization expense.
Cost of content that is predominantly monetized as a group is tested for impairment by comparing the present value of the discounted cash flows of the group to the aggregate unamortized costs of the group. The group is established by identifying the lowest level for which cash flows are independent of the cash flows of other produced and licensed content. If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess and allocated to individual titles based on the relative carrying value of each title in the group. If there are no plans to continue to use an individual film or television program that is part of a group, the unamortized cost of the individual title is written down to its estimated fair value. Licensed content is included as part of the group within which it is monetized for purposes of impairment testing.
The amortization of multi-year sports rights is based on projections of revenues for each season relative to projections of total revenues over the contract period (estimated relative value). Projected revenues include advertising revenue and an allocation of affiliate revenue. If the annual contractual payments related to each season approximate each season’s estimated relative value, we expense the related contractual payments during the applicable season. If estimated relative values by year were to change significantly, amortization of our sports rights costs may be accelerated or slowed.
Revenue Recognition
The Company has revenue recognition policies for its various operating segments that are appropriate to the circumstances of each business. Refer to Note 2 to the Consolidated Financial Statements for our revenue recognition policies.
Pension and Postretirement Medical Plan Actuarial Assumptions
The Company’s pension and postretirement medical benefit obligations and related costs are calculated using a number of actuarial assumptions. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expense and/or liability measurement, which we evaluate annually. Other assumptions include the healthcare cost trend rate and employee demographic factors such as retirement patterns, mortality, turnover and rate of compensation increase.
The discount rate enables us to state expected future cash payments for benefits as a present value on the measurement date. A lower discount rate increases the present value of benefit obligations and increases pension and postretirement medical expense. The guideline for setting this rate is a high-quality long-term corporate bond rate. We increased our discount rate to 5.94% at the end of fiscal 2023 from 5.44% at the end of fiscal 2022 to reflect market interest rate conditions at our fiscal 2023 year-end measurement date. The Company’s discount rate was determined by considering yield curves constructed of a large population of high-quality corporate bonds and reflects the matching of the plans’ liability cash flows to the yield curves. A one percentage point decrease in the assumed discount rate would increase total benefit expense for fiscal 2024 by approximately $200 million and would increase the projected benefit obligation at September 30, 2023 by approximately $2.0 billion. A one
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percentage point increase in the assumed discount rate would decrease total benefit expense and the projected benefit obligation by approximately $45 million and $1.8 billion, respectively.
To determine the expected long-term rate of return on the plan assets, we consider the current and expected asset allocation, as well as historical and expected returns on each plan asset class. Our expected return on plan assets is 7.00%. A lower expected rate of return on plan assets will increase pension and postretirement medical expense. A one percentage point change in the long-term asset return assumption would impact fiscal 2024 annual expense by approximately $170 million.
Goodwill, Other Intangible Assets, Long-Lived Assets and Investments
The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and if current events or circumstances require, on an interim basis. The Company performs its annual test of goodwill and indefinite-lived intangible assets for impairment in its fiscal fourth quarter.
Goodwill is allocated to various reporting units, which are an operating segment or one level below the operating segment. To test goodwill for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of a reporting unit exceeds its fair value. If it is, a quantitative assessment is required. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test.
The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions and changes in projected future cash flows of the reporting unit.
The quantitative assessment compares the fair value of each goodwill reporting unit to its carrying amount, and to the extent the carrying amount exceeds the fair value, an impairment of goodwill is recognized for the excess up to the amount of goodwill allocated to the reporting unit.
In fiscal 2023, the Company bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment, under both the previous segment reporting structure and the new segment reporting structure. There were no goodwill impairments under the previous reporting structure. The change in reporting structure requires judgment to identify new reporting units, allocate goodwill to these reporting units (based on relative fair values) and assign other recorded assets and liabilities to these reporting units.
To determine the fair value of our reporting units, we generally use a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate. The discounted cash flow analyses are sensitive to our estimated projected future cash flows as well as the discount rates used to calculate their present value. Our future cash flows are based on internal forecasts for each reporting unit, which consider projected inflation and other economic indicators, as well as industry growth projections. Discount rates for each reporting unit are determined based on the inherent risks of each reporting unit’s underlying operations. We believe our estimates are consistent with how a marketplace participant would value our reporting units.
Since our prior annual impairment assessment performed in the fourth quarter of fiscal 2022, the fair values of our media and entertainment businesses have generally declined as a result of higher discount rates and lower projections for certain revenue streams.
Based on our projections, the carrying amounts of our entertainment and international sports linear networks reporting units exceeded their fair values and we recorded non-cash goodwill impairment charges of approximately $0.7 billion. The entertainment linear networks reporting unit goodwill after impairment is approximately $8 billion and the international sports linear networks reporting unit goodwill is fully impaired.
In addition, the fair value of our entertainment DTC services reporting unit exceeded its carrying amount by less than 10%. Goodwill of the entertainment DTC services reporting unit is approximately $45 billion.
Significant judgments and assumptions in the discounted cash flow model relate to future revenues and certain operating expenses, terminal growth rates and discount rates. Changes to these significant assumptions, market trends, or macroeconomic events could produce test results in the future that differ, and we could be required to record additional impairment charges.
For our entertainment linear networks reporting unit, a 25 basis point increase in the discount rate or a 1% reduction in projected cash flows used to determine fair value would result in an incremental impairment charge of approximately $0.3 billion.
For our entertainment DTC services reporting unit, a 25 basis point increase in the discount rate used to determine fair value would result in an impairment of $0.5 billion, and a 1% reduction in projected cash flows would result in a decrease in the excess fair value over carrying amount by approximately $0.9 billion.
To test other indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair
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value. If it is, a quantitative assessment is required. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test.
The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions and changes in projected future cash flows.
The quantitative assessment compares the fair value of an indefinite-lived intangible asset to its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized for the excess. Fair values of indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate.
The Company tests long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount may not be recoverable. Once a triggering event has occurred, the impairment test employed is based on whether the Company’s intent is to hold the asset for continued use or to hold the asset for sale. The impairment test for assets held for use requires a comparison of the estimated undiscounted future cash flows expected to be generated over the useful life of the significant assets of an asset group to the carrying amount of the asset group. An asset group is generally established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets and could include assets used across multiple businesses. If the carrying amount of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the asset group and the carrying amount of the asset group. For assets held for sale, to the extent the carrying amount is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference. Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of asset groups, estimates of future cash flows and the discount rate used to determine fair values.
The Company has investments in equity securities. For equity securities that do not have a readily determinable fair value, we consider forecasted financial performance of the investee companies, as well as volatility inherent in the external markets for these investments. If these forecasts are not met, impairment charges may be recorded.
The Company tested its indefinite-lived intangible assets, long-lived assets and investments for impairment and recorded non-cash impairment charges of $2.3 billion, $0.2 billion and $0.3 billion in fiscal 2023, 2022 and 2021, respectively. The fiscal 2023 charges primarily related to content impairments resulting from a strategic change in our approach to content curation. See Note 18 to the Consolidated Financial Statements for additional information. The fiscal 2022 charges primarily related to exiting our businesses in Russia. The fiscal 2021 charges primarily related to the closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe.
Allowance for Credit Losses
We evaluate our allowance for credit losses and estimate collectability of accounts receivable based on historical bad debt experience, our assessment of the financial condition of individual companies with which we do business, current market conditions, and reasonable and supportable forecasts of future economic conditions. In times of economic turmoil, including COVID-19, our estimates and judgments with respect to the collectability of our receivables are subject to greater uncertainty than in more stable periods. If our estimate of uncollectible accounts is too low, costs and expenses may increase in future periods, and if it is too high, costs and expenses may decrease in future periods. See Note 2 to the Consolidated Financial Statements for additional discussion.
Contingencies and Litigation
We are currently involved in certain legal proceedings and, as required, have accrued estimates of the probable and estimable losses for the resolution of these proceedings. These estimates are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies and have been developed in consultation with outside counsel as appropriate. From time to time, we are also involved in other contingent matters for which we accrue estimates for a probable and estimable loss. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to legal proceedings or our assumptions regarding other contingent matters. See Note 14 to the Consolidated Financial Statements for more detailed information on litigation exposure.
Income Tax
As a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. From time to time, these audits result in proposed assessments. Our determinations regarding the recognition of income tax benefits are made in consultation with outside tax and legal counsel, where appropriate, and are based upon the technical merits of our tax positions in consideration of applicable tax statutes and related interpretations and precedents and upon the expected outcome of proceedings (or negotiations) with taxing and legal authorities. The tax benefits ultimately realized by the Company may differ from those recognized in our future financial statements based on a number of factors, including the Company’s decision to
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settle rather than litigate a matter, relevant legal precedent related to similar matters and the Company’s success in supporting its filing positions with taxing authorities. See Note 9 to the Consolidated Financial Statements for additional discussion.
New Accounting Pronouncements
See Note 19 to the Consolidated Financial Statements for information regarding new accounting pronouncements.
DTC PRODUCT DESCRIPTIONS, KEY DEFINITIONS AND SUPPLEMENTAL INFORMATION
Product Offerings
In the U.S., Disney+, ESPN+ and Hulu SVOD Only are each offered as a standalone service or together as part of various multi-product offerings. Hulu Live TV + SVOD includes Disney+ and ESPN+. Disney+ is available in more than 150 countries and territories outside the U.S. and Canada. In India and certain other Southeast Asian countries, the service is branded Disney+ Hotstar. In certain Latin American countries, we offer Disney+ as well as Star+, a general entertainment SVOD service, which is available on a standalone basis or together with Disney+ (Combo+). Depending on the market, our services can be purchased on our websites or through third-party platforms/apps or are available via wholesale arrangements.
Paid Subscribers
Paid subscribers reflect subscribers for which we recognized subscription revenue. Subscribers cease to be a paid subscriber as of their effective cancellation date or as a result of a failed payment method. Subscribers to multi-product offerings in the U.S. are counted as a paid subscriber for each service included in the multi-product offering and subscribers to Hulu Live TV + SVOD are counted as one paid subscriber for each of the Hulu Live TV + SVOD, Disney+ and ESPN+ services. In Latin America, if a subscriber has either the standalone Disney+ or Star+ service or subscribes to Combo+, the subscriber is counted as one Disney+ paid subscriber. Subscribers include those who receive a service through wholesale arrangements including those for which the service is distributed to each subscriber of an existing content distribution tier. When we aggregate the total number of paid subscribers across our DTC streaming services, we refer to them as paid subscriptions.
International Disney+ (excluding Disney+ Hotstar)
International Disney+ (excluding Disney+ Hotstar) includes the Disney+ service outside the U.S. and Canada and the Star+ service in Latin America.
Average Monthly Revenue Per Paid Subscriber
Hulu and ESPN+ average monthly revenue per paid subscriber is calculated based on the average of the monthly average paid subscribers for each month in the period. The monthly average paid subscribers is calculated as the sum of the beginning of the month and end of the month paid subscriber count, divided by two. Disney+ average monthly revenue per paid subscriber is calculated using a daily average of paid subscribers for the period. Revenue includes subscription fees, advertising (excluding revenue earned from selling advertising spots to other Company businesses) and premium and feature add-on revenue but excludes Premier Access and Pay-Per-View revenue. The average revenue per paid subscriber is net of discounts on offerings that carry more than one service. Revenue is allocated to each service based on the relative retail or wholesale price of each service on a standalone basis. Hulu Live TV + SVOD revenue is allocated to the SVOD services based on the wholesale price of the Hulu SVOD Only, Disney+ and ESPN+ multi-product offering. In general, wholesale arrangements have a lower average monthly revenue per paid subscriber than subscribers that we acquire directly or through third-party platforms.
Supplemental information about paid subscribers(1):
(in millions)September 30,
2023		October 1,
2022		October 2,
2021
Domestic (U.S. and Canada) standalone55.560.465.4
Domestic (U.S. and Canada) multi-product(1)
22.619.411.4
78.179.776.9
International standalone (excluding Disney+ Hotstar)(2)
55.349.234.8
International multi-product(3)
10.87.21.2
66.156.536.0
Total(4)
144.2136.2112.9

(1)At September 30, 2023, there were 20.3 million and 2.3 million subscribers to three-service and two-service multi-product offerings, respectively. At October 1, 2022, there were 18.7 million and 0.7 million subscribers to three-
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service and two-service multi-product offerings, respectively. At October 2, 2021, there were 11.4 million subscribers to three-service offerings and no subscribers to two-service offerings.
(2)Disney+ Hotstar is not included in any of the Company’s multi-product offerings.
(3)Consists of subscribers to Combo+.
(4)Total may not equal the sum of the column due to rounding.
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, $14.0 billion of the outstanding exchange notes were exchanged for new senior notes of TWDC registered under the Securities Act, issued pursuant to the TWDC Indenture and guaranteed by Legacy Disney. In addition, contemporaneously with the closing of the March 20, 2019 exchange offer, TWDC entered into a guarantee of the registered debt securities issued by Legacy Disney under the Indenture dated as of September 24, 2001 between Legacy Disney and Wells Fargo Bank, National Association, as trustee (the “2001 Trustee”) (as amended by the first supplemental indenture among Legacy Disney, as issuer, TWDC, as guarantor, and the 2001 Trustee, as trustee).
Other subsidiaries of the Company do not guarantee the registered debt securities of either TWDC or Legacy Disney (such subsidiaries are referred to as the “non-Guarantors”). The par value and carrying value of total outstanding and guaranteed registered debt securities of the Obligor Group at September 30, 2023 was as follows:
TWDCLegacy Disney
($ in millions)Par ValueCarrying ValuePar ValueCarrying Value
Registered debt with unconditional guarantee$35,163  $35,393  $8,121  $7,880  
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.
Set forth below are 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 U.S. GAAP.MR. LANSBERRY
Results of operations ($ in millions)2023
RevenuesSALARYThe Committee set Mr. Lansberry’s 2023 annual salary upon his appointment as Interim Chief Financial Officer.
$
PERFORMANCE-BASED BONUS
Target Bonus
Mr. Lansberry’s target bonus of $588,561 reflects a pro-ration of his bonus target as both CFO of our Experiences segment and Interim CFO of the Company.
Other Performance Factor
The Compensation Committee did not apply an Other Performance Factor for Mr. Lansberry as he was in his role on an interim basis. Based on the recommendation of Mr. Iger, the Compensation Committee approved Mr. Lansberry's bonus to recognize his contributions while serving as Interim CFO.
Performance Highlights:
—•Showed exemplary leadership and decision making on behalf of the Company during his tenure as Interim CFO.
•Successfully refinanced the Company’s $5.25 billion 364-day revolving credit facility, with comparable pricing terms.
•Successfully negotiated amendment to Hulu put/call provision with Comcast.
•Continued to align real estate footprint and projects with business priorities and objective of promoting creativity and collaboration through in-person work.
•Ranked #1 in our industry in Institutional Investor’s rankings across the board, including for Investor Relations program and Investor/Analysts Event.
EQUITY AWARD VALUEThe annual equity award value of $1,976,257 for Mr. Lansberry reflects 50% of his total annual compensation for fiscal 2023. The value of Mr. Lansberry’s fiscal 2023 equity awards was set when he was CFO of our former Parks, Experiences and Products segment, and was granted in two equal installments on December 15, 2022 and July 17, 2023. Mr. Lansberry’s fiscal 2023 award was awarded 70% as RSUs and 30% as stock options.
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MR. GUTIERREZ
SALARYThe Committee increased Mr. Gutierrez’s 2023 annual salary by 2.3% to reflect changes in the market for executive talent and his continued outstanding performance.
PERFORMANCE-BASED BONUS
Target Bonus
As set forth in his employment agreement, Mr. Gutierrez’s target bonus for fiscal 2023 is equal to two times his fiscal year-end salary.
Other Performance Factor
The Compensation Committee applied a factor of 145% with respect to Other Performance Factors for Mr. Gutierrez in fiscal 2023. In fiscal 2022 the Other Performance Factor was 114%.
Performance Highlights:
•Continued promotion of diversity and inclusion in the Legal and Global Affairs department, resulting in positive trends within the Legal and Global Affairs department for promotions and new hires among women and people of color.
•Advised on corporate governance and public policy issues.
•Oversaw the regulatory work associated with launches of our DTC products.
•Mapped out strategy to protect Disney content as generative artificial intelligence services proliferate and move towards video content, including identifying key services that may have the most impact on Disney content from an infringement perspective.
•Continued leadership of the Company’s legal and public policy positions on litigation matters, transactions and regulatory developments.
EQUITY AWARD VALUEThe annual equity award value of $7,206,862 for Mr. Gutierrez reflects 62% of his total annual compensation for fiscal 2023. Mr. Gutierrez’s fiscal 2023 award was awarded 50% as PBUs, 25% as RSUs and 25% as stock options. The annual equity award value includes the fiscal 2023 ROIC portion of Mr. Gutierrez’s fiscal 2022 award.
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MS. SCHAKE
SALARYThe Committee increased Ms. Schake’s 2023 annual salary in January 2023 by 2.0% to reflect changes in the market for executive talent and her continued outstanding performance. In connection with her contract extension and with the addition of Corporate Social Responsibility to her scope, the Committee increased Ms. Schake’s base salary by an additional 5.5% given performance and market positioning.
PERFORMANCE-BASED BONUS
Target Bonus
As set forth in her employment agreement, Ms. Schake’s target bonus for fiscal 2023 is equal to 1.5 times her fiscal year-end salary.
Other Performance Factor
The Compensation Committee applied a factor of 125% with respect to Other Performance Factors for Ms. Schake in fiscal 2023. In fiscal 2022 the Other Performance Factor was 114%.
Performance Highlights:
•Created a communications task force across key divisions to advise on major PR initiatives, including resetting narratives through media relations and executive engagement.
•Led significant efforts to protect and enhance the Company’s reputation with a wide range of stakeholders.
•Realigned communications teams to streamline functions for greater efficiency and effectiveness, enabling a more unified, collaborative and nimble approach to drive business success.
EQUITY AWARD VALUEThe annual equity award value of $1,852,537 for Ms. Schake reflects 47% of her total annual compensation for fiscal 2023. Ms. Schake’s fiscal 2023 award was awarded 50% as PBUs, 25% as RSUs and 25% as stock options. The annual equity award value includes the fiscal 2023 ROIC portion of Ms. Schake’s fiscal 2022 award.
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MS. COLEMAN
  
CostsSALARYThe Committee set Ms. Coleman’s 2023 annual salary upon her promotion to Senior Executive Vice President and expensesChief Human Resources Officer.
—  
Net income (loss)PERFORMANCE-BASED BONUS
Target Bonus
As set forth in her employment agreement, Ms. Coleman’s target bonus for fiscal 2023 is equal to 1.5 times her fiscal year-end salary.
Other Performance Factor
The Compensation Committee applied a factor of 139% with respect to Other Performance Factors for Ms. Coleman in fiscal 2023.
Performance Highlights:
•Bolstered outreach and engagement to amplify the Company’s brand in an authentic manner in order to attract top, diverse talent from continuing operationsunderrepresented communities.
•Provided leadership through the company-wide strategic transformation and cost reduction efforts in fiscal 2023.
•Launched a team, partnering with technology and legal, to identify opportunities to integrate and enable technology within human resources to drive efficiencies and elevate the overall employee and human resources experience.
(2,160) 
Net income (loss)EQUITY AWARD VALUE(2,160)The total equity award value of $2,036,279 for Ms. Coleman reflects 51% of her total annual compensation for fiscal 2023, reflecting the annual equity award for her previous role as Senior Vice President, Human Resources for our Television businesses, which was granted in two equal installments on December 15, 2022 and July 17, 2023 and was awarded 70% in RSUs and 30% in stock options. In addition, in connection with her promotion, Ms. Coleman received additional grants of RSUs, PBUs and options on June 23, 2023, which was awarded 50% as PBUs, 25% as RSUs and 25% as stock options.
MS. MCCARTHY
 
Net income (loss) attributable to TWDC shareholdersSALARY(2,160)The Committee increased Ms. McCarthy’s 2023 annual salary by 3.5% to reflect changes in the market for executive talent.
 
PERFORMANCE-BASED BONUS
Target Bonus
As set forth in her employment agreement, Ms. McCarthy’s target bonus for fiscal 2023 is equal to two times her fiscal year-end salary. As Ms. McCarthy began a leave of absence on July 1, 2023, her fiscal 2023 target bonus has been pro-rated 75% to reflect the period of fiscal 2023 she served as Senior Executive Vice President and Chief Financial Officer.
Other Performance Factor
The Compensation Committee applied a factor of 91% with respect to Other Performance Factors for Ms. McCarthy in fiscal 2023. In fiscal 2022 the Other Performance Factor was 114%.
EQUITY AWARD VALUEThe annual equity award value of $12,953,949 for Ms. McCarthy reflects 71% of her total annual compensation for fiscal 2023. Ms. McCarthy’s fiscal 2023 award was awarded 50% as PBUs, 25% as RSUs and 25% as stock options. The annual equity award value includes the fiscal 2023 ROIC portion of Ms. McCarthy’s fiscal 2021 and 2022 awards.
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Balance Sheet ($ in millions)September 30, 2023October 1, 2022
Current assets$8,544 $5,665 
Noncurrent assets2,927 1,948 
Current liabilities5,746 3,741 
Noncurrent liabilities (excluding intercompany to non-Guarantors)43,307 46,218 
Intercompany payables to non-Guarantors154,018 148,958 
Other Compensation Information
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Management Considerations
The Company is exposedCompensation Committee believes that the following features of performance-based bonus and equity programs appropriately incentivize the creation of long-term shareholder value while discouraging behavior that could lead to the impact of interest rate changes, foreign currency fluctuations, commodity fluctuations and changes in the market values of its investments.excessive risk:
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 Performance Measures. The 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 flow 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, Japanese yen, British pound, Chinese yuan and Canadian dollar. Cross-currency swaps aremetrics used to effectively convert foreign currency denominated borrowings to U.S. dollar denominated borrowings. By policy,determine the Company maintains hedge coverage between minimum and maximum percentagesamount of its forecasted foreign exchange exposures generallyan executive’s bonus are measures the Committee believes drive long-term shareholder value. The ranges set for periods not to exceed four years. The gains and losses on these contractsmeasures are intended to offset changesreward success without encouraging excessive risk-taking.
•Limit on Bonus. The overall bonus opportunity is not expected to exceed two times the target amount, no matter how much financial performance exceeds the ranges established at the beginning of the fiscal year.
•Equity Vesting Periods. Performance-based stock units generally vest in three years. Time-based stock units and options vest annually for up to four years and options remain exercisable for ten years. These periods are designed to reward sustained performance over several periods, rather than performance in a single period.
•Equity Retention Guidelines. NEOs are required to acquire within five years of becoming an executive officer and hold as long as they are executive officers of the Company, shares (including restricted stock units) having a value of at least three times their base salary amounts, or five times in the U.S. dollar equivalent valuecase of the related exposures. The economic or political conditions in certain countriesChief Executive Officer. If these levels have reduced andnot been reached, these officers are required to retain ownership of shares representing at least 75% of the net after-tax gain (100% in the future could further reduce our ability to hedge exposure to currency fluctuations in, or repatriate cash from, those countries.
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.
See Note 17case of the Consolidated Financial StatementsChief Executive Officer) realized on exercise of options for additional information.a minimum of twelve months.
Value at Risk (VAR)
The Company utilizes a VAR model to estimate the maximum potential one-day loss in the fair value of its interest rate, foreign exchange, commodities and market sensitive equity financial instruments. The VAR model estimates were made assuming normal market conditions and a 95% confidence level. Various modeling techniques can be used in a VAR computation.•No Hedging or Pledging. The Company’s computations are based on the interrelationships between movements in various interest rates, currencies, commodities and equity prices (a variance/co-variance technique). These interrelationships were determined by observing interest rate, foreign currency, commodity and equity market changes over the preceding quarter for the calculation of VAR amounts at each fiscal quarter end. The model includes all of the Company’s debt as well as all interest rate and foreign exchange derivative contracts, commodities and market sensitive equity investments. Forecasted transactions, firm commitments and accounts receivable and payable denominated in foreign currencies, which certain of these instruments are intended to hedge, were excluded from the model.
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The VAR model is a risk analysis tool and does not purport to represent actual losses in fair value that will be incurred by the Company, nor does it consider the potential effect of favorable changes in market factors.
VAR on a combined basis decreased to $284 million at September 30, 2023 from $395 million at October 1, 2022 due to reduced interest rate volatility and lower sensitivity of our debt portfolio to movement of interest rates.

The estimated maximum potential one-day loss in fair value, calculated using the VAR model, is as follows (unaudited, in millions):
Fiscal 2023Interest Rate
Sensitive
Financial
Instruments		Currency
Sensitive
Financial
Instruments		Equity 
Sensitive
Financial
Instruments		Commodity Sensitive Financial InstrumentsCombined
Portfolio
Year end fiscal 2023 VAR$258$45$4$4$284
Average VAR33658134360
Highest VAR40376235425
Lowest VAR2584544284
Year end fiscal 2022 VAR37671204395
The VAR for Hong Kong Disneyland Resort and Shanghai Disney Resort is immaterial as of September 30, 2023 and has been excluded from the above table.
ITEM 8. Financial Statements and Supplementary Data
See Index to Financial Statements and Supplemental Data on page 77.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and made known to the officers who certify the Company’s financial reports and to otherinsider trading compliance program prohibits members of senior management and the Board of Directors, as appropriateNEOs and all other employees subject to allow timely decisions regarding required disclosure.the Company’s insider trading compliance program from entering into any transaction designed to hedge, or having the effect of hedging, the economic risk of owning the Company’s securities and prohibits certain persons, including members of the Board of Directors and the NEOs, from pledging Company securities.
Based on their evaluation as•Clawback Policy. In connection with the SEC’s and NYSE’s recently-approved rules requiring adoption of September 30, 2023,a clawback policy applicable to incentive-based compensation for Section 16 officers of listed companies, the principal executive officerCompany has adopted The Walt Disney Company Clawback Policy, and principal financial officercurrent Section 16 officers of the Company have concludedagreed in writing that employment agreements and other compensation agreements and plans are subject to the policy. Under such policy, if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws, the Company will recoup any erroneously awarded incentive-based compensation from the Company’s current and former executive officers. Further, under the 2011 Stock Incentive Plan approved at the Company’s 2020 Annual Meeting, equity awards pursuant to the plan may be clawed back where there is reputational or financial harm to the Company, even in the absence of a restatement.
Equity awards are generally approved on dates the Compensation Committee meets. Committee meetings are normally scheduled well in advance and are not scheduled with an eye to announcements of material information regarding the Company. The Committee may make an award with an effective date in the future, including awards contingent on commencement of employment, execution of a new employment agreement or some other subsequent event, or may act by unanimous written consent on the date of such an event when the proposed issuances have been reviewed by the Committee prior to the date of the event.
At the Compensation Committee’s request, management conducted its annual assessment of the risk profile of our compensation programs in November 2023. The assessment included an inventory of the compensation programs at each of the Company’s segments and an evaluation of whether any program contained elements that created risks that could have a material adverse impact on the Company. Management provided the results of this assessment to Pay Governance LLC, the Committee’s compensation consultant, which evaluated the findings and reviewed them with the Committee. As a result of this review, the Committee determined that the risks arising from the Company’s disclosure controlspolicies and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)practices are effective.
Management’s Report on Internal Control Over Financial Reporting
Management’s report set forth on page 78 is incorporated herein by reference.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting during the fourth quarter of the fiscal year ended September 30, 2023 that have materially affected, or arenot reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. Other Information
None of our directors or officers adopted or terminatedhave a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) duringmaterial adverse effect on the quarterly period covered by this report.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.Company.
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PART IIIPeer Groups
SUMMARY OF PEER GROUPS
ITEM 10. Directors, Executive Officers and Corporate Governance
Information regarding Section 16(a) compliance,The following graph summarizes the Audit Committee, the Company’s code of ethics, background of the directors and director nominations appearing under the captions “Delinquent Section 16(a) Reports,” “The Board of Directors,” “Committees” and “Corporate Governance Documents” in the Company’s Proxy Statementthree distinct peer groups we use for the 2024 annual meeting of Shareholders is hereby incorporated by reference.
Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G(3).
ITEM 11. Executive Compensation
Information appearing under the captions “Director Compensation,” and “Executive Compensation” (other than the “Compensation Committee Report,” which is deemed furnished herein by reference,three distinct purposes and the “Letter fromcompanies that met these criteria and were included at the Compensation Committee”)beginning of fiscal 2023, described in the 2024 Proxy Statement is hereby incorporated by reference.more detail below:
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information setting forth the security ownership of certain beneficial owners and management appearing under the caption “Stock Ownership” and information appearing under the caption “Equity Compensation Plans” in the 2024 Proxy Statement is hereby incorporated by reference.
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Information regarding certain related transactions appearing under the captions “Certain Relationships and Related Person Transactions” and information regarding director independence appearing under the caption “Director Independence” in the 2024 Proxy Statement is hereby incorporated by reference.
ITEM 14. Principal Accounting Fees and Services
Information appearing under the captions “Auditor Fees and Services” and “Policy for Approval of Audit and Permitted Non-Audit Services” in the 2024 Proxy Statement is hereby incorporated by reference.
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PART IV
ITEM 15. Exhibits and Financial Statement Schedules
(1)Financial Statements and Schedules
See Index to Financial Statements and Supplemental Data on page 77.
(2)Exhibits
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
ExhibitPERFORMANCE PEERS S&P 500Location
GENERAL INDUSTRY PEERS
•Alphabet, Inc.
•Amazon.com, Inc.
•Apple, Inc.
•AT&T Inc.
•Charter Communications, Inc.
•Comcast Corporation
•IBM Corporation
•Meta Platforms, Inc.
•Microsoft Corporation
•Netflix, Inc.
•NIKE, Inc.
•Oracle Corporation
•Paramount Global
•Verizon Communications Inc.
•Warner Bros. Discovery, Inc.
MEDIA INDUSTRY PEERS
•Alphabet, Inc.
•Amazon.com, Inc.
•Apple, Inc.
•Comcast Corporation
•Meta Platforms, Inc.
•Netflix, Inc.
•Paramount Global
•Warner Bros. Discovery, Inc.
MEDIA INDUSTRY PEERS
The media industry peer group helps evaluate compensation levels for the NEOs. The Compensation Committee believes that there is a limited pool of talent with the set of creative and organizational skills needed to run a global creative organization like the Company. The Committee also understands that executives with the background needed to manage a company such as ours have career options with compensation opportunities that normally exceed those available in most other industries, and that compensation levels within the peer group are driven by the dynamics of compensation in the entertainment industry and not the ownership structure of a particular company. Accordingly, the market for executive talent to lead the Company, and the group against which to compare our executive compensation, is best represented by the companies in our media industry peer group.
GENERAL INDUSTRY PEERS
The general industry peer group helps evaluate general compensation structure, policies and practices. The Compensation Committee believes that the features of the Company’s overall compensation structure, policies and practices should normally be consistent for all executives. Because our operations span multiple industries, the Committee believes that a consistent approach across the breadth of the Company’s operations with respect to features of our overall executive compensation structure is best achieved by reference to a group of General Industry Peers that is broader than the Media Industry Peers.
The peer group used for establishing compensation structure, policies and practices consists of companies that have:
•A consumer orientation and/or strong brand recognition;
•A global presence and operations;
•Annual revenue no less than 40% and no more than two and a half times our annual revenue; and
•As a general matter, a market capitalization in the range of approximately one-quarter to four times our market capitalization.
Additionally, the general industry peer group includes companies that do not meet the revenue or market cap test, but that are included in the peer groups used by one or more of the Media Industry Peers.
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PERFORMANCE PEERS
The performance peers help evaluate relative economic performance of the Company. The overall financial performance of the Company is driven by the Company’s diverse businesses, which compete in multiple sectors of the overall market. The Compensation Committee believes that, given the span of the Company’s businesses, the best measure of relative performance is how the Company’s diverse businesses have fared in the face of the economic trends that impact companies in the overall market and that the best benchmark for measuring such success is the Company’s relative performance compared to that of the companies comprising the S&P 500. Accordingly, the Committee has selected the S&P 500 to set the context for evaluating the Company’s performance and to measure relative performance for PBU awards.
The Committee will continue to monitor the competitive landscapes in which the Company’s various business units operate and implement changes to the peer group as it deems appropriate.
Deductibility of Compensation
For taxable years commencing after 2017, Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation over $1 million paid to any person whose compensation was required to be included in this report for any fiscal year after 2016 because such person was either the Company’s Chief Executive Officer or Chief Financial Officer or was one of the Company’s three other most highly compensated executive officers for such fiscal year. Accordingly, to the extent that compensation in excess of $1 million is payable to any such person in any fiscal year after fiscal 2018, such excess amount is likely to be non-deductible by the Company for federal income tax purposes. However, Section 162(m) exempts qualifying performance-based compensation paid after fiscal 2018 pursuant to a binding written agreement in effect on November 2, 2017. Thus, performance-based awards that were outstanding on that date or awarded thereafter pursuant to a binding written agreement can be exempt from the deduction limit if applicable requirements are met. For fiscal 2023, none of the executive officers served under employment agreements that were in place without amendment prior to November 2, 2017.
However, awards to executive officers under the annual performance-based bonus program and the long-term incentive program that were (i) granted prior to November 2, 2017, or (ii) may continue to qualify for the exemption because they were granted pursuant to a binding written agreement in effect on such date, have been or will be made payable or vest subject to achievement of a performance test based on adjusted net income in order to qualify for the exemption from Section 162(m), to the extent available. If this test is satisfied, the additional performance tests described in the Compensation Discussion and Analysis are applied to determine the actual payout of such bonuses and awards, which in order to remain deductible may not be more than the maximum level funded based on achievement of the Section 162(m) test. Adjusted net income means net income adjusted, as appropriate, to exclude the following items or variances: change in accounting principles; acquisitions; dispositions of a business; asset impairments; restructuring charges; extraordinary, unusual or infrequent items; and extraordinary litigation costs and insurance recoveries. For fiscal 2023, the adjusted net income target was $3.5 billion and the Company achieved adjusted net income of $6.9 billion. Net income was adjusted to account for transaction purchase accounting, restructuring and impairment charges, gain on sale of equity investments, content license early termination and legal compliance.
Therefore, we believe the Section 162(m) test was satisfied with respect to restricted stock units vesting based on fiscal 2023 results.
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Compensation Committee Report
The Compensation Committee has:
1.reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management; and
2.based on this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K, amendment to its annual report on Form 10-K/A and proxy statement relating to the 2024 Annual Meeting of Shareholders.
Members of the fiscal 2023 Compensation Committee
Maria Elena Lagomasino (Chair)
Mary T. Barra
Carolyn N. Everson
Calvin R. McDonald
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Compensation Tables
Fiscal 2023 Summary Compensation Table
The following table provides information concerning the total compensation earned in fiscal 2021(except for Mr. Lansberry, Mr. Gutierrez, Ms. Schake and Ms. Coleman), fiscal 2022 (except for Mr. Lansberry and Ms. Coleman) and fiscal 2023 by persons who served as Chief Executive Officer or Chief Financial Officer and the three other persons serving as executive officers at the end of fiscal 2023 who were the most highly compensated executive officers of the Company in fiscal 2023. These seven officers are referred to as the named executive officers or NEOs in this report. Information regarding the amounts in each column follows the table.
Name and Principal PositionFiscal YearSalaryBonus
Stock
Awards1
Option
Awards
Non-Equity Incentive Plan CompensationChange In Pension Value and Non- Qualified Deferred Compensation Earnings
All Other
Compensation
Total
          
Robert A. Iger
Chief Executive Officer2; Former Executive Chairman
2023$865,385 $— $16,103,421 $10,000,027 $2,140,000 $— $2,478,333 $31,587,166 
20221,096,154 — 4,670,521 2,395,104 4,370,000 — 2,466,520 14,998,299 
20213,000,000 — 9,479,879 9,293,921 22,920,000 — 1,205,996 45,899,796 
Kevin A. Lansberry3
Interim Chief
Financial Officer
2023765,114 — 1,383,396 592,861 1,000,000 169,497 35,964 3,946,832 
Horacio E. Gutierrez4
Senior Executive Vice President, General Counsel and Chief Compliance Officer
20231,322,500 — 5,544,337 1,662,525 3,000,000 — 123,073 11,652,435 
2022870,000 2,000,000 5,951,801 2,500,013 3,783,000 — 93,194 15,198,008 
Kristina K. Schake5
Senior Executive Vice President and Chief Communications Officer
2023755,346 — 1,390,327 462,210 1,250,000 — 86,898 3,944,781 
2022361,250 1,500,000 2,132,366 913,287 1,320,000 — 5,444 6,232,347 
Sonia L. Coleman
Senior Executive Vice President and Chief Human Resources Officer
2023646,546 — 1,827,251 209,028 1,250,000 73,971 25,277 4,032,073 
Robert A. Chapek
Former Chief Executive Officer2
2023673,077 — 1,324,503 — — 220,581 7,722,231 9,940,392 
20222,500,000 — 10,810,832 3,750,020 6,750,000 — 372,151 24,183,003 
20212,500,000 — 10,215,466 3,750,012 14,330,000 1,358,505 310,310 32,464,293 
Christine M. McCarthy3
Former Senior Executive Vice President and Chief Financial Officer
20232,052,500 — 9,953,921 3,000,028 3,000,000 — 127,890 18,134,339 
20221,980,000 — 8,935,794 3,375,042 5,820,000 — 124,833 20,235,669 
20211,903,754 — 6,922,854 5,000,015 7,680,000 103,152 119,440 21,729,215 
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1Stock awards for each fiscal year include awards subject to performance conditions that were valued based on the probability that performance targets will be achieved. For Mr. Iger, Mr. Gutierrez, Ms. Schake, Mr. Chapek and Ms. McCarthy, fiscal 2023 includes $1,103,364, $556,679, $3,712, $1,324,503 and $953,844, respectively, related to the portion of awards from fiscal 2021 and fiscal 2022 having ROIC targets, which were established on November 29, 2022. Assuming the highest level of performance conditions are achieved, the grant date stock awards values are outlined below:
Fiscal YearMr. IgerMr. LansberryMr. GutierrezMs. SchakeMs. ColemanMr. ChapekMs. McCarthy
        
2023$33,073,344 $1,383,396 $8,817,198 $2,149,166 $2,270,390 $2,351,227 $15,660,185 
20227,489,338 — 8,694,020 2,143,642 — 15,733,462  12,969,186  
202112,101,153 — — — — 11,963,950    7,767,106    
2In fiscal 2020, Mr. Iger served as Chief Executive Officer until February 24, 2020, when he was appointed Executive Chairman. Mr. Chapek was appointed Chief Executive Officer on February 24, 2020 and served as Chief Executive Officer until November 20, 2022, at which time Mr. Iger again assumed the role of Chief Executive Officer. In fiscal 2022, Mr. Chapek was entitled to receive compensation under the annual performance-based bonus program pursuant to his employment agreement because his termination occurred after the end of the fiscal year. For details on the treatment of Mr. Chapek’s equity awards following his separation from the Company, please see the section titled “Executive Compensation — Compensation Tables — Potential Payments and Rights on Termination or Change in Control — Termination Pursuant to Company Termination Right Other Than for Cause or By Executive for Good Reason” below.
3Ms. McCarthy began a leave of absence on July 1, 2023, at which point she ceased to serve as Senior Executive Vice President and Chief Financial Officer, and began serving as Strategic Advisor. On July 1, 2023, Mr. Lansberry began serving as Interim CFO, remaining in this role through the end of fiscal 2023 and until Hugh Johnston joined the Company on December 4, 2023.
4Mr. Gutierrez joined the Company on February 1, 2022. In connection with his hiring, Mr. Gutierrez received a cash sign-on bonus of $2,000,000, primarily to replace forgone compensation from his previous employer.
5Ms. Schake joined the Company on April 1, 2022 as Executive Vice President, Global Communications. In connection with her hiring, Ms. Schake received a cash sign-on bonus of $1,500,000 given her outstanding qualifications and extraordinary experience in both the public and private sectors, and to secure her acceptance of employment with the Company. On June 29, 2022, Ms. Schake was promoted to Senior Executive Vice President and Chief Communications Officer.
Salary. This column sets forth the base salary earned during each fiscal year. On July 1, 2023, Ms. McCarthy began a leave of absence and started serving in her new role as Strategic Advisor. In her capacity as Strategic Advisor, for fiscal 2023 she received $517,500.
Stock Awards. This column sets forth the grant date fair value of the restricted stock unit awards granted to the NEOs during each fiscal year as part of the Company’s long-term incentive compensation program. The grant date fair value of these awards was calculated by multiplying the number of units awarded by the average of the high and low trading price of the Company’s common stock on the grant date, subject to valuation adjustments for restricted stock unit awards subject to vesting conditions other than, with respect to certain legacy awards to Ms. McCarthy, the test to assure deductibility under Section 162(m) of the Internal Revenue Code. The valuation adjustments for performance-based awards reflect the fact that the number of shares received on vesting varies based on the level of performance achieved and were determined using a Monte Carlo simulation that determines the probability that the performance targets will be achieved. The grant date fair value of the restricted stock unit awards granted during fiscal 2023 is also included in the Fiscal 2023 Grants of Plan Based Awards Table.
Option Awards. This column sets forth the grant date fair value of options to purchase shares of the Company’s common stock granted to the NEOs during each fiscal year. The grant date fair value of these options was calculated using a binomial option pricing model. The assumptions used in estimating the fair value of these options are set forth in footnote 12 to the Company’s Audited Financial Statements for fiscal 2023. The grant date fair value of the options granted during fiscal 2023 is also included in the Fiscal 2023 Grants of Plan Based Awards Table.
Non-Equity Incentive Plan Compensation. This column sets forth the amount of compensation earned by the NEOs under the Company’s annual performance-based bonus program during each fiscal year. A description of the Company’s annual performance-based bonus program is included in the section “Executive Compensation — Compensation Discussion and Analysis — Executive Compensation Program Structure—Objectives and Methods” and the determination of performance-based bonuses for fiscal 2023 is described in the section “Executive Compensation — Compensation Discussion and Analysis — Fiscal 2023 Compensation Decisions.”
Change in Pension Value and Non-Qualified Deferred Compensation Earnings. This column reflects the aggregate change in the actuarial present value of each NEO’s accumulated benefits under all defined benefit plans, including supplemental plans, during each fiscal year. The amounts reported in this column vary with a number of factors, including the discount rate applied to determine the value of future payment streams, the NEO’s age and additional earned benefits as a result of an additional year of service. The discount rate used pursuant to pension accounting rules to calculate the present value of future payments for fiscal 2021 was 2.88%, for fiscal 2022 was 5.44% and for fiscal 2023 was 5.94%. Neither increases nor decreases in pension value resulting from changes in the discount rate result in any increase or decrease in benefits payable to participants under the plan. As Mr. Gutierrez and Ms. Schake joined the
42

Company in 2022, they are not eligible for the Company’s defined benefit pension. For Mr. Iger and Ms. McCarthy, their age factors drove the change in pension value for such year to be negative (-$1,337,423 and -$118,908, respectively). Mr. Lansberry, Mr. Chapek and Ms. McCarthy were credited with earnings on deferred compensation as disclosed below under “Executive Compensation — Compensation Tables — Fiscal 2023 Non-Qualified Deferred Compensation Table.” These earnings were at rates that were not above market rates and therefore are not reported in this column.
All Other Compensation. This column sets forth all of the compensation for each fiscal year that we could not properly report in any other column of the table, including:
•the incremental cost to the Company of perquisites and other personal benefits;
•the amount of Company contributions to employee savings plans;
•the dollar value of insurance premiums paid by the Company with respect to excess liability insurance for the NEOs; and
•the dollar amount of matching charitable contributions made to charities pursuant to the Company’s charitable gift matching program, which is available to all regular U.S. employees with at least one year of service.
The dollar amount of matching charitable contributions in fiscal 2023 was $50,000 for Mr. Iger, $12,250 for Mr. Gutierrez, $3,100 for Ms. Coleman, $40,000 for Mr. Chapek and $50,000 for Ms. McCarthy.
The dollar amount the Company contributed to both the Disney Retirement Savings Plan (for Mr. Gutierrez, Ms. Schake and Mr. Iger) and Key Employee Retirement Savings Plan (for Mr. Iger) in fiscal 2023 was $104,850 for Mr. Iger, $9,900 for Mr. Gutierrez and $9,900 for Ms. Schake. The Retirement Savings Plan is a defined contribution plan for eligible salaried employees funded by the Company. After a year of service, the Company will make quarterly contributions based on a combination of age and years of service and eligible pay. The Key Employee Retirement Savings Plan is a defined contribution plan funded by the Company. The Plan is a non-qualified plan under IRS regulations that is intended to restore or replace certain benefits that cannot be provided under the qualified Retirement Savings Plan due to IRS compensation limits.
Upon his retirement on December 31, 2021, the consulting period established under Mr. Iger’s then current employment agreement with the Company commenced. In connection with his consulting agreement, Mr. Iger received quarterly payments of $500,000 for each quarter he served in this capacity; for fiscal 2023 he received $271,739.
On November 20, 2022, the Board decided to exercise its right to terminate Mr. Chapek’s employment without cause. In connection with this termination, Mr. Chapek received cash termination payments in fiscal 2023 of $6,527,397 in remaining base salary through the scheduled expiration date of his amended employment agreement and $1,027,397 in the form of a pro-rated target bonus.
In accordance with the SEC’s interpretations of its rules, this column also sets forth the incremental cost to the Company of certain items that are provided to the NEOs for business purposes but which may not be considered integrally related to their duties. The following table sets forth the incremental cost to the Company of each other perquisite and other personal benefit that exceeded the greater of $25,000 or 10% of the total amount of perquisites and personal benefits for an NEO in fiscal 2023.
Personal Air TravelSecurityRelocationOtherTotal 
      
Robert A. Iger$793,993 $1,236,703 $— $15,244 $2,045,940 
Kevin A. Lansberry— — 14,800 13,136 27,936 
Horacio E. Gutierrez76,589 — — 15,400 91,989 
Kristina K. Schake— — 57,480 14,400 71,880 
Sonia L. Coleman— — — 13,840 13,840 
Robert A. Chapek35,226 73,743 — 17,200 126,169 
Christine M. McCarthy53,536 — — 15,400 68,936 
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The incremental cost to the Company of the items specified above was determined as follows:
•Personal air travel: the actual catering costs, landing and ramp fees, fuel costs and lodging costs incurred by flight crew plus a per hour charge based on the average hourly maintenance costs for the aircraft during the year for flights that were purely personal in nature, and a pro-rata portion of catering costs where personal guests accompanied an NEO on flights that were business in nature. Where a personal flight coincided with the repositioning of an aircraft following a business flight, only the incremental costs of the flight compared to an immediate repositioning of the aircraft are included. Our CEO is required for security reasons to use corporate aircraft for all personal travel.
•Security: the actual costs incurred by the Company for providing security services and equipment.
•Relocation: the actual amount provided to accommodate the cost expended by Mr. Lansberry and Ms. Schake with regard to their relocations.
The “Other” column in the table above reflects the incremental cost to the Company of vehicle benefits including a fixed monthly payment to offset the costs of owning and maintaining an automobile, personal air travel (except for personal air travel that is separately identified in the “personal air travel” column in the table above), reimbursement of up to $1,000 per calendar year for wellness-related purposes such as fitness and nutrition management and reimbursement of expenses for financial consulting.
The Company provides employees with benefits and perquisites based on competitive market conditions. All salaried employees, including the NEOs, receive the following benefits: (i) health care coverage; (ii) life and disability insurance protection; (iii) reimbursement of certain educational expenses; (iv) access to favorably priced group insurance coverage; (v) Company matching of gifts of up to $25,000 per employee (and $50,000 per Senior Executive Vice President and Chairman directly reporting to the CEO) each calendar year to qualified charitable organizations; and (vi) complimentary streaming subscription for the ad-supported Disney Bundle. Additionally, employees at the vice president level and above, including NEOs, receive the following benefits, each of which involved no incremental cost to the Company: (i) complimentary access to the Company’s theme parks and some resort facilities; (ii) discounts on Company merchandise and resort facilities; and (iii) personal use of tickets acquired by the Company for business entertainment when they become available because no business use has been arranged.
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Fiscal 2023 Grants of Plan Based Awards Table
The following table provides information concerning the range of awards available to the NEOs under the Company’s annual performance-based bonus program for fiscal 2023 and information concerning the option grants and restricted stock unit awards made to the NEOs during fiscal 2023. Additional information regarding the amounts reported in each column follows the table.
Estimated Future Payouts Under Non-Equity Incentive Plan AwardsEstimated Future Payouts Under Equity Incentive Plan Awards All Other Stock Awards: Number of Shares of Stock or UnitsAll Other Option Awards: Number of Securities Underlying OptionsExercise or Base Price of Option AwardsGrant Date Closing Price of Shares Underlying Options
Grant Date Fair Value of Stock and Option Awards1
Approval DateGrant DateThresholdTargetMaximumThresholdTargetMaximum
Robert A. Iger11/20/2211/20/22278,699$92.04 $91.80 $10,000,027 
(A)11/20/2211/20/2285,000 169,999 339,998 15,000,057 
(B)11/29/2211/29/225,797 11,593 18,720 1,103,364 
$665,000 $1,900,000 $3,800,000 
Kevin A. Lansberry12/15/2212/15/221,199 91.62 90.49 41,277 
12/15/2212/15/227,412 91.62 90.49 255,169 
6/23/2307/17/231,346 86.90 85.56 41,259 
6/23/2307/17/238,324 86.90 85.56 255,156 
12/15/2212/15/221,051 96,290 
12/15/2212/15/226,499 595,422 
6/23/2307/17/231,108 96,280 
6/23/2307/17/236,852 595,405 
$205,996 $588,561 $1,177,122 
Horacio E. Gutierrez12/15/2212/15/2248,292 91.62 90.49 1,662,525 
12/15/2212/15/2218,147 1,662,583 
(A)12/15/2212/15/2216,485 32,970 65,940 3,325,076 
(B)11/29/2211/29/222,925 5,849 11,698 556,679 
$931,000 $2,660,000 $5,320,000 
Kristina K. Schake12/15/2212/15/2213,426 91.62 90.49 462,210 
12/15/2212/15/225,045 462,210 
(A)12/15/2212/15/224,583 9,166 18,332 924,405 
(B)11/29/2211/29/2220 39 78 3,712 
$409,500 $1,170,000 $2,340,000 
Sonia L. Coleman6/23/2306/23/236,654 88.00 88.10 209,028 
12/15/2212/15/221,638 150,069 
12/15/2212/15/224,912 450,025 
6/23/2306/23/232,375 209,006 
6/23/2307/17/231,727 150,068 
6/23/2307/17/235,179 450,029 
(A)6/23/2306/23/232,447 4,893 9,786 418,054 
$393,750 $1,125,000 $2,250,000 
Robert A. Chapek2
(B)11/29/2211/29/226,958 13,917 24,704 1,324,503 
Christine M. McCarthy12/15/2212/15/2287,143 91.62 90.49 3,000,028 
12/15/2212/15/2232,745 3,000,015 
(A)12/15/2212/15/2229,747 59,494 118,988 6,000,062 
(B)11/29/2211/29/225,011 10,022 18,480 953,844 
$1,086,750 $3,105,000 $6,210,000 
1Stock awards for fiscal 2023 subject to performance conditions were valued based on the probability that performance targets will be achieved. Assuming the highest level of performance conditions are achieved, the grant date stock award values would be $33,073,344, $7,154,615, $1,686,956, $861,192, $2,351,227 and $12,660,170 for Mr. Iger, Mr. Gutierrez, Ms. Schake, Ms. Coleman, Mr. Chapek and Ms. McCarthy, respectively, for the performance-based awards made on November 20, 2022 (for Mr. Iger), November 29, 2022 (for Mr. Iger, Mr. Gutierrez, Ms. Schake, Mr. Chapek and Ms. McCarthy), December 15, 2022 (for Mr. Gutierrez, Ms. Schake and Ms. McCarthy) and June 23, 2023 (for Ms. Coleman).
2Mr. Chapek separated from the Company effective November 20, 2022. While he was not with the Company at the time, awards shown reflect ROIC portions of awards from previous fiscal years granted on November 29, 2022, which Mr. Chapek will continue to vest in, as further discussed in the section “Executive Compensation — Potential Payments and Rights on Termination or Change in Control” below.
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Grant Date. The Compensation Committee made the annual grant of stock options and restricted stock unit awards for fiscal 2023 on December 15, 2022 for those executives (other than Mr. Iger) serving as NEOs at that date. Mr. Iger’s awards for fiscal year 2023 were made on November 20, 2022, the date he recommenced his employment with the Company. As ROIC targets for fiscal 2023 were set on November 29, 2022, for purposes of the above chart for fiscal 2021 and 2022 ROIC portions were considered granted on that date. A portion of the fiscal 2023 PBUs granted on December 15, 2022 are subject to the ROIC performance test, as described below. Based on the Company’s fiscal 2023 ROIC, 103.38% of the reported portion of fiscal 2021 awards will vest and 106.75% of the reported portion of fiscal 2022 awards will vest. The ROIC target for fiscal 2024 was set in November 2023 for the remaining portion of those grants, and the grant date values for the remaining portions of those grants will be reported for the appropriate fiscal year when the applicable targets are established. For most equity recipients other than the executive officers, the fiscal 2023 annual grant was split into two equal installments, with the first half being granted on December 15, 2022 and the second half being granted on July 17, 2023. As both Mr. Lansberry and Ms. Coleman were not serving as executive officers at the time of the first portion of the annual grant, consistent with the treatment for most equity recipients other than the executive officers, they received their annual equity awards in two equal installments. In addition, Ms. Coleman received a promotion grant on June 23, 2023.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards. As described in the section “Executive Compensation — Compensation Discussion and Analysis,” the Compensation Committee sets the target bonus opportunity for the NEOs at the beginning of the fiscal year as a percentage of fiscal year-end salary, and the actual bonuses for the NEOs may, except in special circumstances such as unusual challenges or extraordinary successes, range from 35% to 200% of the target level based on the Compensation Committee’s evaluation of financial and other performance factors for the fiscal year. The bonus amount may be zero if actual performance is below the specified threshold levels or less than the calculated amounts if the Compensation Committee otherwise decides to reduce the bonus. As addressed in the discussion of “Executive Compensation — Compensation Discussion and Analysis,” the employment agreements of each executive officer require that the target used to calculate the bonus opportunity (but not the actual bonus awarded) be at least the amount specified in each agreement. As Mr. Lansberry served as Interim CFO for a portion of fiscal 2023 on an at-will basis, his target is prorated between his previous bonus and Interim CFO bonus amount based on the portion of the year he served in either role. This column shows the range of potential bonus payments for each NEO from the threshold to the maximum based on the target range set at the beginning of the fiscal year. The actual bonus amounts received for fiscal 2023 are set forth in the “Non-Equity Incentive Plan Compensation” column of the “Fiscal 2023 Summary Compensation Table.”
Estimated Future Payouts Under Equity Incentive Plan Awards. This column sets forth the number of restricted stock units awarded to the NEOs during fiscal 2023 that are subject to performance tests as described below. These include units awarded to each of the NEOs then serving as an executive officer as part of the annual grant in December 2022 and, for Mr. Iger, Mr. Gutierrez, Ms. Schake, Mr. Chapek and Ms. McCarthy, when fiscal 2023 ROIC targets were set with respect to fiscal 2021 and 2022 grants in November 2022. In addition, in connection with her promotion, Ms. Coleman received a promotion award including PBUs on June 23, 2023. The vesting dates for all of the outstanding restricted stock unit awards held by the NEOs as of the end of fiscal 2023 are set forth in the “Fiscal 2023 Outstanding Equity Awards at Fiscal Year-End Table” below.
All units in Row (A) are subject to the following vesting conditions: Half of the units subject to the performance test are subject to a TSR test and half of the units are subject to an ROIC test.
•For the half of the units subject to the TSR performance test:
◦None of the units related to this measure vest if the Company’s TSR is below the 25th percentile of the S&P 500 for that measure.
◦If the Company’s TSR is at or above the 25th percentile of the S&P 500 for the related measure, the number of units related to that measure that vest will vary from 50% of the target number related to that measure (at the 25th percentile) to 100% of the target number related to that measure (at the 55th percentile) to 200% of the target number related to that measure (at or above the 75th percentile) (in each case, plus dividend equivalent units).
•For the half of the units subject to the ROIC performance test:
◦None of the units related to this measure vest if the Company’s fiscal year ROIC performance in the applicable performance period is below the threshold of target ROIC.
◦If the Company’s ROIC is above the threshold in the two-year period with respect to the award made November 20, 2022 and the three-year period for awards made on December 15, 2022 and June 23, 2023, the number of units related to that measure for that year that vest will vary from 50% of the target number related to that measure (equals threshold) to 200% of the target number related to that measure (exceeds maximum) (in each case, plus dividend equivalent units).
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All units in Row (B) are subject to a ROIC test.
•None of the units related to this measure will vest if the Company’s fiscal year ROIC performance in each of the applicable performance periods is below the threshold of target ROIC.
•If the Company’s ROIC is above the threshold in any fiscal year, the number of units related to that measure for that year that vest will vary from 50% of the target number related to that measure (equals threshold) to 200% of the target number related to that measure for fiscal 2022 and 150% for fiscal 2021(exceeds maximum) (in each case, plus dividend equivalent units).
See “Executive Compensation — Compensation Discussion and Analysis — Executive Compensation Program Structure — Objectives and Methods — Compensation at Risk” above for a discussion of how ROIC for the Company is calculated.
When dividends are distributed to shareholders, dividend equivalents are credited in an amount equal to the dollar amount of dividends on the number of units held on the dividend record date divided by the fair market value of the Company’s shares of common stock on the dividend distribution date. Dividend equivalents vest only when, if and to the extent that the underlying units vest.
All Other Stock Awards: Number of Shares of Stock or Units. This column sets forth the number of restricted stock units awarded to the NEOs during fiscal 2023. For all executive officers that received restricted stock units, awards were made on December 15, 2022. For most equity recipients other than the executive officers, the fiscal 2023 annual grant was split into two equal installments, with the first half being granted on December 15, 2022 and the second half being granted on July 17, 2023. As both Mr. Lansberry and Ms. Coleman were not serving as executive officers at the time of the first portion of the annual grant, consistent with the treatment for most equity recipients other than the executive officers, they received their annual equity awards in two equal installments. In addition, in connection with her promotion, Ms. Coleman received a promotion award including restricted stock units on June 23, 2023. The vesting dates for these options are set forth in the “Fiscal 2023 Outstanding Equity Awards at Fiscal Year-End Table” below.
All Other Option Awards: Number of Securities Underlying Options. This column sets forth the options to purchase shares of the Company’s common stock granted to the NEOs then serving as an executive officer as part of the annual grant in December 2022. As previously discussed, Mr. Lansberry received his annual grants of options in two equal installments on December 15, 2022 and July 17, 2023.In addition, in connection with her promotion, Ms. Coleman received a promotion award including options on June 23, 2023. The vesting dates for these options are set forth in the “Fiscal 2023 Outstanding Equity Awards at Fiscal Year-End Table” below. These options are scheduled to expire ten years after the date of grant.
Exercise or Base Price of Option Awards; Grant Date Closing Price of Shares Underlying Options. These columns set forth the exercise price for each option grant and the closing price of the Company’s common stock on the date of grant. The exercise price is equal to the average of the high and low trading price on the grant date, which may be higher or lower than the closing price on the grant date.
Grant Date Fair Value of Stock and Option Awards. This column sets forth the grant date fair value of the stock and option awards granted during fiscal 2023 calculated in accordance with applicable accounting requirements. The grant date fair value of all restricted stock unit awards and options is determined as described in the section “Grant Date” above.
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Fiscal 2023 Outstanding Equity Awards at Fiscal Year-End Table
The following table provides information concerning outstanding unexercised options and unvested restricted stock unit awards held by the NEOs as of September 30, 2023. Additional information regarding the amounts reported in each column follows the table.
Option Awards
(A)
Stock Awards
Number of Securities Underlying Unexercised OptionsEquity Incentive Plan Awards
Grant
Date
ExercisableUnexercisableOption Exercise PriceOption Expiration Date
Number of Units That Have Not Vested
(A)
Market Value of Units That Have Not Vested
(B)
Number of Unearned Units That Have Not Vested
(C)(D)
Market Value of Unearned Units That Have Not Vested
(B)
Robert A. Iger12/18/2014 372,412 —$92.2412/18/2024
12/17/2015 271,331 —113.2312/17/2025
12/21/2016 321,694 —105.2112/21/2026
12/19/2017 295,237 —111.5812/19/2027
12/19/2018 291,891 —110.5412/19/2028
3/21/2019 46,803 —109.263/21/2029
12/17/2019 197,762 65,921148.0412/17/2029
12/17/2020 111,264 55,632173.4012/17/203035,7322,896,079
12/14/2021 16,750 33,499150.0712/14/203110,640862,372
11/20/2022 — 278,69992.0411/20/2032169,999 (E)13,778,419
Kevin A. Lansberry12/21/2016 2,555 —105.2112/21/2026
12/19/2017 6,426 —111.5812/19/2027
12/19/2018 12,633 —110.5412/19/2028
12/17/2019 11,553 3,851148.0412/17/2029 1,419 115,010
12/17/2020 2,993 1,497173.4012/17/2030 1,122 90,938
3/8/2021 2,405 1,203198.413/8/2031 980 79,429
6/22/2021 3,182 1,591173.536/22/2031 1,121 90,857
12/14/2021 5,193 5,193 (F)150.0712/14/2031 3,849 (G) 311,961
12/15/2022 1,235 6,177 (H)91.6212/15/2032 5,416 (I) 438,967
12/15/2022 1991,000 (H)91.6212/15/2032 876 (I) 71,000
7/17/2023 — 1,346 (J)86.907/17/20331,108 (K)89,803
7/17/2023— 8,324 (J)86.907/17/2033 6,852 (K)555,355
Horacio E. Gutierrez3/8/202219,211 38,421 (L)132.393/8/2032 12,589 (M)1,020,338 23,394 (N)1,896,043
12/15/2022 — 48,29291.6212/15/2032 18,147 1,470,814 32,970 2,672,219
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Option Awards
(A)
Stock Awards
Number of Securities Underlying Unexercised OptionsEquity Incentive Plan Awards
Grant
Date
ExercisableUnexercisableOption Exercise PriceOption Expiration Date
Number of Units That Have Not Vested
(A)
Market Value of Units That Have Not Vested
(B)
Number of Unearned Units That Have Not Vested
(C)(D)
Market Value of Unearned Units That Have Not Vested
(B)
Kristina K. Schake6/27/2022 8,484 16,970 (O)97.026/27/2032 14,432 (P) 1,169,714 — —
9/28/2022 121 24297.669/28/2032 90 7,295 155 12,563
12/15/2022 — 13,42691.6212/15/2032 5,045 408,897 9,166 742,904
Sonia L. Coleman12/19/2018 1,742 —110.5412/19/2028
12/17/2019 4,951 1,651148.0412/17/2029 608 49,278
12/17/2020 1,437 718173.4012/17/2030 538 43,605
3/8/2021 1,155 577198.413/8/2031 471 38,175
6/22/2021 1,527 764173.536/22/2031 538 43,605
12/14/2021 — ——— 3,999 (G) 324,119
3/8/2022 — ——— 5,288 (Q) 428,592
12/15/2022 — ——— 1,365 (I)110,633
12/15/2022———— 4,094 (I)331,819
6/23/2023 — 6,65488.006/23/2033 2,375 192,494 4,893 396,578
7/17/2023 — ——— 1,727 (K)139,973
7/17/2023———— 5,179 (K)419,758
49

Option Awards
(A)
Stock Awards
Number of Securities Underlying Unexercised OptionsEquity Incentive Plan Awards
Grant
Date
ExercisableUnexercisableOption Exercise PriceOption Expiration Date
Number of Units That Have Not Vested
(A)
Market Value of Units That Have Not Vested
(B)
Number of Unearned Units That Have Not Vested
(C)(D)
Market Value of Unearned Units That Have Not Vested
(B)
Robert A. Chapek12/19/2013 53,233—72.5912/19/2023————
12/18/2014 53,077—92.2412/18/2024————
12/17/2015 39,796—113.2312/17/2025————
12/21/2016 49,621—105.2112/21/2026————
12/19/2017 45,691—111.5812/19/2027————
12/19/2018 75,227—110.5412/19/2028————
12/17/2019 47,285 15,762148.0412/17/2029 2,773 224,752——
2/28/2020 29,223 9,741115.762/28/2030 2,231 180,823——
12/17/2020 44,894 22,447173.4012/17/2030 6,887 558,191 25,032 2,028,803
12/14/2021 26,225 52,450150.0712/14/2031 15,917 1,290,073 30,635 2,482,926
Christine M. McCarthy12/19/2013 30,687—72.5912/19/2023————
12/18/2014 28,839—92.2412/18/2024————
12/17/2015 41,722—113.2312/17/2025————
12/21/2016 50,396—105.2112/21/2026————
12/19/2017 64,252—111.5812/19/2027————
12/19/2018 76,621—110.5412/19/2028————
12/17/2019 77,702 25,901148.0412/17/2029—— 4,771 386,690
12/17/2020 59,859 29,929173.4012/17/2030 6,886 558,110 12,516 1,014,422
12/14/2021 23,603 47,205150.0712/14/2031 14,325 1,161,041 27,571 2,234,630
12/15/2022— 87,14391.6212/15/2032 32,745 2,653,982 59,494 4,821,989
Number of Securities Underlying Unexercised Options: Exercisable and Unexercisable. These columns set forth, for each NEO and for each grant made to the officer, the number of shares of the Company’s common stock that could be acquired upon exercise of outstanding options at the end of fiscal 2023. The vesting schedule for each option with unexercisable shares is shown under “Vesting Schedule” below. The vesting of options held by the NEOs may be accelerated in the circumstances described under the section “Executive Compensation — Compensation Tables — Potential Payments and Rights on Termination or Change in Control” below.
Number; Market Value of Units of Stock That Have Not Vested. These columns report the number and market value, respectively, of shares underlying each grant of restricted stock units to each officer that is not subject to performance vesting conditions nor the test to assure eligibility for deduction pursuant to Section 162(m). The number of shares includes dividend equivalent units that have accrued for dividends payable through September 30, 2023. The market value is equal to the number of shares underlying the units times the closing market price of the Company’s common stock on September 29, 2023, the last trading day of the Company’s fiscal year. The vesting schedule for each grant is shown below, with grants identified by the letter following the number of shares underlying the grant. Vesting of
50

restricted stock units held by NEOs may be accelerated in the circumstances described under the section “Executive Compensation — Compensation Tables — Potential Payments and Rights on Termination or Change in Control” below.
Number; Market Value of Unearned Units That Have Not Vested. These columns set forth the target number and market value, respectively, of shares of the Company’s common stock underlying each restricted stock unit award held by each NEO that is subject to performance-based vesting conditions and/or the test to assure eligibility for deduction pursuant to Section 162(m). The number of shares includes dividend equivalent units that have accrued for dividends payable through September 30, 2023. The market value is equal to the number of shares underlying the units multiplied by the closing market price of the Company’s common stock on September 29, 2023, the last trading day of the Company’s fiscal year. The vesting schedule and performance tests and/or the test to assure eligibility under Section 162(m) are shown in “Vesting Schedule” below.
Vesting Schedule. The options reported above that are not yet exercisable and restricted stock unit awards that have not yet vested are scheduled to become exercisable and vest as set forth below.
(A)Unless otherwise noted, stock options and restricted stock units granted before December 2020 will vest 25% on each of the first four anniversaries of the grant date. Grants made in or after December 2020 will vest one-third on each of the first three anniversaries of the grant date.
(B)Amounts may not sum to total due to rounding.
(C)Unless otherwise noted, PBUs will cliff vest on the third anniversary of grant date, based on 3-year TSR versus S&P 500 and absolute ROIC tests for each of the fiscal years in the 3-year period (targets set each year for awards made in 2020 and 2021; 3-year target set for awards made in December 2022 and June 2023).
(D)While restricted stock units will vest 25% on each of the first four anniversaries of the grant date for grants made before December 2020 and one-third on each of the first three anniversaries of the grant date for grants made in or after December 2020, grants before 2020 for Ms. McCarthy are also subject to a performance test to assure eligibility for deduction under Section 162(m).
(E)PBUs will cliff vest on November 20, 2024, based on 2-year TSR versus S&P 500 and absolute ROIC test for the fiscal years in the 2-year period.
(F)Unexercisable options will vest one-third on December 14, 2023, June 14, 2024 and December 14, 2024.
(G)Restricted stock units will vest one-third on December 14, 2023, June 14, 2024 and December 14, 2024.
(H)Unexercisable options will vest one-fifth on December 15, 2023, June 15, 2024, December 15, 2024, June 15, 2025 and December 15, 2025.
(I)Restricted stock units will vest one-fifth on December 15, 2023, June 15, 2024, December 15, 2024, June 15, 2025 and December 15, 2025.
(J)Unexercisable options will vest one-sixth on January 17, 2024, July 17, 2024, January 17, 2025, July 17, 2025, January 17, 2026 and July 17, 2026.
(K)Restricted stock units will vest one-sixth on January 17, 2024, July 17, 2024, January 17, 2025, July 17, 2025, January 17, 2026 and July 17, 2026.
(L)Unexercisable options will vest one-half on December 14, 2023 and December 14, 2024.
(M)Restricted stock units will vest one-half December 14, 2023 and December 14, 2024.
(N)PBUs will cliff vest on December 14, 2024, based on 3-year TSR versus S&P 500 and absolute ROIC tests for each of the fiscal years in the 3-year period (targets set each year).
(O)Unexercisable options will vest one-fourth on December 27, 2023, June 27, 2024, December 27, 2024 and June 27, 2025.
(P)Restricted stock units will vest one-fourth on December 27, 2023, June 27, 2024, December 27, 2024 and June 27, 2025.
(Q)Restricted stock units will vest in full on March 8, 2024.
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Vesting of Equity
Options and restricted stock units continue to vest beyond retirement (and options remain exercisable) if (1) they were awarded at least one year prior to the date of an employee’s retirement and (2) the employee was age 60 or older and had at least ten years of service on the date such employee retired. In these circumstances:
•Options continue to vest following retirement according to the original vesting schedule. They remain exercisable for up to five years following retirement. Options do not, however, remain exercisable beyond the original expiration date of the option.
•Restricted stock units continue to vest following retirement according to the original vesting schedule, but vesting remains subject to any applicable performance conditions (except, in some cases, the test to ensure that the compensation is deductible pursuant to Section 162(m)).
The extended vesting and exercisability is not available to certain employees outside the United States.
Options and restricted stock units awarded to executive officers with employment agreements also continue to vest (and options remain exercisable) beyond termination of employment if the executive’s employment is terminated by the Company without cause or by the executive with good reason. In this case, options and restricted stock units continue to vest (and options remain exercisable) as though the executive remained employed through the end of the stated term of the employment agreement. If the executive would be age 60 or older and have at least ten years of service as of the end of the stated term of the employment agreement, the options and restricted stock units awarded at least one year prior to the end of the stated term of the agreement would continue to vest (and options remain exercisable) beyond the stated term of the employment agreement.
Fiscal 2023 Option Exercises and Stock Vested Table
The following table provides information concerning the exercise of options and vesting of restricted stock unit awards held by the NEOs during fiscal 2023.
Option AwardsStock Awards
Number of Shares Acquired on ExerciseValue Realized on ExerciseNumber of Shares Acquired on VestingValue Realized on Vesting
     
Robert A. Iger— $— 32,261$2,898,206 
Kevin A. Lansberry— — 10,129927,022 
Horacio E. Gutierrez— — 6,295592,013 
Kristina K. Schake— — 7,261638,704 
Sonia L. Coleman— — 6,599608,053 
Robert A. Chapek60,860 2,888,923 44,6754,058,593 
Christine M. McCarthy42,533 2,006,282 33,1402,995,761 
The value realized on the exercise of options is equal to the amount per share at which the NEO sold shares acquired on exercise (all of which occurred on the date of exercise) minus the exercise price of the option times the number of shares acquired on exercise of the options. The value realized on the vesting of stock awards is equal to the closing market price of the Company’s common stock on the date of vesting times the number of shares acquired upon vesting. The number of shares and value realized on vesting includes shares that were withheld at the time of vesting to satisfy tax withholding requirements.
52

Equity Compensation Plans
The following table summarizes information, as of September 30, 2023, relating to equity compensation plans of the Company pursuant to which grants of options, restricted stock, restricted stock units or other rights to acquire shares of the Company’s common stock may be granted from time to time.
Plan Category
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(A)
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
(B)
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(A))
(C)
Equity compensation plans approved by security holders1
42,410,1882;3
$120.204
92,644,2263;5
Equity compensation plans not approved by security holders———
Total
42,410,1882;3
$120.204
92,644,2263;5
1These plans are the Company’s Amended and Restated 2011 Stock Incentive Plan, The Walt Disney Company/Pixar 2004 Equity Incentive Plan (the “Disney/Pixar Plan”, which was assumed by the Company in connection with the acquisition of Pixar) and The Walt Disney Company/TFCF 2013 Equity Incentive Plan (the “Disney/TFCF Plan”, which was assumed by the Company in connection with the acquisition of TFCF). The Disney/TFCF Plan expired on October 18, 2023 and these shares are no longer able to be granted.
2Includes an aggregate of 24,191,694 time-based restricted stock units and PBUs. Includes an aggregate of 11,640 restricted stock units granted under the Disney/Pixar Plan, which was approved by the shareholders of Pixar prior to the Company’s acquisition.
3Assumes shares issued upon vesting of PBUs vest at 100% of target number of units. For awards granted in fiscal 2021, the actual number of shares issued on vesting of PBUs could be zero to 150% of the target number of PBUs. For awards granted in fiscal 2022 and 2023, the actual number of shares issued on vesting of PBUs could be zero to 200% of the target number of PBUs.
4Reflects the weighted average exercise price of outstanding options; excludes restricted stock units and PBUs.
5Includes 382,356 securities available for future issuance under the Disney/Pixar Plan, which was approved by the shareholders of Pixar prior to the Company’s acquisition. Includes 27,720,535 securities available for future issuance under the Disney/TFCF Plan, which was approved by the shareholders of TFCF prior to the Company’s acquisition and has since expired on October 18, 2023. No shares remain available for future issuance under the Disney/TFCF Plan. Assumes all awards are made in the form of options. Each award of one restricted stock unit under the 2011 Stock Incentive Plan reduces the number of shares available under the plan by two, so the number of securities available for issuance will be smaller to the extent awards are made as restricted stock units.
Pension Benefits
The Company maintains a tax-qualified, noncontributory retirement plan, called the Disney Salaried Pension Plan D, for salaried employees who commenced employment before January 1, 2012. Benefits are based on a percentage of total average monthly compensation multiplied by years of credited service. For service years after 2012, average monthly compensation includes overtime, commission and regular bonus and is calculated based on the highest five consecutive years of compensation during the ten-year period prior to termination of employment or retirement, whichever is earlier. For service years prior to 2012, average monthly compensation considers only base salary, benefits were based on a somewhat higher percentage of average monthly compensation and benefits included a flat dollar amount based solely on years and hours of service. Retirement benefits are non-forfeitable after three years of vesting service (five years of vesting service prior to 2012) or at age 65 after one year of service. Actuarially reduced benefits are paid to participants whose benefits are non-forfeitable and who retire before age 65 but on or after age 55. The early retirement reduction is 50% at age 55, decreasing to 0% at age 65.
In calendar year 2023, the maximum compensation limit under a tax-qualified plan was $330,000 and the maximum annual benefit that may be accrued under a tax-qualified defined benefit plan was $265,000. The Company maintains a supplemental non-qualified, unfunded plan, the Amended and Restated Key Plan, which provides to key salaried employees the retirement benefits that cannot be provided under our tax-qualified plans because of these limitations and certain other limitations applicable to qualified plans. Under this plan, benefits are calculated in the same manner as under the Disney Salaried Pension Plan D (with the amounts payable offset by the benefits that are provided under the qualified plans), including the differences in benefit determination for years before and after January 1, 2012, described above, except as follows:
•starting on January 1, 2017, average annual compensation used for calculating benefits under the plans for any participant was capped at the greater of $1,000,000 or the participant’s average annual compensation determined as of January 1, 2017; and
•benefits for persons who were NEOs on January 1, 2012 are limited to the amount the executive officer would have received had the plan in effect prior to its January 1, 2012 amendment continued without change.
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Company employees who either transferred to the Company from ABC, Inc. after the Company’s acquisition of ABC or worked for a legacy ABC company (e.g., ESPN) are also eligible to receive benefits under the Disney Salaried Pension Plan A (formerly known as the ABC, Inc. Retirement Plan) and a Benefit Equalization Plan, which, like the Amended and Restated Key Plan, provides eligible participants retirement benefits in excess of the compensation limits and maximum benefit accruals that apply to tax-qualified plans. Mr. Iger received credited years of service under those plans for the years prior to the Company’s acquisition of ABC, Inc. A term of the 1995 purchase agreement between ABC, Inc. and the Company provides that employees transferring employment to coverage under a Disney pension plan will receive an additional benefit under Disney plans equal to (a) the amount the employee would receive under the Disney pension plans if all of the employee’s ABC service were counted under the Disney pension less (b) the combined benefits the employee receives under the ABC plan (for service prior to the transfer) and the Disney plan (for service after the transfer). Mr. Iger transferred from ABC and, as such, receives a pension benefit under the Disney plans to bring his total benefit up to the amount he would have received if all his years of service had been credited under the Disney plans. The effect of these benefits is reflected in the present value of benefits under the Disney plans in the table below.
The Company also maintains the Disney Associated Companies’ Retirement Plan for certain hourly, union employees. Prior to 2005, hourly non-union employees could participate if they satisfied the participant requirements. Benefits under the Disney Associated Companies’ Retirement Plan are determined by a participant’s Credited Years of Service and Credited Hours of Service according to the schedule which applies to their employee group. Mr. Lansberry had 2 years of service, with 2,389 hours, under the Disney Associated Companies’ Retirement Plan from 1986 to 1988 before becoming eligible for the Disney Salaried Plan D.
As of the end of fiscal 2023, Mr. Lansberry was eligible for early retirement; Ms. McCarthy was eligible for retirement and Mr. Chapek’s separation constituted early retirement. Mr. Iger initially retired from the Company on December 31, 2021, at which point his accrued benefits were finalized.
54

Fiscal 2023 Pension Benefits Table
The following table sets forth the present value of the accumulated pension benefits that each NEO is eligible to receive under each of the plans described above.
NamePlan NameNumber of Years of Credited Service at Fiscal Year-End
Present Value of Accumulated Benefit at Fiscal Year-End1
Payments During Last Fiscal Year1
      
Robert A. IgerDisney Salaried Pension Plan D22$1,428,760 $108,751 
Disney Amended and Restated Key Plan2211,539,258 856,335 
Disney Salaried Pension Plan A25697,649 53,148 
Benefit Equalization Plan of ABC, Inc.255,507,939 408,110 
Total19,173,606 1,426,345 
Kevin A. LansberryDisney Salaried Pension Plan D362,363,350 — 
Disney Amended and Restated Key Plan361,587,344 — 
Disney Associated Companies’ Retirement Plan23,202 — 
Total3,953,896 — 
Sonia L. ColemanDisney Salaried Pension Plan D16459,461 — 
Disney Amended and Restated Key Plan16542,061 
Total1,001,523 — 
Robert A. ChapekDisney Salaried Pension Plan D30 2,816,618 175,195 
Disney Amended and Restated Key Plan3011,359,642 646,250 
Total14,176,260 821,445 
Christine M. McCarthyDisney Salaried Pension Plan D24 1,539,638 — 
Disney Amended and Restated Key Plan243,725,250 — 
Total5,264,888 — 
1Amounts may not sum to total due to rounding.
These present values assume that each NEO retires at age 65 (or their age on September 30, 2023, if older) for purposes of the Disney Salaried Pension Plan D and the Amended and Restated Key Plan, and age 62 (or their age on September 30, 2023, if older) for purposes of the Disney Salaried Pension Plan A and the Benefit Equalization Plan of ABC, Inc. Age 65 is the normal retirement age under each of the plans and is also the age at which unreduced benefits are payable, except the earliest age at which unreduced benefits are payable under the ABC plans is age 62 for service years prior to 2012. The values also assume a straight life-annuity payment for an unmarried participant. Participants may elect other actuarially reduced forms of payment, such as joint and survivor benefits and payment of benefits for a period certain irrespective of the death of the participant. The present values were calculated using the 5.94% discount rate assumption set forth in footnote 10 to the Company’s Audited Financial Statements for fiscal 2023 and using actuarial factors including Pri-2012 annuitant mortality table, projected generationally with a modified version of the MP-2021 scale for males and females. The present values reported in the table are not available as lump sum payments under the plans.
55

Fiscal 2023 Non-Qualified Deferred Compensation Table
Under the Company’s Non-Qualified Deferred Compensation Plan, U.S.-based executives at the level of Vice President or above may defer a portion of their compensation and applicable taxes with an opportunity to earn a tax-deferred return on the deferred amounts. The plan gives eligible executives the opportunity to defer up to 50% of their base salary and up to 100% of their annual performance-based bonus award until retirement or termination of employment or, at the executive’s election, until an earlier date at least five years following the date the compensation is earned. The Company also has the option to make a contribution into an executive’s deferred compensation account on terms and subject to any conditions (such as vesting conditions) the Company chooses. Amounts in an executive’s deferred account earn a return based on the executive’s election among a series of mutual funds designated by the Company, which are generally the same funds available under the Company’s qualified deferred compensation plans. Returns on the funds available for the deferred account ranged from 0.75% to 26.49% for the year ended September 30, 2023.
The deferred amounts and any deemed earnings on the amounts are not actual investments and are obligations of the Company. Ms. McCarthy participated in this plan in fiscal 2023 and her contributions and aggregate earnings during the fiscal year and aggregate balance at the end of the fiscal year are reflected in the table below. Ms. McCarthy’s contributions represent deferred salary in the amount of $1,025,577 and bonus in the amount of $2,868,993. Mr. Lansberry and Mr. Chapek had positive returns on the year, but did not make a contribution in fiscal 2023.
The Key Employees Retirement Savings Plan is a defined contribution plan funded by the Company. The Plan is a non-qualified plan under IRS regulations that is intended to restore or replace certain benefits that cannot be provided under the qualified Retirement Savings Plan due to IRS compensation limits. Eligible pay under the Key Employees Retirement Savings Plan includes base salary, regular bonuses, overtime pay and commissions up to a $1,000,000 annual limit. The Company contributes 3%, 6% or 9% of eligible pay that exceeds the annual IRS compensation limit based on age and years of service as of the end of the plan year. Mr. Iger began participating in the plan when he was re-hired by the Company on November 20, 2022 and based on his age and service he is eligible for a 9% contribution.
Executive Contributions in Last Fiscal YearCompany Contributions in Last Fiscal YearAggregate Earnings in Last Fiscal YearAggregate Withdrawals in Last Fiscal YearAggregate Balance at Last Fiscal Year-End
    
Robert A. Iger$— $62,550 ($749.1)$— $61,801 
Kevin A. Lansberry— — 366,022 — $2,605,595 
Robert A. Chapek— — 944,536.33 150,434$7,683,049 
Christine M. McCarthy3,894,570 — 7,446,037 — $58,005,491 
Because the earnings accrued under these programs were not “above market” or preferential, these amounts are not reported in the “Fiscal 2023 Summary Compensation Table.” A portion of the aggregate balances at last fiscal year-end were however included in the Summary Compensation Table since fiscal 2021, as follows:
Amount Included in Summary Compensation Table
Fiscal YearSalaryNon-Equity Incentive PlanAll Other CompensationTotal
     
Robert A. Iger2023$— $— $62,550 $62,550 
2022— — — — 
2021— — — — 
Kevin A. Lansberry2023— — — — 
2022— — — — 
2021— — — — 
Robert A. Chapek2023— — — — 
2022— — — — 
2021— — — — 
Christine M. McCarthy20231,025,577 — — 1,025,577 
2022989,231 5,565,846 — 6,555,077 
2021951,242 7,336,137 — 8,287,379 
56

Potential Payments and Rights on Termination or Change in Control
Our NEOs may receive compensation in connection with termination of their employment. This compensation is payable pursuant to (a) the terms of compensation plans applicable by their terms to all participating employees and (b) the terms of employment agreements with each of our NEOs (with the exception of Mr. Lansberry, who is employed on an at-will basis). During fiscal 2023, the employment agreements with our applicable NEOs had the following end dates: December 31, 2026 for Mr. Iger, December 31, 2024 for Mr. Gutierrez, June 29, 2026 for Ms. Schake, April 7, 2026 for Ms. Coleman, June 30, 2025 for Mr. Chapek and June 30, 2024 for Ms. McCarthy. As Mr. Chapek exited the Company as Chief Executive Officer before fiscal year end, he was not entitled to termination payments as of September 30, 2023. In fiscal 2023, the Company entered into a new employment agreement with Mr. Iger as Chief Executive Officer with an end date of December 31, 2024. In July 2023, the Board agreed to extend Mr. Iger’s employment agreement to December 31, 2026, noting that the extension of Mr. Iger’s employment agreement provides continuity of leadership during the Company’s ongoing transformation and allows more time to execute a transition plan for CEO succession, which remains a priority for the Board. In fiscal 2024, the Company entered into an amendment to Mr. Gutierrez’s employment agreement, pursuant to which the term of the agreement was extended to December 31, 2026.
On November 20, 2022 (after the commencement of fiscal 2023), the Board decided to exercise its right to terminate Mr. Chapek’s employment without cause. In connection with this termination, in the event that Mr. Chapek successfully completed all of the terms of his post-employment consulting agreement and did not violate the terms of the employment agreement that survive his termination or the general release, Mr. Chapek’s severance would strictly conform to the terms of his employment agreement such that he would be entitled to the following cash termination payments:
•$6,527,397 in remaining base salary through the scheduled expiration date of his employment agreement, as amended; and
•$1,027,397 equivalent to a pro-rated target bonus for fiscal 2023.
The treatment of the equity awards held by Mr. Chapek at his termination date under his employment agreement is described below in the section titled “Executive Compensation — Compensation Tables — Potential Payments and Rights on Termination of Change in Control —Termination Pursuant to Company Termination Right Other Than For Cause or By Executive For Good Reason.”
In June 2023, in connection with her leave of absence, which commenced on July 1, 2023, Ms. McCarthy and the Company entered into an amendment to Ms. McCarthy’s employment agreement, pursuant to which Ms. McCarthy ceased to serve as Senior Executive Vice President and Chief Financial Officer and has the title “Strategic Advisor” during her leave of absence. Ms. McCarthy’s duties as Strategic Advisor are to assist the Company with the transition of duties to the Company’s Chief Financial Officer and the last day of Ms. McCarthy’s leave and employment with the Company will be June 30, 2024. The terms of Ms. McCarthy’s compensation are unchanged, and she did not receive an equity grant in fiscal 2024.
The termination provisions included in our executive officers’ employment agreements serve a variety of purposes, including: providing the benefits of equity incentive plans to the executive and the executive’s family in case of death or disability; defining when the executive may be terminated with cause and receive no further compensation; and clearly defining rights in the event of a termination in other circumstances. The availability, nature and amount of compensation on termination differ depending on whether employment terminates because of:
•death or disability;
•the Company’s termination of the executive pursuant to the Company’s termination right or the executive’s decision to terminate because of action the Company takes or fails to take;
•the Company’s termination of the executive for cause; or
•expiration of an employment agreement, retirement or other voluntary termination.
The compensation that each of our NEOs may receive under each of these termination circumstances is described below.
In December 2023, the Compensation Committee adopted a cash severance policy pursuant to which the Company will not enter into any new agreement that provides, or amend any existing agreement to provide, any Section 16 officer of the Company the right to any cash severance payment that would exceed 2.99 times the sum of base salary plus target bonus for such officer unless such cash payment is approved by the Company’s shareholders.
It is important to note that the amounts of compensation set forth in the tables below are based on the specific assumptions noted and do not predict the actual compensation that our NEOs would receive. Actual compensation received would be a function of a number of factors that are unknowable at this time, including: the date of the executive’s termination of employment; the executive’s base salary at the time of termination; the executive’s age and service with the Company at the time of termination; and, because many elements of the compensation are performance-based pursuant to the Company’s compensation philosophy described in “Executive Compensation — Compensation Discussion and Analysis” above, the future performance of the Company.
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Moreover, the option and restricted stock unit acceleration amounts in case of a termination without cause or by the executive for good reason assume that these awards immediately accelerate, which is not the case in the absence of a change in control. Rather, options and units continue to vest over time and in most cases are subject to the same performance measures that apply as if there had been no termination. (There is a deemed performance measure for vesting of restricted stock unit awards when termination is due to death or disability and the test to assure deductibility under Section 162(m) does not apply if it is not necessary to preserve deductibility.)
In each of the circumstances described below, our NEOs are eligible to receive earned, unpaid salary through the date of termination and benefits that are unconditionally accrued as of the date of termination pursuant to policies applicable to all employees. This includes the deferred compensation and earnings on these deferred amounts as described under the “Fiscal 2023 Non-Qualified Deferred Compensation Table.” This earned compensation is not described or quantified below because these amounts represent earned, vested benefits that are not contingent on the termination of employment, but we do describe and quantify benefits that continue beyond the date of termination that are in addition to those provided for in the applicable benefit plans. The executive’s accrued benefits include the pension benefits described under “Executive Compensation — Compensation Tables — Pension Benefits,” which become payable to all participants who have reached retirement age. Because they have reached early retirement or retirement age under the plans, Mr. Lansberry and Ms. McCarthy would have been eligible to receive these benefits if their employment had terminated at the end of fiscal 2023, and Mr. Iger is already receiving these benefits. Because the pension benefits do not differ from those described under “Executive Compensation — Compensation Tables — Pension Benefits” except in ways that are equally applicable to all salaried employees, the nature and amount of their pension benefits are not described or quantified below.
DEATH AND DISABILITY
The employment agreement of each NEO provides for payment of any unpaid bonus for any fiscal year that had been completed at the time of the executive’s death or termination of employment due to disability. The amount of the bonus will be determined by the Compensation Committee using the same criteria used for determining a bonus as if the executive remained employed. As Mr. Lansberry served as Interim CFO on an at-will basis, he is not due a cash payment at the time of death or termination of employment due to disability.
In addition to the compensation and rights in employment agreements, the 2011 Stock Incentive Plan and award agreements thereunder provide that all options awarded to a participant (including the NEOs) become fully exercisable upon the death or disability of the participant. Following the death or disability of the participant, options terminate on the earlier of (a) the scheduled expiration date and (b) in the case of death, 18 months and in the case of disability, 12 months. With respect to performance-based restricted stock units, if the performance measurement has not been made at the time of death or disability, all restricted stock units awarded to the participant under the 2011 Stock Incentive Plan will, to the extent the units had not previously been forfeited, fully vest (and deemed to have been satisfied at the 50th percentile of comparative performance) and become payable upon the death or disability of the participant. If a performance measurement has been made at the time of death or disability with respect to restricted stock units, the restricted stock units will vest and accelerate based on the performance measurement. Time-based restricted stock units become fully vested or payable upon death or disability to the extent not previously forfeited.
The following table sets forth the value of the estimated payments and benefits each of our NEOs (other than Mr. Chapek who exited the Company in November 2022) would have received under our compensation plans and their employment agreements if their employment had terminated at the close of business on the last day of fiscal 2023 as a result of death or disability. The value of option acceleration is equal to the difference between the $81.05 closing market price of shares of the Company’s common stock on September 29, 2023 (the last trading day in fiscal 2023) and the weighted average exercise price of options with an exercise price less than the market price times the number of shares subject to such options that would accelerate as a result of termination. The value of restricted stock unit acceleration is equal to the $81.05 closing market price of shares of the Company’s common stock on September 29, 2023 multiplied by the number of units that would accelerate as a result of termination, which, for PBUs, is equal to the target number of units.
Cash
Payment1
Option
Acceleration
Restricted Stock
Unit Acceleration
    
Robert A. Iger$2,140,000 $— $17,536,870 
Kevin A. Lansberry— — 1,843,320 
Horacio E. Gutierrez2
3,000,000 — 7,059,414 
Sonia L. Coleman1,250,000 — 2,518,629 
Kristina K. Schake1,250,000 — 2,341,372 
Christine M. McCarthy3,000,000 — 12,830,863 
1This amount is equal to the bonus awarded to the NEOs with respect to fiscal 2023 and set forth in the “Non-Equity Incentive Plan Compensation” column of the “Fiscal 2023 Summary Compensation Table.”
2Effective December 21, 2023, Mr. Gutierrez entered into an amended employment agreement with an end date of December 31, 2026. The above values reflect values calculated using a December 31, 2024 contract end date, which was the date in effect at the end of the fiscal year.
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TERMINATION PURSUANT TO COMPANY TERMINATION RIGHT OTHER THAN FOR CAUSE OR BY EXECUTIVE FOR GOOD REASON
The employment agreement with each NEO provides that the executive officer will receive a bonus for any fiscal year that had been completed at the time of termination of employment if the executive officer’s employment is terminated by the Company pursuant to the Company’s termination right other than for cause (as described below) or by the NEO with good reason (as described below). The amount of the bonus will be determined by the Compensation Committee using the same criteria used for determining a bonus if the executive remained employed.
In addition, each NEO’s employment agreement provides that the NEO will receive the following compensation and rights conditioned on the NEO executing a general release of claims and, except for Mr. Iger (who has a separate consulting arrangement), agreeing to provide the Company with consulting services (the “Consulting Agreement”) for a period of six months after the NEO’s termination (or, if shorter, until the employment agreement expiration date):
•A lump sum payment equal to the base salary the NEO would have earned had the NEO remained employed during the term of the NEO’s Consulting Agreement (or, in the case of Mr. Iger, for up to six months), paid six months and one day after termination of employment.
•If the employment agreement expiration date is later than the end of the term of the NEO’s Consulting Agreement (or, in the case of Mr. Iger, six months after his employment termination date), a further lump sum payment equal to the base salary the NEO would have earned had the NEO remained employed after such period and until the termination of the NEO’s Consulting Agreement (subject to compliance with the terms of the Consulting Agreement).
•A bonus for the year in which the NEO is terminated equal to a pro-rata portion of a target bonus amount determined in accordance with the employment agreement.
•All options that had vested as of the termination date or were scheduled to vest no later than three months after the employment agreement expiration date will remain or become exercisable as though the NEO were employed until that date. The options will remain exercisable until the earlier of (a) the scheduled expiration date of the options and (b) three months after the employment agreement expiration date. In addition, as is true for all employees, options awarded at least one year before termination will continue to vest and will remain exercisable until the earlier of the expiration date of the option and five years after the termination date if the officer would have attained age 60 and have completed at least ten years of service as of that date. Pursuant to employment agreements with each of the NEOs, the termination date for these purposes will be deemed to be the employment agreement expiration date. For any employee that is eligible for immediate retirement benefits, options awarded within, but less than, one year of termination will vest to the extent they are scheduled to vest within three months of termination and will remain exercisable for 18 months following termination.
•All restricted stock units that were scheduled to vest prior to the employment agreement expiration date will vest as though the NEO were employed until that date to the extent applicable performance tests are met (but any test to assure deductibility of compensation under Section 162(m) will be waived for any units scheduled to vest after the fiscal year in which the termination of employment occurs unless application of the test is necessary to preserve deductibility). As is true for all employees, restricted stock units awarded at least one year before termination will continue to vest through the end of the vesting schedule to the extent applicable performance criteria are met if the officer would be over 60 years of age and have at least ten years of service as of the termination date. Pursuant to employment agreements with each of the NEOs, the termination date for these purposes will be deemed to be the employment agreement expiration date. Based on these provisions, all of the equity awards held by Mr. Chapek at the date of his termination, including the grants made on December 14, 2021, have continued to vest in accordance with the applicable vesting schedules.
The employment agreements provide that the Company has the right to terminate the NEO’s employment subject to payment of the foregoing compensation in its sole, absolute and unfettered discretion for any reason or no reason whatsoever. A termination for cause does not constitute an exercise of this right and would be subject to the compensation provisions described below under the section “Termination for Cause.”
The employment agreements provide that an NEO can terminate the NEO’s employment for “good reason” following notice to the Company within three months of the NEO having actual notice of the occurrence of any of the following events (except that the Company will have 30 days after receipt of the notice to cure the conduct specified in the notice):
(i)a reduction in the NEO’s base salary, annual target bonus opportunity or (where applicable) annual target long-term incentive award opportunity;
(ii)the removal from the NEO’s position;
(iii)a material reduction in the NEO’s duties and responsibilities;
(iv)the assignment to the NEO of duties that are materially inconsistent with the NEO’s position or duties or that materially impair the NEO’s ability to function in the NEO’s office;
(v)relocation of the NEO’s principal office to a location that is more than 50 miles outside of the greater Los Angeles area; or
(vi)a material breach of any material provision of the NEO’s employment agreement by the Company.
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An NEO (or any employee holding equity awards) can also terminate for “good reason” after a change in control (as defined in the 2011 Stock Incentive Plan) if, within 12 months following the change in control, a “triggering event” occurs and in that case the 2011 Stock Incentive Plan provides that any outstanding options, restricted stock units, PBUs or other plan awards will generally become fully vested and, in certain cases, paid to the plan participant. A “triggering event” is defined to include: (a) a termination of employment by the Company other than for death, disability or “cause;” or (b) a termination of employment by the participant following a reduction in position, pay or other “constructive termination.” Under the 2011 Stock Incentive Plan, “cause” has the same meaning as in the NEO’s employment agreement, as defined below under “— Termination for Cause.” Any such payments that become subject to the excess parachute tax rules may be reduced in certain circumstances.
Each NEO’s employment agreement specifies that any compensation resulting from subsequent employment will not be offset against amounts described above.
As Mr. Lansberry was serving as Interim CFO on an at-will basis, his cash severance payment would be dictated by the Company’s severance policy. Given both Mr. Lansberry's level and over 37 years with the Company, he would be eligible to receive a lump sum payment equal to 52 weeks of base salary. As Mr. Lansberry is over the age of 60 and has been with the Company for over 10 years, any award he has held for over one year at the time of separation would be eligible for continued vesting for restricted stock units and vesting and exercisability of options.
The following table provides a quantification of benefits (as calculated in the following paragraph) each of the NEOs would have received if their employment had been terminated at the end of fiscal 2023 (under their employment agreements as in effect at that time and, for Mr. Lansberry, under the Company's severance plan) by the Company pursuant to its termination right or by the executive with good reason.
The “option valuation” amount is (a) the difference between the $81.05 closing market price of shares of the Company’s common stock on September 29, 2023 and the weighted average exercise price of options with an exercise price less than the market price times (b) the number of options with in-the-money exercise prices that would become exercisable despite the termination. The “restricted stock unit valuation” amount is the $81.05 closing market price on September 29, 2023, times the target number of units that could vest. However, as described above, options do not become immediately exercisable and restricted stock units do not immediately vest (and would eventually vest only to the extent applicable performance conditions are met) absent a change in control. The actual value realized from the exercise of the options and the vesting of restricted stock units may therefore be more or less than the amount shown below depending on changes in the market price of the Company’s common stock and the satisfaction of applicable performance tests.
Cash Payment1
Option ValuationRestricted Stock Unit Valuation
Robert A. Iger
No change in control$5,405,385 $— $17,536,870 
Change in control5,405,385 — 17,536,870 
Kevin A. Lansberry
No change in control694,485 — 688,196 
Change in control694,485 — 1,843,320 
Horacio E. Gutierrez2
No change in control4,672,731 — 3,896,925 
Change in control4,672,731 — 7,059,414 
Kristina K. Schake
No change in control3,398,000 — 2,341,372 
Change in control3,398,000 — 2,341,372 
Sonia L. Coleman
No change in control3,145,192 — 1,964,571 
Change in control3,145,192 — 2,518,629 
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Cash Payment1
Option ValuationRestricted Stock Unit Valuation
Christine M. McCarthy
No change in control4,552,500 — 12,830,863 
Change in control4,552,500 — 12,830,863 
1This amount is equal to the bonus awarded to the NEOs with respect to fiscal 2023 and set forth in the “Non-Equity Incentive Plan Compensation” column of the “Fiscal 2023 Summary Compensation Table,” plus the lump sum payments based on salary through the end of the employment term as described above.
2Effective December 21, 2023, Mr. Gutierrez entered into an amended employment agreement with an end date of December 31, 2026. The above values reflect values calculated using a December 31, 2024 contract end date, as that was the date in effect at the end of the fiscal year.
TERMINATION FOR CAUSE
Each NEO’s employment agreement provides that, if the NEO’s employment is terminated by the Company for cause, the NEO will only be eligible to receive the compensation earned and benefits vested through the date of such termination of employment, including any rights the NEO may have under the NEO’s indemnification agreement with the Company or the equity plans of the Company.
“Termination for Cause” is defined in each NEO’s employment agreement as termination based on a felony conviction, unauthorized disclosure of confidential information, failure to substantially perform such NEO’s duties, or any other significant policy violation that is significantly injurious to the Company unless, if the Company determines that the conduct or cause is curable, such conduct or cause is timely cured by the NEO.
EXPIRATION OF EMPLOYMENT TERM; RETIREMENT
Each of the NEOs is eligible to receive earned, unpaid salary and unconditionally vested accrued benefits (including continued vesting of restricted stock units and vesting and exercisability of options awarded more than one year prior to retirement if they are over 60 years of age with at least ten years of service) if the NEO’s employment terminates at the expiration of the NEO’s employment agreement or the NEO otherwise retires, but except as described below, they are not contractually entitled to any additional compensation in this circumstance.
Under the terms of Mr. Iger’s employment agreement as in effect at December 31, 2021, to enable the Company to have access to Mr. Iger’s unique skills, knowledge and experience with regard to the media and entertainment business and his institutional knowledge of the Company and its strategic evolution, upon his retirement, Mr. Iger was to serve as a consultant to the Company for a period of five years. In this capacity, Mr. Iger would provide assistance, up to certain specified monthly and annual maximum time commitments, on such matters as his successor as Chief Executive Officer may request from time to time. In consideration of his consulting services, Mr. Iger is to receive a quarterly fee of $500,000 for each of the quarters of this five-year period. For the five years following termination of employment, the Company would also provide Mr. Iger with the same security services (other than the personal use of a Company-provided or Company-leased aircraft) as it has made available to him as Chief Executive Officer. Under his employment agreement entered into on November 20, 2022, upon the re-commencement of his employment, the parties’ obligations in respect of these post-employment commitments are suspended and will resume to be fulfilled for the remaining term when Mr. Iger again terminates his employment with the Company. Under the amendment to his employment agreement entered into on July 12, 2023, the post-retirement security benefits will not be reduced for the approximately 11-month period such services were provided following Mr. Iger’s prior retirement on December 31, 2021.
Other NEO employment agreements each provide that the Chief Executive Officer may recommend to the Compensation Committee an annual cash bonus for the fiscal year in which their respective employment agreements end based on the executive’s contributions during that fiscal year.
As in the case of a termination under the Company’s termination right other than for cause or the executive’s right to terminate for good reason, vested options and restricted stock units will remain exercisable for 18 months for executives eligible to receive retirement benefits, and options and restricted stock units outstanding for at least one year will continue to vest, and options will remain exercisable, for up to three or five years (depending on the original grant date) if the NEO was age 60 or greater and had at least ten years of service at the date of retirement. In addition, under the terms of his employment agreement as in effect at December 31, 2021, the equity grants made to Mr. Iger in fiscal 2022 became eligible to continue to vest (and options remain exercisable) upon his retirement at December 31, 2021.
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Pay Ratio
In accordance with SEC rules, we are providing the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of the Company’s median employee. The ratio is a reasonable estimate calculated in a manner consistent with SEC rules and the methodology described below.
Per SEC rules, the Company is permitted to use the same median employee as was used in fiscal 2022, and the Company determined that no change was needed to the median employee since there has been no change in the Company’s employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure. Our methodology to confirm the median employee is consistent with last year. We reviewed the annual base salary of the global workforce as of the last business day of the fiscal year, September 29, 2023. Due to population size, we identified a band of employees with a base salary that approximates the median base salary for the Company. The median base salary reflects a workforce with large populations of seasonal, part-time and international employees working in multiple, distinct lines of business. We calculated the median employee’s total annual compensation for fiscal 2023 (which consisted of an increase to base salary, overtime pay and the Company’s contribution to health insurance premiums), and the median employee’s compensation did not contain distortive compensation features (e.g., abnormal amounts of overtime, special premium pay or commissions/tips, etc.).
The median Disney employee works in a full-time hourly role in parks and has been with the Company for over twelve years. For fiscal 2023, the median employee’s total annual compensation was $54,010. Mr. Iger was Chief Executive Officer on September 29, 2023. Mr. Iger’s total annual compensation, including the Company’s contribution to health insurance premiums (which are not included in the Fiscal 2023 Summary Compensation Table in this report), was $32,123,717. Since Mr. Iger became CEO beginning November 20, 2022, we have annualized his salary, other compensation and the Company’s contribution to health insurance premiums and included reported values for equity grants and change in pension value, as they are reflective of annual compensation. The ratio of these amounts was 595:1.
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Pay Versus Performance
This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Exchange Act and does not necessarily reflect how the Compensation Committee evaluates compensation decisions in light of Company or individual performance. The Compensation Committee did not consider the pay versus performance disclosure below in making its compensation decisions for any of the fiscal years shown. For discussion of how the Compensation Committee seeks to align pay with performance when making     compensation decisions, please review the section above titled “Executive Compensation —Compensation Discussion and Analysis.”
Pay Versus Performance Table
The following table sets forth compensation information of our CEOs (Mr. Iger and Mr. Chapek) and our non-CEO NEOs and Company performance for the fiscal years listed below, in accordance with Item 402(v) of Regulation S-K.
Fiscal Year
Summary Compensation Table Total for Mr. Iger1,2
Compensation Actually Paid to Mr. Iger1,3,4
Summary Compensation Table Total for Mr. Chapek5,6
Compensation Actually Paid to Mr. Chapek3,5,7
Average Summary Compensation Table Total for Non-CEO NEOs8,9
Average Compensation Actually Paid to Non-CEO NEOs3,8,10
Value of an initial $100 Investment Based on:
GAAP Net Income
($ Millions)12
Adjusted Segment Operating Income13
Total Shareholder Return11
Peer Group Total Shareholder Return11
2023$31,587,166 $21,754,776$9,940,392$6,153,457$8,342,092$6,069,195$66.14$129.46$2,354$12,863
2022— — 24,183,0032,102,20511,755,869-10,064,46276.9797.313,14512,121
2021— — 32,464,29341,482,22120,269,74844,993,365143.62131.851,9954,055
1Mr. Iger has served as the Company’s CEO since November 20, 2022. Mr. Iger also served as Executive Chairman from February 24, 2020 until his retirement on December 31, 2021. Value shown relates to Mr. Iger’s service as CEO during fiscal 2023.
2Represents the amount of total compensation reported for our CEO, Mr. Iger, in the “Total” column of the “Summary Compensation Table” for fiscal 2023.
3We made certain assumptions in valuing equity for our compensation actually paid (“CAP”) calculations to determine the fair value or change in fair value as of the applicable year-end date. The assumptions used for each valuation date included stock price, risk-free rate, stock price volatility, expected exercise behavior and the probable outcome of any applicable performance conditions. These assumptions were determined based on the same methodologies as used to determine grant date fair values and were estimated in accordance with FASB ASC Topic 718.
4The dollar amounts reported in the “Compensation Actually Paid to Mr. Iger” column have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the CEO. These amounts reflect the amount set forth in the “Total” column of the “Summary Compensation Table” for each fiscal year presented, with certain adjustments as described in the table below, in accordance with the requirements of Item 402(v) of Regulation S-K. Amounts in the below reconciliation table may not sum to total due to rounding:
Reconciliation of Summary Compensation Table Total
to Compensation Actually Paid for Mr. Iger
Fiscal Year 2023Fiscal Year 2022Fiscal Year 2021
Summary Compensation Table Total$31,587,166— — 
Minus: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year
26,103,448— — 
Plus: Fair Value at Fiscal Year-End of Option and Stock Awards Granted in Fiscal Year That Were Outstanding and Unvested at Fiscal Year-End
20,260,990— — 
Plus: Year-Over-Year Change in Fair Value at Fiscal Year-End of Option and Stock Awards Granted in Any Prior Fiscal Year That Were Outstanding and Unvested at Fiscal Year-End
-2,934,893— — 
Plus: Fair Value at Vesting Date of Option and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year
— — — 
Plus: Change in Fair Value as of Vesting Date (From the End of the Prior Fiscal Year) of Option and Stock Awards Granted in Any Prior Fiscal Year For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year
-1,055,039— — 
Minus: Fair Value as of Prior Fiscal Year-End of Option and Stock Awards Granted in Any Prior Fiscal Year That Failed to Meet Applicable Vesting Conditions During Fiscal Year
— — — 
Plus: Value of Dividends or Other Earnings Paid on Option and Stock Awards in the Fiscal Year Not Otherwise Reflected in Total Compensation for the Fiscal Year
— — — 
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Reconciliation of Summary Compensation Table Total
to Compensation Actually Paid for Mr. Iger
Fiscal Year 2023Fiscal Year 2022Fiscal Year 2021
Minus: Change in Pension Value From the Summary Compensation Table for the Fiscal Year
— — — 
Plus: Pension Service Costs in Fiscal Year
— — — 
Compensation Actually Paid$21,754,776——
5Mr. Chapek served as the Company’s CEO during fiscal 2022 & 2021 until his separation during fiscal 2023.
6Represents the amount of total compensation reported for Mr. Chapek in the “Total” column of the “Summary Compensation Table” for each fiscal year presented.
7The dollar amounts reported in the “Compensation Actually Paid to Mr. Chapek” column have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by Mr. Chapek. These amounts reflect the amount set forth in the “Total” column of the “Summary Compensation Table” for each fiscal year presented, with certain adjustments as described in the table below, in accordance with the requirements of Item 402(v) of Regulation S-K. Amounts in the below reconciliation table may not sum to total due to rounding:
Reconciliation of Summary Compensation Table Total
to Compensation Actually Paid for Mr. Chapek
Fiscal Year 2023Fiscal Year 2022Fiscal Year 2021
Summary Compensation Table Total$9,940,392$24,183,003$32,464,293
Minus: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year
1,324,50314,560,85213,965,478
Plus: Fair Value at Fiscal Year-End of Option and Stock Awards Granted in Fiscal Year That Were Outstanding and Unvested at Fiscal Year-End
1,102,9068,788,72614,286,960
Plus: Year-Over-Year Change in Fair Value at Fiscal Year-End of Option and Stock Awards Granted in Any Prior Fiscal Year That Were Outstanding and Unvested at Fiscal Year-End
-3,444,195-14,852,6676,002,525
Plus: Fair Value at Vesting Date of Option and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year
— — — 
Plus: Change in Fair Value as of Vesting Date (From the End of the Prior Fiscal Year) of Option and Stock Awards Granted in Any Prior Fiscal Year For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year
-512,231-2,247,0553,231,102
Minus: Fair Value as of Prior Fiscal Year-End of Option and Stock Awards Granted in Any Prior Fiscal Year That Failed to Meet Applicable Vesting Conditions During Fiscal Year
— — — 
Plus: Value of Dividends or Other Earnings Paid on Option and Stock Awards in the Fiscal Year Not Otherwise Reflected in Total Compensation for the Fiscal Year
-439-9,80924,261
Minus: Change in Pension Value From the Summary Compensation Table for the Fiscal Year
220,581— 1,358,505
Plus: Pension Service Costs in Fiscal Year
612,108800,858797,062
Compensation Actually Paid$6,153,457$2,102,205$41,482,221
8The individuals comprising the non-CEO NEOs are as follows:
Fiscal 2023: Ms. Coleman, Mr. Gutierrez, Mr. Lansberry, Ms. McCarthy, Ms. Schake
Fiscal 2022: Mr. Gutierrez, Mr. Iger, Ms. McCarthy, Geoffrey Morrell, Paul Richardson, Ms. Schake
Fiscal 2021: Alan Braverman, Mr. Iger, Ms. McCarthy, Zenia Mucha, Jayne Parker
9Represents the average of the amounts of total compensation reported for our non-CEO NEOs, as a group, in the “Total” column of the “Summary Compensation Table” for each fiscal year presented.
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10The dollar amounts reported in the ”Average Compensation Actually Paid to Non-CEO NEOs” column have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the non-CEO NEOs. These amounts reflect the average of the amounts set forth in the ”Total” column of the ”Summary Compensation Table” for each fiscal year presented for the applicable non-CEO NEOs, with certain adjustments as described in the table below, in accordance with the requirements of Item 402(v) of Regulation S-K. Amounts in the below reconciliation table may not sum to total due to rounding:
Reconciliation of Average Summary Compensation Table Total to Average Compensation Actually Paid for Non-CEO NEOsFiscal Year 2023Fiscal Year 2022Fiscal Year 2021
Summary Compensation Table Total$8,342,092$11,755,869$20,269,748
Minus: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year
5,205,1766,313,1499,372,260
Plus: Fair Value at Fiscal Year-End of Option and Stock Awards Granted in Fiscal Year That Were Outstanding and Unvested at Fiscal Year-End
4,114,4354,136,2728,367,110
Plus: Year-Over-Year Change in Fair Value at Fiscal Year-End of Option and Stock Awards Granted in Any Prior Fiscal Year That Were Outstanding and Unvested at Fiscal Year-End
-1,075,192-6,214,51120,182,305
Plus: Fair Value at Vesting Date of Option and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year
52,223— — 
Plus: Change in Fair Value as of Vesting Date (From the End of the Prior Fiscal Year) of Option and Stock Awards Granted in Any Prior Fiscal Year For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year
-170,899-13,291,1265,188,583
Minus: Fair Value as of Prior Fiscal Year-End of Option and Stock Awards Granted in Any Prior Fiscal Year That Failed to Meet Applicable Vesting Conditions During Fiscal Year
— — — 
Plus: Value of Dividends or Other Earnings Paid on Option and Stock Awards in the Fiscal Year Not Otherwise Reflected in Total Compensation for the Fiscal Year
-147-230,670335,626
Minus: Change in Pension Value From the Summary Compensation Table for the Fiscal Year
48,694— 257,407
Plus: Pension Service Costs in Fiscal Year
60,55292,853279,661
Compensation Actually Paid$6,069,195-$10,064,462$44,993,365
11Required by Item 201(e) of Regulation S-K included in the report for each listed fiscal year. Total Shareholder Return represents the cumulative return on a fixed investment of $100 in the common stock (including reinvested dividends) of (a) the Company and (b) our general industry peer group, respectively, for the period starting October 3, 2020 through the end of the listed fiscal year.
The peer group TSR uses the following peer companies from our general industry peer group for each year:
–Fiscal 2023: Alphabet, Inc., Amazon.com, Inc., Apple, Inc., AT&T Inc., Charter Communications, Inc., Comcast Corporation, IBM Corporation, Meta Platforms, Inc., Microsoft Corporation, Netflix, Inc., NIKE, Inc., Oracle Corporation, Paramount Global, Verizon Communications Inc., Warner Bros. Discovery, Inc.
–Fiscal 2022: Alphabet, Inc., Amazon.com, Inc., Apple, Inc., AT&T Inc., Charter Communications, Inc., Cisco Systems, Comcast Corporation, IBM Corporation, Intel, Meta Platforms, Inc., Microsoft Corporation, Netflix, Inc., Oracle Corporation, Paramount Global, Verizon Communications Inc., Warner Bros. Discovery, Inc.
–Fiscal 2021: Alphabet, Inc., Amazon.com, Apple, Inc., AT&T Inc., Charter Communications, Inc., Cisco Systems, Comcast Corporation, Discovery, IBM Corporation, Intel, Meta Platforms, Inc., Microsoft Corporation, Netflix, Inc., Oracle Corporation, Verizon Communications Inc., ViacomCBS
12Reflects net income calculated in accordance with generally accepted accounting principles (”GAAP”) in the Company’s Consolidated Statements of Income included in the Company’s Annual Reports on Form 10-K for the applicable fiscal year.
13Adjusted Segment Operating Income consists of total segment operating income, as adjusted based on the Compensation Committee's evaluation against the bonus plan performance each fiscal year. ”Total segment operating income” consists of the total of segment operating income from each of our segments, which is equivalent to income from continuing operations before income taxes, adjusted for corporate and unallocated shared expenses, restructuring and impairment charges, A+E gain (for fiscal 2023), net other (income) expense, net interest expense, amortization of TFCF and Hulu intangible assets and fair value step-up on film and television costs and the impact of content license early terminations (for fiscal 2022). In addition, in fiscal 2021 the Committee adjusted actual total segment operating income to exclude the net benefits the Company received from timing variances related to the pandemic, such as savings from delayed programming and domestic parks operating efficiencies, partially offset by delays in park openings. We determined Adjusted Segment Operating Income to be the most important financial performance measure used to link Company performance to CAP to our CEOs and non-CEO NEOs in fiscal 2023, as required pursuant to Item 402(v) of Regulation S-K. This performance measure may not have been the most important financial performance measure for prior fiscal years, and we may determine a different financial performance measure to be the most important financial performance measure in future years.
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Description of Relationships
The following charts show graphically the relationships over the past three fiscal years of the CAP amounts for our CEOs and non-CEO NEOs as compared to our cumulative TSR, peer group TSR, GAAP net income, and Adjusted Segment Operating Income.
7915
7917
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7919
Tabular List of Performance Metrics
The following table lists the five financial performance measures that, in the Company’s assessment, represent the most important performance measures used to link CAP for our NEOs to Company performance for fiscal 2023.
Performance Metrics
Adjusted Segment Operating Income
Adjusted Revenue
Adjusted After-Tax Free Cash Flow
Return on Invested Capital
TSR Performance Relative to the S&P 500
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ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Stock Ownership
Based on a review of filings with the SEC, the Company has determined that the following persons hold more than 5% of the outstanding shares of Disney common stock. Applicable percentage ownership is based 1,833,541,083 shares outstanding as of January 3, 2024.
To our knowledge, except as noted below no person or entity is the beneficial owner of more than 5% of the voting power of the Company’s stock.
Name and Address of Beneficial OwnerSharesPercent of Class
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
146,328,5091
8.0%
Blackrock, Inc.
55 East 52nd Street
New York, NY 10055
120,970,2142
6.6%
1According to Vanguard’s Schedule 13G/A filing with the SEC, Vanguard has sole voting power with respect to no shares, shared voting power with respect to 2,539,313 shares, sole dispositive power with respect to 138,851,722 shares and shared dispositive power with respect to 7,476,787 shares.
2According to Blackrock’s Schedule 13G/A filing with the SEC, Blackrock has sole voting power with respect to 107,134,578 shares, shared voting power with respect to no shares, sole dispositive power with respect to 120,970,214 shares and shared dispositive power with respect to no shares.
The following table shows the amount of Disney common stock beneficially owned (unless otherwise indicated) by Directors, nominees and NEOs and by Directors, nominees and executive officers as a group. Except as otherwise indicated, all information is as of January 3, 2024.
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Name
Shares1,2
Stock Units3
Shares Acquirable Within 60 Days4
Percent of Class
     
Mary T. Barra229 18,175 -*
Safra A. Catz 11,131 6,498 -*
Amy L. Chang 1,198 5,792 -*
Robert A. Chapek 216 - 487,445*
Sonia L. Coleman 2,637 - 14,331*
D. Jeremy Darroch1,156 - -*
Francis A. deSouza 6,056 9,803 -*
Carolyn N. Everson 265 4,085 -*
Michael B.G. Froman 8,623 6,425 -*
James P. Gorman - - -*
Horacio E. Gutierrez 9,407 - 54,519*
Robert A. Iger 204,899 - 2,156,346*
Maria Elena Lagomasino 2,815 24,957 -*
Kevin A. Lansberry 16,534 - 59,825*
Christine M. McCarthy 207,788 - 531,474*
Calvin R. McDonald 1,671 7,190 -*
Mark G. Parker 129 24,301 -*
Derica W. Rice 1 13,899 -*
Kristina K. Schake 6,875 - 17,324*
All Directors, nominees and executive officers as a group (17 persons)257,342.65121,123.702,242,520.00*
*Less than 1% of outstanding shares.
1The number of shares shown includes shares that are individually or jointly owned, as well as shares over which the individual has either sole or shared investment or voting authority. Some Directors and executive officers disclaim beneficial ownership of some of the shares included in the table, as follows: Ms. Barra — 229 shares held in a trust and by spouse in trust; Ms. Chang — 120 shares held in a trust; Mr. Chapek — 214 shares held in a trust and by an adult child; Mr. Froman — 20 shares held in a trust; and Mr. Iger — 156 shares held by his spouse. All Directors and executive officers as of January 3, 2024 as a group disclaim beneficial ownership of a total of 747 shares.
2For NEOs, the number of shares listed includes interests in shares held in Company savings and investment plans as of January 3, 2024: Ms. Coleman — 776 shares; Mr. Iger — 20,552 shares; Mr. Lansberry — 767 shares; Ms. McCarthy — 4,307 shares; and all executive officers as of January 3, 2024 as a group — 21,328 shares.
3Reflects the number of stock units credited as of January 3, 2024 to the account of each non-employee Director participating in the 2011 Stock Incentive Plan. These units are payable solely in shares of Company common stock as described in Item 11. Executive Compensation — “Director Compensation,” but do not have current voting or investment power. Excludes unvested restricted stock units awarded to executives under the 2011 Stock Incentive Plan that vest on a performance basis and other restricted stock units awarded to executives that have not vested under their vesting schedules.
4Reflects the number of shares that could be purchased by exercise of options exercisable at January 3, 2024, or within 60 days thereafter under the Company’s stock option plans and the number of shares underlying restricted stock units that vest within 60 days of January 3, 2024, excluding dividend equivalent units that will vest in that period.
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Equity Compensation Plans
Information regarding the equity compensation plans of the Company is set forth in Item 11. Executive Compensation — “Executive Compensation — Compensation Tables — Equity Compensation Plans.”
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ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Person Transactions
The Board has adopted a written policy for review of transactions in any fiscal year in which the Company is a participant and in which any Director, Director nominee, executive officer, holder of more than 5% of our outstanding shares or any immediate family member of any of these persons has a direct or indirect material interest. Directors, Director nominees, 5% shareholders and executive officers are required to inform the Company of any such transaction promptly after they become aware of it and the Company collects information from Directors, Director nominees and executive officers about their affiliations and affiliations of their family members so the Company can search its records for any such transactions. Transactions are presented to the Governance and Nominating Committee of the Board (or to the Chair of the Committee if the Committee delegates this responsibility) for approval before they are entered into or, if this is not possible, for ratification after the transaction has been entered into. The Committee approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company, including whether the transaction impairs independence of a Director.
Each of the investment management firms, Vanguard Group, Inc. and Blackrock, Inc., through their affiliates, held more than 5% of the Company’s shares during fiscal 2023. Funds managed by affiliates of Vanguard and Blackrock are included as investment options in defined contribution plans offered to Company employees. In addition, Blackrock manages investment portfolios for the Company’s pension funds and provides a risk analytics platform related to management of investments in the pension funds. Vanguard and Blackrock received fees of approximately $1 million and $9 million, respectively, in fiscal 2023 based on the amounts invested in funds managed by them. The ongoing relationships were reviewed and approved in fiscal 2023 by the Governance and Nominating Committee under the Related Person Transaction Approval Policy.
Beginning in fiscal 2021, MVL Productions LLC, a subsidiary of the Company, contracted with a company wholly owned by Mr. Chapek’s son, Brian Chapek (“Mr. B. Chapek”), for Mr. B. Chapek’s exclusive services for a three-year period. The contract provided for Mr. B. Chapek to receive an annual base payment of $322,000 in fiscal 2021, $342,000 in fiscal 2022 and $367,000 in fiscal 2023. These amounts are inclusive of a payment in lieu of benefits. Additionally, Mr. B. Chapek would receive a $200,000 fee for each film on which he served as lead producer and an additional bonus calculated by a predetermined formula based on the worldwide box office of films on which he worked ($31,000 for fiscal 2023), consistent with a range and structure typical of producer deals at Walt Disney Studios. From October 2022 to June 2023, Mr. B. Chapek received $276,500 of the $367,000 annual base payment, plus an additional $74,667 for production work on a film, under the contract.
In June 2023, MVL Productions LLC terminated the contract and re-hired Mr. B. Chapek as an employee with the title of Executive, Production & Development. Compensation terms for Mr. B. Chapek include a base salary of $320,000 (prorated for the final three months of fiscal 2023), with a year-end bonus of $94,000, a long-term incentive award of $48,000 granted in December 2023, a signing bonus of $400,000 that was paid in July 2023 and estimated benefits of approximately $5,663. Mr. B. Chapek is also eligible for Marvel film bonuses. For fiscal 2023, Mr. B. Chapek earned total compensation and benefits of $963,061. Mr. B. Chapek was paid an amount and his compensation was structured the same as similarly situated employees. This relationship was reviewed and approved in fiscal 2023 by the Governance and Nominating Committee under the Related Person Transaction Approval Policy.
In fiscal 2023, Daniel McCormick, son of Christine McCarthy was employed as Senior Manager-Research in the General Entertainment Content business. For fiscal 2023, Mr. McCormick’s base salary was $133,157, his benefits were approximately $11,736 and his bonus was $18,554. Mr. McCormick was paid an amount and his compensation was structured the same as similarly situated employees. This relationship was reviewed and approved in fiscal 2023 by the Governance and Nominating Committee under the Related Person Transaction Approval Policy.
Director Independence
The provisions of the Company’s Corporate Governance Guidelines regarding Director independence meet and, in some respects, exceed the listing standards of the New York Stock Exchange. The Corporate Governance Guidelines are available on the Company’s Investor Relations website under the “Corporate Governance” heading at www.disney.com/investors and in print to any shareholder who requests them from the Company’s Secretary.
Pursuant to the Corporate Governance Guidelines, the Board undertook its annual review of Director independence in November 2023. During this review, the Board considered transactions and relationships between the Company and its subsidiaries and affiliates on the one hand, and on the other hand, Directors, immediate family members of Directors or entities of which a Director or an immediate family member is an executive officer, general partner or significant equity holder. The Board also considered whether there were any transactions or relationships between any of these persons or entities and the Company’s executive officers or their affiliates. As provided in the Corporate Governance Guidelines, the purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the Director is independent.
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As a result of this review, the Board affirmatively determined that all of the Directors serving in fiscal 2023 or nominated for election at the Annual Meeting are independent of the Company and its management under the standards set forth in the Corporate Governance Guidelines, with the exception of Mr. Iger and Mr. Chapek, neither of whom is considered independent because of employment as a senior executive of the Company. Additionally, Mr. Chapek’s son provided producer services to the Company and was re-hired as an employee in fiscal 2023, as discussed under the section titled “Certain Relationships and Related Person Transactions” above.
In determining the independence of each Director, the Board considered and deemed immaterial to the Directors’ independence transactions involving the sale of products and services in the ordinary course of business between the Company on the one hand, and on the other, companies or organizations at which some of our Directors or their immediate family members were officers or employees during fiscal 2023. In each case, the amount paid to or received from these companies or organizations in each of the last three years was below the 2% of total revenue threshold in the Corporate Governance Guidelines. The Board determined that none of the relationships it considered impaired the independence of the Directors.
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ITEM 14. Principal Accounting Fees and Services
Auditor Fees and Services
The following table presents fees for professional services rendered by PricewaterhouseCoopers LLP for the audit of the Company’s annual financial statements and internal control over financial reporting for fiscal 2023 and fiscal 2022, together with fees for audit-related, tax and other services rendered by PricewaterhouseCoopers LLP during fiscal 2023 and fiscal 2022. Audit-related services consisted principally of audits and agreed upon procedures of other entities related to the Company, viewership rankings and other attest projects. Tax services consisted principally of planning and advisory services and tax compliance assistance. Other services consisted of other miscellaneous services, including accounting research software. The Audit Committee directs and reviews the negotiations associated with the Company’s retention of its independent registered public accountants.
Fiscal 2023Fiscal 2022
(in millions)
   
Audit fees$28.9$30.1
Audit-related fees1.92.3
Tax fees3.02.5
All other fees0.10.1
Policy for Approval of Audit and Permitted Non-Audit Services
All audit, audit-related, tax and other services were pre-approved by the Audit Committee, which concluded that the provision of such services by PricewaterhouseCoopers LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee’s Outside Auditor Independence and Pre-Approval Policy provides for pre-approval of specifically described audit, audit-related, tax and other services by the Committee on an annual basis, but individual engagements anticipated to exceed pre-established thresholds must be separately approved. The policy also requires specific approval by the Committee if total fees for audit-related, tax and other services would exceed total fees for audit services in any fiscal year. The policy authorizes the Committee to delegate to one or more of its members pre-approval authority with respect to permitted services, and the Committee has delegated to the Chair of the Committee the authority to pre-approve services in certain circumstances.

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PART IV
ITEM 15. Exhibits and Financial Statement Schedules
1.Financial Statements and Schedules
No financial statement or supplemental data are filed with this report on Form 10-K/A. See Index to Financial Statements and Supplemental Data of the Original Form 10-K.
2.Exhibits
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
ExhibitLocation
3.13.3Amended and Restated Certificate of IncorporationBylaws of The Walt Disney Company, effective as of March 19, 2019November 30, 2023
3.2Certificate of Amendment to the Restated Certificate of Incorporation of The Walt Disney Company, effective as of March 20, 2019
3.3Amended and Restated Bylaws of The Walt Disney Company, effective as of March 20, 2019
3.4Amended and Restated Certificate of Incorporation of TWDC Enterprises 18 Corp., effective as of March 20, 2019
3.5Amended and Restated Bylaws of TWDC Enterprises 18 Corp., effective as of March 20, 2019
3.6Certificate of Elimination of Series B Convertible Preferred Stock of The Walt Disney Company, as filed with the Secretary of State of the State of Delaware on November 28, 2018
4.1Senior Debt Securities Indenture, dated as of September 24, 2001, between TWDC Enterprises 18 Corp. and Wells Fargo Bank, N.A., as Trustee
4.2First Supplemental Indenture, dated as of March 20, 2019, among The Walt Disney Company, TWDC Enterprises 18 Corp. and Wells Fargo Bank, N.A., as Trustee
4.3Indenture, dated as of March 20, 2019, by and among The Walt Disney Company, as issuer, and TWDC Enterprises 18 Corp., as guarantor, and Citibank, N.A., as trustee
4.4Other long-term borrowing instruments are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company undertakes to furnish copies of such instruments to the Commission upon request
4.5Description of Registrant’s Securities
10.1Employment Agreement dated as of February 24, 2020 between the Company and Robert Chapek †
10.2Amendment dated July 15, 2022 to the Employment Agreement dated February 24, 2020, between the Company and Robert Chapek †
10.3Amended and Restated Employment Agreement, dated as of October 6, 2011, between the Company and Robert A. Iger †
10.4Amendment dated July 1, 2013 to Amended and Restated Employment Agreement, dated as of October 6, 2011, between the Company and Robert A. Iger †
10.5Amendment dated October 2, 2014 to Amended and Restated Employment Agreement, dated as of October 6, 2011, between the Company and Robert A. Iger †
10.6Amendment dated March 22, 2017 to Amended and Restated Employment Agreement, dated as of October 6, 2011, between the Company and Robert A. Iger †

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ExhibitLocation
10.7Amendment dated December 13, 2017 to Amended and Restated Employment Agreement, dated as of October 6, 2011, between the Company and Robert A. Iger †
10.8Amendment to Amended and Restated Employment Agreement, Dated as of October 6, 2011, as amended, between the Company and Robert A. Iger, dated November 30, 2018 †
10.9Amendment to Amended and Restated Employment Agreement, Dated as of October 6, 2011, as amended, between the Company and Robert A. Iger, dated March 4, 2019 †
10.10Amendment to Amended and Restated Employment Agreement, Dated as of October 6, 2011 and as previously amended, between the Company and Robert A. Iger, dated February 24, 2020 †
10.11Employment Agreement Dated as of November 20, 2022, between the Company and Robert A. Iger †
10.12Amendment dated July 12, 2023 to Employment Agreement dated as of November 20, 2022, between the Company and Robert A. Iger †
10.13Employment Agreement dated as of July 1, 2015 between the Company and Christine M. McCarthy †
10.14Amendment dated August 15, 2017 to the Employment Agreement dated as of July 1, 2015 between the Company and Christine M. McCarthy †
10.15Amendment dated December 2, 2020 to Amended Employment Agreement dated as of July 1, 2015 between the Company and Christine M. McCarthy †
10.16Amendment dated December 21, 2021 to Amended Employment Agreement dated as of July 1, 2015 between the Company and Christine M. McCarthy †
10.17Assignment of Employment Agreement dated January 19, 2022 between the Company and Christine M. McCarthy †
10.18Amendment dated June 15, 2023 to Amended Employment Agreement dated as of July 1, 2015 between the Company and Christine M. McCarthy, as previously assigned †
10.19Employment Agreement, dated as of December 21, 2021 between the Company and Horacio E. Gutierrez †
10.20Assignment of Employment Agreement dated January 31, 2022 between the Company and Horacio E. Gutierrez †
10.21Amendment dated July 21, 2022 to the Employment Agreement dated December 21, 2021, between Disney Corporate Services Co., LLC and Horacio E. Gutierrez and to the Indemnification Agreement dated December 21, 2021, between the Company and Horacio E. Gutierrez †
10.22Amendment dated April 21, 2023 to the Employment Agreement dated December 21, 2021, between Disney Corporate Services Co., LLC and Horacio E. Gutierrez and to the Indemnification Agreement dated December 21, 2021, between the Company and Horacio E. Gutierrez †
10.23Employment Agreement, dated June 29, 2022, between the Company and Kristina K. Schake †
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ExhibitLocation
10.24Amendment dated April 18, 2023 to Employment Agreement, dated June 29, 2022 between the Company and Kristina K. Schake †
10.25Employment Agreement dated as of March 10, 2023, by and between the Company and Sonia L. Coleman †
10.26Voluntary Non-Qualified Deferred Compensation
Plan †
10.27Description of Directors Compensation
10.28Form of Indemnification Agreement for certain officers and directors †
10.29Form of Assignment and Assumption of Indemnification Agreement for certain officers and directors †

10.301995 Stock Option Plan for Non-Employee Directors
10.31Amended and Restated 2002 Executive Performance Plan †
10.32Management Incentive Bonus Program †
10.33Amended and Restated 1997 Non-Employee Directors Stock and Deferred Compensation Plan
10.34Amended and Restated The Walt Disney Company/Pixar 2004 Equity Incentive Plan †
10.35Amended and Restated 2011 Stock Incentive Plan †
10.36Disney Key Employees Retirement Savings Plan †
10.37Amendments dated April 30, 2015 to the Amended and Restated The Walt Disney Productions and Associated Companies Key Employees Deferred Compensation and Retirement Plan, Amended and Restated Benefit Equalization Plan of ABC, Inc. and Disney Key Employees Retirement Savings Plan †
10.38Second Amendment to the Disney Key Employees Retirement Savings Plan †
10.39Third Amendment to the Disney Key Employees Retirement Savings Plan †
10.40Group Personal Excess Liability Insurance Plan †
10.41Form of Non-Qualified Stock Option Award Agreement †
10.42Form of Non-Qualified Stock Option Award Agreement †
10.43Form of Restricted Stock Unit Award Agreement (Time-Based Vesting) †
10.44Form of Performance-Based Stock Unit Award Agreement (Section 162(m) Vesting Requirement) †
10.45Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) †
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ExhibitLocation
10.46Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) †
10.47Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests/Section 162(m) Vesting Requirements) †
10.48Form of Restricted Stock Unit Award Agreement (Time-Based Vesting) †
10.49Form of Performance-Based Stock Unit Award Agreement (Section 162(m) Vesting Requirement) †
10.50Form of Non-Qualified Stock Option Award Agreement †
10.51Form of Non-Qualified Stock Option Award Agreement †
10.52Form of Restricted Stock Unit Award Agreement (Time-Based Vesting) †
10.53Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC tests) for Robert A. Iger dated as of December 14, 2021 †
10.54Non-Qualified Stock Option Award Agreement for Robert A. Iger dated as of December 14, 2021 †
10.55Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) †
10.56Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year Vesting subject to Total Shareholder Return/ROIC Tests) †
10.57Form of Performance-Based Restricted Stock Unit Award Agreement (Three-Year/Two-Year Vesting subject to Total Shareholder Return/ROIC Tests) †
10.58Form of Stock Option Awards Agreement †
10.59Form of Stock Option Awards Agreement †
10.60Form of Stock Option Awards Agreement †
10.61Form of Stock Option Awards Agreement †
10.62Form of Stock Option Awards Agreement †
10.63Twenty-First Century Fox, Inc. 2013 Long-Term Incentive Plan †
10.64Five-Year Credit Agreement dated as of March 6, 2020
10.65First Amendment dated as of March 4, 2022 to the Five-Year Credit Agreement dated as of March 6, 2020
10.66Five-Year Credit Agreement dated as of March 4, 2022
10.67364-Day Credit Agreement dated as of March 3, 2023
10.68Support Agreement, dated as of September 30, 2022, by and among Third Point LLC and certain of its affiliates and The Walt Disney Company
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ExhibitLocation
21Subsidiaries of the Company
22List of Guarantor Subsidiaries
23Consent of PricewaterhouseCoopers LLP
31(a)Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002
31(b)Rule 13a-14(a) Certification of Interim Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002
32(a)Section 1350 Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002**
32(b)Section 1350 Certification of Interim Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002**
97The Walt Disney Company Clawback Policy
101The following materials from the Company’s Annual Report on Form 10-K for the year ended September 30, 2023 formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Equity and (vi) related notesFiled herewith
104Cover Page Interactive Data File (embedded within the Inline XBRL document)Filed herewith

*Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the SEC upon request.
**A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.
†Management contract or compensatory plan or arrangement.
ITEM 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE WALT DISNEY COMPANY
(Registrant)
Date:November 21, 2023January 24, 2024By:/s/    ROBERT A. IGER
(Robert A. Iger
Chief Executive Officer and Director)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SignatureTitleDate
Principal Executive Officer
/s/    ROBERT A. IGERChief Executive Officer and DirectorNovember 21, 2023
(Robert A. Iger)
Principal Financial and Accounting Officers
/s/    KEVIN A. LANSBERRY
Interim Chief Financial Officer
(Principal Financial Officer)
November 21, 2023
(Kevin A. Lansberry)
/s/    BRENT A. WOODFORDExecutive Vice President-Controllership, Financial Planning and TaxNovember 21, 2023
(Brent A. Woodford)
Directors
/s/    MARY T. BARRADirectorNovember 21, 2023
(Mary T. Barra)
/s/    SAFRA A. CATZDirectorNovember 21, 2023
(Safra A. Catz)
/s/    AMY L. CHANGDirectorNovember 21, 2023
(Amy L. Chang)
/s/    FRANCIS A. DESOUZADirectorNovember 21, 2023
(Francis A. deSouza)
/s/    CAROLYN N. EVERSONDirectorNovember 21, 2023
(Carolyn N. Everson)
/s/    MICHAEL B.G. FROMANDirectorNovember 21, 2023
(Michael B.G. Froman)
/s/    MARIA ELENA LAGOMASINODirectorNovember 21, 2023
(Maria Elena Lagomasino)
/s/    CALVIN R. MCDONALDDirectorNovember 21, 2023
(Calvin R. McDonald)
/s/    MARK G. PARKERChairman of the Board and DirectorNovember 21, 2023
(Mark G. Parker)
/s/    DERICA W. RICEDirectorNovember 21, 2023
(Derica W. Rice)
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THE WALT DISNEY COMPANY AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Page
Management’s Report on Internal Control Over Financial Reporting
78
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)
79
Consolidated Financial Statements of The Walt Disney Company and Subsidiaries
Consolidated Statements of Income for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021
81
Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021
82
Consolidated Balance Sheets as of September 30, 2023 and October 1, 2022
83
Consolidated Statements of Cash Flows for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021
84
Consolidated Statements of Shareholders’ Equity for the Years Ended September 30, 2023, October 1, 2022 and October 2, 2021
85
Notes to Consolidated Financial Statements
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All schedules are omitted for the reason that they are not applicable or the required information is included in the financial statements or notes.
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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on our evaluation under the framework in Internal Control - Integrated Framework, management concluded that our internal control over financial reporting was effective as of September 30, 2023.
The effectiveness of our internal control over financial reporting as of September 30, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of The Walt Disney Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of The Walt Disney Company and its subsidiaries (the “Company”) as of September 30, 2023 and October 1, 2022, and the related consolidated statements of income, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended September 30, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2023 and October 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging,
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subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Annual Goodwill Impairment Assessment – Entertainment Linear Networks and Direct-to-Consumer (DTC) Services Reporting Units
As described in Notes 2 and 18 to the consolidated financial statements, the Company’s consolidated goodwill balance was $77.1 billion as of September 30, 2023, of which a significant portion relates to the entertainment linear networks and DTC services reporting units. Management performs the annual test of goodwill for impairment in the fiscal fourth quarter, and if current events or circumstances require, on an interim basis. Management bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment. The quantitative assessment compares the fair value of each goodwill reporting unit to its carrying amount, and to the extent the carrying amount exceeds the fair value, an impairment of goodwill is recognized for the excess up to the amount of goodwill allocated to the reporting unit. To determine the fair value of the Company’s reporting units, management generally uses a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate. Significant judgments and assumptions in the discounted cash flow model relate to future revenues and certain operating expenses, terminal growth rates, and discount rates. Based on management’s projections, the carrying amounts of the entertainment and international sports linear networks reporting units exceeded their fair values, and management recorded non-cash goodwill impairment charges of approximately $0.7 billion, of which a significant portion relates to the entertainment linear networks reporting unit.
The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment of the entertainment linear networks and DTC services reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the entertainment linear networks and DTC services reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to future revenues and certain operating expenses, terminal growth rates, and discount rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s entertainment linear networks and DTC services reporting units. These procedures also included, among others, for the entertainment linear networks and DTC services reporting units (i) testing management’s process for developing the fair value estimates; (ii) testing the completeness and accuracy of underlying data used in the discounted cash flow models; and (iii) evaluating the reasonableness of the significant assumptions used by management related to future revenues and certain operating expenses, terminal growth rates, and discount rates. Evaluating management’s assumptions related to future revenues and certain operating expenses, and terminal growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the entertainment linear networks and DTC services reporting units; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the discount rate assumptions.

/s/ PricewaterhouseCoopers LLP
Los Angeles, California
November 21, 2023
We have served as the Company’s auditor since 1938.
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CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
202320222021
Revenues:
Services$79,562  $74,200  $61,768  
Products9,336  8,522  5,650  
Total revenues88,898  82,722  67,418  
Costs and expenses:
Cost of services (exclusive of depreciation and amortization)(53,139) (48,962) (41,129) 
Cost of products (exclusive of depreciation and amortization)(6,062) (5,439) (4,002) 
Selling, general, administrative and other(15,336) (16,388) (13,517) 
Depreciation and amortization(5,369) (5,163) (5,111) 
Total costs and expenses(79,906) (75,952) (63,759) 
Restructuring and impairment charges(3,892) (237) (654) 
Other income (expense), net96  (667) 201  
Interest expense, net(1,209) (1,397) (1,406) 
Equity in the income of investees782  816  761  
Income from continuing operations before income taxes4,769  5,285  2,561  
Income taxes on continuing operations(1,379) (1,732) (25) 
Net income from continuing operations3,390  3,553  2,536  
Loss from discontinued operations, net of income tax benefit of $0, $14 and $9, respectively—  (48) (29) 
Net income3,390  3,505  2,507  
Net income from continuing operations attributable to noncontrolling and redeemable noncontrolling interests(1,036) (360) (512) 
Net income attributable to The Walt Disney Company (Disney)$2,354  $3,145  $1,995  
Earnings (loss) per share attributable to Disney(1):
Diluted
Continuing operations$1.29  $1.75  $1.11  
Discontinued operations—  (0.03) (0.02) 
$1.29  $1.72  $1.09  
Basic
Continuing operations$1.29  $1.75  $1.11  
Discontinued operations—  (0.03) (0.02) 
$1.29  $1.73  $1.10  
Weighted average number of common and common equivalent shares outstanding:
Diluted1,830  1,827  1,828  
Basic1,828  1,822  1,816  
(1)Total may not equal the sum of the column due to rounding.
See Notes to Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
202320222021
Net income$3,390  $3,505  $2,507  
Other comprehensive income (loss), net of tax:
Market value adjustments, primarily for hedges(430) 735  41  
Pension and postretirement medical plan adjustments1,214  2,503  1,850  
Foreign currency translation and other10  (1,060) 77  
Other comprehensive income794  2,178  1,968  
Comprehensive income4,184  5,683  4,475  
Net income from continuing operations attributable to noncontrolling interests(1,036) (360) (512) 
Other comprehensive income (loss) attributable to noncontrolling interests33  143  (86) 
Comprehensive income attributable to Disney$3,181  $5,466  $3,877  
See Notes to Consolidated Financial Statements
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CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
September 30,
2023		October 1,
2022
ASSETS
Current assets
Cash and cash equivalents$14,182  $11,615  
Receivables, net12,330  12,652  
Inventories1,963  1,742  
Content advances3,002  1,890  
Other current assets1,286  1,199  
Total current assets32,763  29,098  
Produced and licensed content costs33,591  35,777  
Investments3,080  3,218  
Parks, resorts and other property
Attractions, buildings and equipment70,090  66,998  
Accumulated depreciation(42,610) (39,356) 
27,480  27,642  
Projects in progress6,285  4,814  
Land1,176  1,140  
34,941  33,596  
Intangible assets, net13,061  14,837  
Goodwill77,067  77,897  
Other assets11,076  9,208  
Total assets$205,579  $203,631  
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued liabilities$20,671  $20,213  
Current portion of borrowings4,330  3,070  
Deferred revenue and other6,138  5,790  
Total current liabilities31,139  29,073  
Borrowings42,101  45,299  
Deferred income taxes7,258  8,363  
Other long-term liabilities12,069  12,518  
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests9,055  9,499  
Equity
Preferred stock—  —  
Common stock, $0.01 par value, Authorized – 4.6 billion shares, Issued – 1.8 billion shares57,383  56,398  
Retained earnings46,093  43,636  
Accumulated other comprehensive loss(3,292) (4,119) 
Treasury stock, at cost, 19 million shares(907) (907) 
Total Disney Shareholders’ equity99,277  95,008  
Noncontrolling interests4,680  3,871  
Total equity103,957  98,879  
Total liabilities and equity$205,579  $203,631  
See Notes to Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
202320222021
OPERATING ACTIVITIES
Net income from continuing operations$3,390  $3,553  $2,536  
Depreciation and amortization5,369  5,163  5,111  
Impairments of produced and licensed content costs and goodwill2,987  —  —  
Net (gain)/loss on investments(166) 714  (332) 
Deferred income taxes(1,346) 200  (1,241) 
Equity in the income of investees(782) (816) (761) 
Cash distributions received from equity investees720  779  754  
Net change in produced and licensed content costs and advances(1,908) (6,271) (4,301) 
Equity-based compensation1,143  977  600  
Pension and postretirement medical cost amortization4  620 816  
Other, net278  595  190  
Changes in operating assets and liabilities
Receivables358  605  (357) 
Inventories(183) (420) 252  
Other assets(201) (707) 171  
Accounts payable and other liabilities(1,142) 964  2,410  
Income taxes1,345  46  (282) 
Cash provided by operations - continuing operations9,866  6,002  5,566  
INVESTING ACTIVITIES
Investments in parks, resorts and other property(4,969) (4,943) (3,578) 
Proceeds from sales of investments458  52  337  
Other, net(130) (117) 70  
Cash used in investing activities - continuing operations(4,641) (5,008) (3,171) 
FINANCING ACTIVITIES
Commercial paper payments, net(191) (334) (26) 
Borrowings83  333  64  
Reduction of borrowings(1,675) (4,016) (3,737) 
Proceeds from exercise of stock options52  127  435  
Contributions from / sales of noncontrolling interests735  74  91  
Acquisition of redeemable noncontrolling interests(900) —  (350) 
Other, net(828) (913) (862) 
Cash used in financing activities - continuing operations(2,724) (4,729) (4,385) 
CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash provided by operations - discontinued operations—  8  1  
Cash provided by investing activities - discontinued operations—  —  8  
Cash used in financing activities - discontinued operations—  (12) —  
Cash (used in) provided by discontinued operations—  (4) 9  
Impact of exchange rates on cash, cash equivalents and restricted cash73  (603) 30  
Change in cash, cash equivalents and restricted cash2,574  (4,342) (1,951) 
Cash, cash equivalents and restricted cash, beginning of year11,661  16,003  17,954  
Cash, cash equivalents and restricted cash, end of year$14,235  $11,661  $16,003  
Supplemental disclosure of cash flow information:
Interest paid$2,110  $1,685  $1,892  
Income taxes paid$1,193  $1,097  $1,638  
See Notes to Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in millions)
 Equity Attributable to Disney  
SharesCommon
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income
(Loss)		Treasury
Stock		Total
Disney
Equity
Non-controlling
Interests(1)
Total Equity
Balance at October 3, 20201,810 $54,497  $38,315  $(8,322) $(907) $83,583  $4,680  $88,263  
Comprehensive income— —  1,995  1,882  —  3,877  284  4,161  
Equity compensation activity8 904  —  —  —  904  —  904  
Contributions— —  —  —  —  —  89  89  
Cumulative effect of accounting change— —  109  —  —  109  —  109  
Distributions and other— 70  10  —  —  80  (595) (515) 
Balance at October 2, 20211,818 $55,471  $40,429  $(6,440) $(907) $88,553  $4,458  $93,011  
Comprehensive income (loss)— —  3,145  2,321  —  5,466  (68) 5,398  
Equity compensation activity6 925  —  —  —  925  —  925  
Contributions— —  —  —  —  —  74  74  
Distributions and other— 2  62  —  —  64  (593) (529) 
Balance at October 1, 20221,824 $56,398  $43,636  $(4,119) $(907) $95,008  $3,871  $98,879  
Comprehensive income— —  2,354  827  —  3,181  549  3,730  
Equity compensation activity6 1,056  —  —  —  1,056  —  1,056  
Contributions— —  —  —  —  —  806  806  
Distributions and other— (71) 103  —  —  32  (546) (514) 
Balance at September 30, 20231,830 $57,383  $46,093  $(3,292) $(907) $99,277  $4,680  $103,957  
(1)Excludes redeemable noncontrolling interest.
See Notes to Consolidated Financial Statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in millions, except where noted and per share amounts)
1Description of the Business and Segment Information
The Walt Disney Company, together with the subsidiaries through which businesses are conducted (the Company), is a diversified worldwide entertainment company with operations in three segments: Entertainment, Sports and Experiences.
The terms “Company”, “we”, “our” and “us” are used in this report to refer collectively to the parent company and the subsidiaries through which businesses are conducted.
Segment Restructuring
In fiscal 2023, the Company reorganized into three business segments: Entertainment, Sports and Experiences (renamed from Disney Parks, Experiences and Products). Fiscal 2022 and 2021 segment financial information has been recast for the following:
•The prior Disney Media and Entertainment Distribution (DMED) segment has been reorganized into the Entertainment and Sports segments
•A portion of Consumer Products (a business within the Experiences segment) revenues is recognized at the Entertainment segment, which is meant to reflect royalties on merchandise licensing revenues generated on IP created by the Entertainment segment
DESCRIPTION OF THE BUSINESS
Entertainment
The Entertainment segment generally encompasses the Company’s non-sports focused global film, television and direct-to-consumer (DTC) video streaming content production and distribution activities.
The significant lines of business within Entertainment are as follows:
•Linear Networks
◦Domestic: ABC Television Network; Disney, Freeform, FX and National Geographic (owned 73% by the Company) branded television channels; and eight owned ABC television stations
◦International: Disney, Fox (which will be rebranded in fiscal 2024 primarily to FX or Star), FX, National Geographic (owned 73% by the Company) and Star branded general entertainment television networks outside of the U.S.
◦A 50% equity investment in A+E Television Networks (A+E), which operates cable channels including A&E, HISTORY and Lifetime
•Direct-to-Consumer
◦Disney+: a global DTC service that primarily offers general entertainment and family programming. In certain Latin American countries, we offer Disney+ as well as Star+, a general entertainment service that also has sports programming
◦Disney+ Hotstar: a DTC service primarily in India that offers general entertainment, family and sports programming
◦Hulu (owned 67% by the Company): a U.S. DTC service that offers general entertainment and family programming and a digital over-the-top service that includes live linear streams of cable networks and the major broadcast networks
•Content Sales/Licensing
◦Sale/licensing of film and episodic content to third-party television and video-on-demand (TV/VOD) services
◦Theatrical distribution
◦Home entertainment distribution: DVD and Blu-ray discs, electronic home video licenses and video-on-demand (VOD) rentals
◦Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)
◦Intersegment allocation of revenues from the Experiences segment, which is meant to reflect royalties on consumer products merchandise licensing revenues generated on intellectual property (“IP”) created by the Entertainment segment
◦Music distribution
◦Post-production services by Industrial Light & Magic and Skywalker Sound
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Entertainment also includes the following activities that are reported with Content Sales/Licensing:
•National Geographic magazine and online business (owned 73% by the Company)
•A 30% ownership interest in Tata Play Limited, which operates a direct-to-home satellite distribution platform in India
The significant revenues of Entertainment are as follows:
•Affiliate fees - Fees charged to multi-channel video programming distributors (i.e. cable, satellite, telecommunications and digital over-the-top (e.g. YouTube TV) service providers) (MVPDs) for the right to deliver our programming to their customers. Linear Networks also generates revenues from fees charged to television stations affiliated with ABC Network.
•Subscription fees - Fees charged to customers/subscribers for our DTC streaming services
•Advertising - Sales of advertising time/space
•TV/VOD distribution - Licensing fees for the right to use our film and episodic content
•Theatrical distribution - Rentals from licensing our films to theaters
•Home entertainment distribution - Sales and rentals of our film and episodic content to retailers and through distributors
•Other revenue - Revenues from licensing our music, ticket sales from stage play performances, fees from licensing our IP for use in stage plays, sales of post-production services and the allocation of consumer products merchandise licensing revenues
The significant expenses of Entertainment are as follows:
•Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor, distribution costs and costs of sales. Programming and production costs include the following:
◦Amortization of capitalized production costs
◦Amortization of the costs of licensed programming rights
◦Subscriber-based fees for programming our Hulu Live service, including fees paid by Hulu to the Sports segment and other Entertainment segment businesses for the right to air their linear networks on Hulu Live
◦Production costs related to live programming (primarily news)
◦Amortization of participations and residual obligations
◦Fees paid to the Sports segment to program ESPN on ABC and certain sports content on Star+
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
Sports
The Sports segment generally encompasses the Company’s sports-focused global television and DTC video streaming content production and distribution activities.
The significant lines of business within Sports are as follows:
•ESPN (generally owned 80% by the Company)
◦Domestic:
▪Eight ESPN branded television channels
▪ESPN on ABC (sports programmed on the ABC Network by ESPN)
▪ESPN+ DTC video streaming service
◦International: ESPN-branded channels outside of the U.S.
•Star: Star-branded sports channels in India
The significant revenues of Sports are as follows:
•Affiliate fees
•Advertising
•Subscription fees
•Other revenue - Fees from the following activities: pay-per-view events on ESPN+, sub-licensing of sports rights, programming ESPN on ABC and licensing the ESPN brand
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The significant expenses of Sports are as follows:
•Operating expenses, consisting primarily of programming and production costs, technology support costs, operating labor and distribution costs. Programming and production costs include amortization of licensed sports rights and production costs related to live sports and other sports-related programming.
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
Experiences
The significant lines of business within Experiences are as follows:
•Parks & Experiences:
◦Domestic:
▪Theme parks and resorts:
•Walt Disney World Resort in Florida
•Disneyland Resort in California
▪Experiences
•Disney Cruise Line
•Disney Vacation Club
•National Geographic Expeditions (owned 73% by the Company) and Adventures by Disney
•Aulani, a Disney Resort & Spa in Hawaii
◦International:
▪Theme parks and resorts:
•Disneyland Paris
•Hong Kong Disneyland Resort (48% ownership interest and consolidated in our financial results)
•Shanghai Disney Resort (43% ownership interest and consolidated in our financial results)
•In addition, the Company licenses its IP to a third party to operate Tokyo Disney Resort
•Consumer Products:
◦Licensing of our trade names, characters, visual, literary and other IP to various manufacturers, game developers, publishers and retailers throughout the world, for use on merchandise, published materials and games
◦Sale of branded merchandise through online, retail and wholesale businesses, and development and publishing of books, comic books and magazines (except National Geographic magazine, which is reported in Entertainment)
The significant revenues of Experiences are as follows:
•Theme park admissions - Sales of tickets for admission to our theme parks and for premium access to certain attractions (e.g. Genie+ and Lightning Lane)
•Resorts and vacations - Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of vacation club properties
•Parks & Experiences merchandise, food and beverage - Sales of merchandise, food and beverages at our theme parks and resorts and cruise ships
•Merchandise licensing and retail:
◦Merchandise licensing - Royalties from licensing our IP for use on consumer goods
◦Retail - Sales of merchandise through internet shopping sites (generally branded shopDisney) and at The Disney Store, as well as to wholesalers (including books, comic books and magazines)
•Parks licensing and other - Revenues from sponsorships and co-branding opportunities, real estate rent and sales and royalties earned on Tokyo Disney Resort revenues
The significant expenses of Experiences are as follows:
•Operating expenses, consisting primarily of operating labor, costs of goods sold, infrastructure costs, supplies, commissions and entertainment offerings. Infrastructure costs include technology support costs, repairs and maintenance, property taxes, utilities and fuel, retail occupancy costs, insurance and transportation
•Selling, general and administrative costs, including marketing costs
•Depreciation and amortization
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SEGMENT INFORMATION
Our operating segments report separate financial information, which is evaluated regularly by the Chief Executive Officer in order to decide how to allocate resources and to assess performance.
Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, net other income, net interest expense, income taxes and noncontrolling interests. Segment operating income generally includes equity in the income of investees and excludes impairments of certain equity investments and acquisition accounting amortization of TFCF Corporation (TFCF) and Hulu assets (i.e. intangible assets and the fair value step-up for film and episodic costs) recognized in connection with the TFCF acquisition in fiscal 2019 (TFCF and Hulu acquisition amortization). Corporate and unallocated shared expenses principally consist of corporate functions, executive management and certain unallocated administrative support functions.
Segment operating results include allocations of certain costs, including information technology, pension, legal and other shared services costs, which are allocated based on metrics designed to correlate with consumption.
Segment revenues and segment operating income are as follows:
202320222021
Revenues
Entertainment
Third parties$40,258  $39,231  $36,155  
Intersegment377  338  334  
40,635  39,569  36,489  
Sports
Third parties16,091  16,429  15,302  
Intersegment1,020  841  658  
17,111  17,270  15,960  
Experiences32,549  28,085  15,961  
Eliminations(1,397) (1,179) (992) 
Total segment revenues$88,898  $83,745  $67,418  
Segment operating income (loss)
Entertainment$1,444  $2,126  $5,196  
Sports2,465  2,710  2,690  
Experiences8,954  7,285  (120) 
Total segment operating income(1)
$12,863  $12,121  $7,766  
(1)Equity in the income of investees is included in segment operating income as follows:
202320222021
Entertainment$685  $783  $744  
Sports55  55  51  
Experiences(2) (10) (19) 
Equity in the income of investees included in segment operating income738  828  776  
A+E Gain(1)
56  —  —  
Amortization of TFCF intangible assets related to equity investees(12) (12) (15) 
Equity in the income of investees$782  $816  $761  
(1)Restructuring and impairment charges include the impact of a content license agreement termination with A+E, which generated a gain at A+E. The Company’s 50% interest of this gain was $56 million (A+E gain).
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A reconciliation of segment revenues to total revenues is as follows:
 202320222021
Segment revenues$88,898 $83,745   $67,418 
Content License Early Termination(1)
—   (1,023)—   
Total revenues$88,898 $82,722 $67,418 
(1)In fiscal 2022, the Company early terminated certain license agreements with a customer for film and episodic content, which was delivered in previous years, in order for the Company to use the content primarily on our Entertainment Direct-to-Consumer services (Content License Early Termination). Because the content is functional IP, we had recognized substantially all of the consideration to be paid by the customer under the licenses as revenue in prior years when the content was delivered. Consequently, we have recorded the amounts to terminate the license agreements, net of remaining amounts of deferred revenue, as a reduction of revenue.
A reconciliation of segment operating income to income from continuing operations before income taxes is as follows:
202320222021
Segment operating income$12,863  $12,121  $7,766  
Content License Early Termination— (1,023)— 
Corporate and unallocated shared expenses(1,147) (1,159) (928) 
Restructuring and impairment charges(1)
(3,836) (237) (654) 
Other income (expense), net96  (667) 201  
Interest expense, net(1,209) (1,397) (1,406) 
TFCF and Hulu acquisition amortization(2)
(1,998) (2,353) (2,418) 
Income from continuing operations before income taxes$4,769  $5,285  $2,561  
(1)Net of the A+E Gain.
(2)TFCF and Hulu acquisition amortization is as follows:
202320222021
Amortization of intangible assets$1,547  $1,707  $1,757  
Step-up of film and episodic costs439 634 646 
Intangibles related to TFCF equity investees12 12 15 
$1,998 $2,353 $2,418 
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Capital expenditures, depreciation expense and amortization expense are as follows:
Capital expenditures202320222021
Entertainment$1,032  $802  $838  
Sports15  8  24  
Experiences
Domestic2,203  2,680  1,597  
International822  767  675  
Corporate897  686  444  
Total capital expenditures$4,969  $4,943  $3,578  
Depreciation expense
Entertainment$669  $560  $513  
Sports73  90  100 
Experiences
Domestic2,011  1,680  1,551  
International669  662  718  
Amounts included in segment operating income2,680  2,342  2,269  
Corporate204  191  186  
Total depreciation expense$3,626  $3,183  $3,068  
Amortization of intangible assets
Entertainment$87  $164  $174  
Sports—  —  4  
Experiences109  109  108  
Amounts included in segment operating income196  273  286  
TFCF and Hulu1,547  1,707  1,757  
Total amortization of intangible assets$1,743  $1,980  $2,043  
Identifiable assets, including equity method investments(1) and intangible assets,(2) are as follows:
September 30, 2023October 1, 2022
Entertainment$113,307  $117,184  
Sports25,402  24,988  
Experiences42,808  41,969  
Corporate (primarily fixed asset and cash and cash equivalents)24,062  19,490  
Total consolidated assets$205,579  203,631  
(1)Equity method investments included in identifiable assets by segment are as follows:
September 30, 2023October 1, 2022
Entertainment$2,433  $2,449  
Sports213  184  
Experiences—  2  
Corporate42  43  
$2,688  $2,678  
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(2)Intangible assets, which include character/franchise intangibles, copyrights, trademarks, MVPD agreements and FCC licenses (see Note 13), included in identifiable assets by segment are as follows:
September 30, 2023October 1, 2022
Entertainment$8,556  $9,829  
Sports1,767  2,152  
Experiences2,718  2,836  
Corporate20  20  
$13,061  $14,837  
The following table presents our revenues and segment operating income by geographical markets:
202320222021
Revenues
Americas$71,205  $68,218  $54,157  
Europe9,533  8,680  6,690  
Asia Pacific8,160  6,847  6,571  
$88,898  $83,745  $67,418  
Content License Early Termination(1,023) 
$82,722  
Segment operating income
Americas$10,779  $11,099  $6,314  
Europe856  586  800  
Asia Pacific1,228  436  652  
$12,863  $12,121  $7,766  
Long-lived assets(1) by geographical markets are as follows:
September 30, 2023October 1, 2022
Americas$148,567  $150,786  
Europe9,895  8,739  
Asia Pacific10,244  10,976  
$168,706  $170,501  
(1)Long-lived assets are total assets less: current assets, long-term receivables, deferred taxes, financial investments and the fair value of derivative instruments.
The changes in the carrying amount of goodwill are as follows:
DMEDExperiencesEntertainmentSportsTotal
Balance at Oct. 2, 2021$72,521  $5,550  $—  $—  $78,071  
Currency translation adjustments and other, net(174) —  —  —  (174) 
Balance at Oct. 1, 202272,347  5,550  —  —  77,897  
Segment recast(1)
(72,347) —  55,488  16,859  —  
Goodwill impairment(2)
—  —  (425) (296) (721) 
Currency translation adjustments and other, net—  —  (32) (77) (109) 
Balance at Sep. 30, 2023$—  $5,550  $55,031  $16,486  $77,067  
(1)Reflects the reallocation of goodwill as a result of the Company recasting its segments from the strategic reorganization during fiscal 2023.
(2)Reflects goodwill impairments at entertainment and international sports linear networks (See Note 18).
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2Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of The Walt Disney Company and its majority-owned or controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.
The Company enters into relationships with or makes investments in other entities that may be variable interest entities (VIE). A VIE is consolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant (as defined by ASC 810-10-25-38) to the VIE. Hong Kong Disneyland Resort and Shanghai Disney Resort (together, the Asia Theme Parks) are VIEs in which the Company has less than 50% equity ownership. Company subsidiaries (the Management Companies) have management agreements with the Asia Theme Parks, which provide the Management Companies, subject to certain protective rights of joint venture partners, with the ability to direct the day-to-day operating activities and the development of business strategies that we believe most significantly impact the economic performance of the Asia Theme Parks. In addition, the Management Companies receive management fees under these arrangements that we believe could be significant to the Asia Theme Parks. Therefore, the Company has consolidated the Asia Theme Parks in its financial statements.
Reporting Period
The Company’s fiscal year ends on the Saturday closest to September 30 and consists of fifty-two weeks with the exception that approximately every six years, we have a fifty-three week year. When a fifty-three week year occurs, the Company reports the additional week in the fourth quarter. Fiscal 2023, 2022 and 2021 were fifty-two week years.
Reclassifications
Certain reclassifications have been made in the fiscal 2022 and fiscal 2021 financial statements and notes to conform to the fiscal 2023 presentation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates.
Revenues and Costs from Services and Products
The Company generates revenue from the sale of both services and tangible products and revenues and operating costs are classified under these two categories in the Consolidated Statements of Income. Certain costs related to both the sale of services and tangible products are not specifically allocated between the service or tangible product revenue streams but are instead attributed to the principal revenue stream. The cost of services and tangible products exclude depreciation and amortization.
Significant service revenues include:
•Affiliate fees
•Subscription fees to our DTC streaming services
•Advertising revenues
•Admissions to our theme parks, charges for room nights at hotels and sales of cruise vacation packages
•Revenue from the licensing and distribution of film and television properties
•Royalties from licensing our IP for use on consumer goods, published materials and in multi-platform games
Significant operating costs related to the sale of services include:
•Programming and production costs
•Distribution costs
•Operating labor
•Facilities and infrastructure costs
Significant tangible product revenues include:
•The sale of food, beverage and merchandise at our retail locations
•The sale of DVDs and Blu-ray discs
•The sale of books, comic books and magazines
Significant operating costs related to the sale of tangible products include:
•Costs of goods sold
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•Operating labor
•Programming and production costs
•Distribution costs
•Retail occupancy costs
Revenue Recognition
The Company’s revenue recognition policies are as follows:
•Affiliate fees are recognized as the programming is provided based on contractually specified per subscriber rates and the actual number of the affiliate’s customers receiving the programming. For affiliate contracts with fixed license fees, the fees are recognized ratably over the contract term. If an affiliate contract includes a minimum guaranteed license fee, the guaranteed license fee is recognized ratably over the guaranteed period and any fees earned in excess of the guarantee are recognized as earned once the minimum guarantee has been exceeded. Affiliate agreements may also include a license to use the network programming for on demand viewing. As the fees charged under these contracts are generally based on a contractually specified per subscriber rate for the number of underlying subscribers of the affiliate, revenues are recognized as earned.
•Subscription fees are recognized ratably over the term of the subscription.
•Advertising sales are recognized as revenue, net of agency commissions, when commercials are aired. For contracts that contain a guaranteed number of impressions, revenues are recognized based on impressions delivered. When the guaranteed number of impressions is not met (“ratings shortfall”), revenues are not recognized for the ratings shortfall until the additional impressions are delivered.
•Theme park admissions are recognized when the tickets are used. Sales of annual passes are recognized ratably over the period for which the pass is available for use.
•Resorts and vacations sales are recognized as revenue as the services are provided to the guest. Sales of vacation club properties are recognized as revenue upon the later of when title transfers to the customer or when construction activity is deemed complete.
•Merchandise, food and beverage sales are recognized at the time of sale. Sales from our branded internet shopping sites and to wholesalers are recognized upon delivery. We estimate returns and customer incentives based upon historical return experience, current economic trends and projections of consumer demand for our products.
•Merchandise licensing fees are recognized as revenue as earned based on the contractual royalty rate applied to the licensee’s underlying product sales. For licenses with minimum guaranteed license fees, the excess of the minimum guaranteed amount over actual royalties earned (“shortfall”) is recognized straight-line over the remaining license period once an expected shortfall is probable.
•TV/VOD distribution fixed license fees are recognized as revenue when the content is available for use by the licensee. License fees based on the underlying sales of the licensee are recognized as revenue based on the contractual royalty rate applied to the licensee sales.
For TV/VOD licenses that include multiple titles with a fixed license fee across all titles, each title is considered a separate performance obligation. The fixed license fee is allocated to each title at contract inception and the allocated license fee is recognized as revenue when the title is available for use by the licensee.
When the license contains a minimum guaranteed license fee across all titles, the license fees earned by titles in excess of their allocated amount are deferred until the minimum guaranteed license fee across all titles is exceeded. Once the minimum guaranteed license fee is exceeded, revenue is recognized as earned based on the licensee’s underlying sales.
TV/VOD distribution contracts may limit the licensee’s use of a title to certain defined periods of time during the contract term. In these instances, each period of availability is generally considered a separate performance obligation. For these contracts, the fixed license fee is allocated to each period of availability at contract inception based on relative standalone selling price using management’s best estimate. Revenue is recognized at the start of each availability period when the content is made available for use by the licensee.
When the term of an existing agreement is renewed or extended, revenues are recognized when the licensed content becomes available under the renewal or extension.
•Theatrical distribution licensing fees are recognized as revenue based on the contractual royalty rate applied to the distributor’s underlying sales from exhibition of the film.
•Home entertainment sales in physical formats are recognized as revenue on the later of the delivery date or the date that the product can be sold by retailers. We reduce home entertainment revenues for estimated future returns of merchandise and sales incentives based upon historical return experience, current economic trends and projections of consumer demand for our products. Sales of our films in electronic formats are recognized as revenue when the product is available for use by the consumer.
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•Taxes collected from customers and remitted to governmental authorities are excluded from revenue.
•Shipping and handling fees collected from customers are recorded as revenue and the related shipping expenses are recorded in cost of products upon delivery of the product to the consumer.
Allowance for Credit Losses
We evaluate our allowance for credit losses and estimate collectability of current and non-current accounts receivable based on historical bad debt experience, our assessment of the financial condition of individual companies with which we do business, current market conditions and reasonable supportable forecasts of future economic conditions.
Advertising Expense
Advertising costs are expensed as incurred. Advertising expense for fiscal 2023, 2022 and 2021 was $6.4 billion, $7.2 billion and $5.5 billion, respectively. The decrease in advertising expense for fiscal 2023 compared to fiscal 2022 was due to lower spend for our DTC streaming services. The increase in advertising expense for fiscal 2022 compared to fiscal 2021 was due to higher spend for our DTC streaming services and an increase in theatrical marketing costs.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less. Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statements of Cash Flows.
September 30, 2023October 1, 2022October 2, 2021
Cash and cash equivalents$14,182$11,615$15,959
Restricted cash included in:
Other current assets—33
Other assets534341
Total cash, cash equivalents and restricted cash in the statement of cash flows$14,235$11,661$16,003
Investments
Investments in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at that value with unrealized gains and losses included in earnings. For equity securities without a readily determinable fair value, the investment is recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with unrealized gains and losses included in earnings.
For equity method investments, the Company regularly reviews its investments to determine whether there is a decline in fair value below book value. If there is a decline that is other-than-temporary, the investment is written down to fair value.
Translation Policy
Generally, the U.S. dollar is the functional currency for our international film and episodic content distribution and licensing businesses and the branded international channels and DTC streaming services. Generally, the local currency is the functional currency for the Asia Theme Parks, Disneyland Paris, the Star branded channels in India, international sports channels and international locations of The Disney Store.
For U.S. dollar functional currency locations, foreign currency assets and liabilities are remeasured into U.S. dollars at end-of-period exchange rates, except for non-monetary balance sheet accounts, which are remeasured at historical exchange rates. Revenue and expenses are remeasured at average exchange rates in effect during each period, except for those expenses related to the non-monetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in income.
For local currency functional locations, assets and liabilities are translated at end-of-period rates while revenues and expenses are translated at average rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss) (AOCI).
Inventories
Inventory primarily includes vacation timeshare units, merchandise, food, materials and supplies. Carrying amounts of vacation ownership units are recorded at the lower of cost or net realizable value. Carrying amounts of merchandise, food, materials and supplies inventories are generally determined on a moving average cost basis and are recorded at the lower of cost or net realizable value.
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Film and Television Content Costs
The Company classifies its capitalized produced and acquired/licensed content costs as long-term assets (“Produced and licensed content costs” in the Consolidated Balance Sheet) and classifies advances for live programming rights made prior to the live event as short-term assets (“Content advances” in the Consolidated Balance Sheet). For produced content, we capitalize all direct costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest. For licensed and acquired content, we capitalize the license fee or acquisition cost, respectively. For purposes of amortization and impairment, the capitalized content costs are classified based on their predominant monetization strategy as follows:
•Individual - lifetime value is predominantly derived from third-party revenues that are directly attributable to the specific title (e.g. theatrical revenues or sales to third-party television programmers)
•Group - lifetime value is predominantly derived from third-party revenues that are attributable only to a bundle of titles (e.g. subscription revenue for a DTC service or affiliate fees for a cable television network)
The determination of the predominant monetization strategy is made at commencement of production on a consolidated basis and is based on the means by which we derive third-party revenues from use of the content. Imputed title by title license fees that may be necessary for other purposes are established as required for those purposes.
We generally classify content that is initially intended for use on our DTC streaming services or Linear Networks as group assets. We generally classify content initially intended for theatrical release or for sale to third-party licensees as individual assets. The classification of content as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment (e.g. content that was initially intended for license to a third party is instead used on an owned DTC service). When there is a significant change in monetization strategy, the title’s capitalized content costs are tested for impairment.
Production costs for content that is predominantly monetized individually are amortized based upon the ratio of the current period’s revenues to the estimated remaining total revenues (Ultimate Revenues). For film productions, Ultimate Revenues include revenues from all sources, which may include imputed license fees for content that is used on our DTC streaming services, that will be earned within ten years from the date of the initial release for theatrical films. For episodic series that are classified as individual, Ultimate Revenues include revenues that will be earned within ten years, including imputed license fees for content that is used on our DTC streaming services, from delivery of the first episode, or if still in production, five years from delivery of the most recent episode, if later. Participations and residuals are expensed over the applicable product life cycle based upon the ratio of the current period’s revenues to the estimated remaining total revenues for each production.
Production costs that are predominantly monetized as a group are amortized based on projected usage, generally resulting in an accelerated or straight-line amortization pattern. Adjustments to projected usage are applied prospectively in the period of the change. Participations and residuals are generally expensed in line with the pattern of usage.
Licensed rights to film and television content and other programs for broadcast on our Linear Networks, domestic ESPN television network, International Sports Channels or DTC streaming services are expensed on an accelerated or straight-line basis over their useful life or over the number of times the program is expected to be aired, as appropriate. We amortize rights costs for multi-year sports programming arrangements during the applicable seasons based on the estimated relative value of each year in the arrangement. If annual contractual payments related to each season approximate each season’s estimated relative value, we expense the related contractual payments during the applicable season.
Acquired film and television libraries are generally amortized on a straight-line basis over 20 years from the date of acquisition. Acquired film and television libraries include content that was initially released three years prior to its acquisition, except it excludes the prior seasons of episodic programming still in production at the date of its acquisition.
Amortization of capitalized costs for produced and acquired content begins in the month the content is first released, while amortization of capitalized costs for licensed content commences when the license period begins and the content is first aired or available for use on our DTC services. Amortization of content assets is primarily included in “Cost of services” in the Consolidated Statements of Income.
The costs of produced and licensed film and television content are subject to regular recoverability assessments. Production costs for content that is predominantly monetized individually are tested for impairment at the individual title level by comparing that title’s unamortized costs to the estimated present value of discounted cash flows directly attributable to the title. To the extent the title’s unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess. Cost of content that is predominantly monetized as a group is tested for impairment by comparing the present value of the discounted cash flows of the group to the aggregate unamortized costs of the group. The group is established by identifying the lowest level for which cash flows are independent of the cash flows of other produced and licensed content. If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded
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for the excess and allocated to individual titles based on the relative carrying value of each title in the group. If there are no plans to continue to use an individual film or television program that is part of a group, the unamortized cost of the individual title is written down to its estimated fair value. Licensed content is included as part of the group within which it is monetized for purposes of impairment testing.
Content Production Incentives
The Company receives tax incentives from U.S. (state and local) and foreign government agencies to encourage the production of film, episodic and streaming content. The incentives are largely received as tax credits, which are recognized as a reduction to produced and licensed content costs when there is reasonable assurance of collection (presented as “Produced and licensed content costs” in the Consolidated Balance Sheets), resulting in a reduction to programming and production costs (presented as “Costs of services” in the Consolidated Statements of Income) over the asset’s amortization period.
Internal-Use Software Costs
The Company expenses costs incurred in the preliminary project stage of developing or acquiring internal use software, such as research and feasibility studies as well as costs incurred in the post-implementation/operational stage, such as maintenance and training. Capitalization of software development costs occurs only after the preliminary-project stage is complete, management authorizes the project and it is probable that the project will be completed and the software will be used for the function intended. As of September 30, 2023 and October 1, 2022, capitalized software costs, net of accumulated amortization, totaled $1.2 billion and $1.1 billion, respectively. The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software, generally up to 5 years.
Parks, Resorts and Other Property
Parks, resorts and other property are carried at historical cost. Depreciation is computed on the straight-line method, generally over estimated useful lives as follows:
Attractions, buildings and improvements20 – 40 years
Furniture, fixtures and equipment3 – 25 years
Land improvements20 – 40 years
Leasehold improvementsLife of lease or asset life if less
Leases
The Company determines whether a contract is a lease at contract inception or for a modified contract at the modification date. At inception or modification, the Company calculates the present value of operating lease payments using the Company’s incremental borrowing rate applicable to the lease, which is determined by estimating what it would cost the Company to borrow a collateralized amount equal to the total lease payments over the lease term based on the contractual terms of the lease and the location of the leased asset. Our leases may require us to make fixed rental payments, variable lease payments based on usage or sales and fixed non-lease costs relating to the leased asset. Variable lease payments are generally not included in the measurement of the right-of-use asset and lease liability. Fixed non-lease costs, for example common-area maintenance costs, are included in the measurement of the right-of-use asset and lease liability as the Company does not separate lease and non-lease components.
Goodwill, Other Intangible Assets and Long-Lived Assets
The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and if current events or circumstances require, on an interim basis. The Company performs its annual test of goodwill and indefinite-lived intangible assets for impairment in its fiscal fourth quarter.
Goodwill is allocated to various reporting units, which are an operating segment or one level below the operating segment. To test goodwill for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of a reporting unit exceeds its fair value. If it is, a quantitative assessment is required. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test.
The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions and changes in projected future cash flows of the reporting unit.
The quantitative assessment compares the fair value of each goodwill reporting unit to its carrying amount, and to the extent the carrying amount exceeds the fair value, an impairment of goodwill is recognized for the excess up to the amount of goodwill allocated to the reporting unit.
In fiscal 2023, the Company bypassed the qualitative test and performed a quantitative assessment of goodwill for impairment (see Note 18).
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The impairment test for goodwill requires judgment related to the identification of reporting units, the assignment of assets and liabilities to reporting units including goodwill and the determination of fair value of the reporting units. To determine the fair value of our reporting units, we generally use a present value technique (discounted cash flows) corroborated by market multiples when available and as appropriate. The discounted cash flow analyses are sensitive to our estimated projected future cash flows as well as the discount rates used to calculate their present value. Our future cash flows are based on internal forecasts for each reporting unit, which consider projected inflation and other economic indicators, as well as industry growth projections. Discount rates for each reporting unit are determined based on the inherent risks of each reporting unit’s underlying operations. We believe our estimates are consistent with how a marketplace participant would value our reporting units. If we had established different reporting units or utilized different valuation methodologies or assumptions, the impairment test results could differ.
To test other indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair value. If it is, a quantitative assessment is required. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test.
The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions and changes in projected future cash flows.
The quantitative assessment compares the fair value of an indefinite-lived intangible asset to its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized for the excess. Fair values of indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate. The Company has determined that there are currently no legal, competitive, economic or other factors that materially limit the useful life of our FCC licenses and trademarks, which are our most significant indefinite-lived intangible assets.
Finite-lived intangible assets are generally amortized on a straight-line basis over periods of 5 to 40 years. The costs to periodically renew our intangible assets are expensed as incurred.
The Company tests long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount may not be recoverable. Once a triggering event has occurred, the impairment test employed is based on whether the Company’s intent is to hold the asset for continued use or to hold the asset for sale. The impairment test for assets held for use requires a comparison of the estimated undiscounted future cash flows expected to be generated over the useful life of the significant assets of an asset group to the carrying amount of the asset group. An asset group is generally established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets and could include assets used across multiple businesses. If the carrying amount of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the asset group and the carrying amount of the asset group. For assets held for sale, to the extent the carrying amount is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference.
The Company recorded non-cash impairment charges of $3.0 billion, $0.2 billion and $0.3 billion in fiscal 2023, 2022 and 2021, respectively. The charges are recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income.
The fiscal 2023 charges primarily related to content impairments resulting from a strategic change in our approach to content curation ($2.2 billion) and goodwill ($0.7 billion) at our entertainment and international sports linear networks reporting units (see Note 18).
The fiscal 2022 charges primarily related to exiting our businesses in Russia.
The fiscal 2021 charges primarily related to the closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe.
The Company expects its aggregate annual amortization expense for finite-lived intangible assets for fiscal 2024 through 2028 to be as follows:
2024$1,627
20251,535
20261,042
2027965
2028898
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Financial Risk Management Contracts
In the normal course of business, the Company employs a variety of financial instruments (derivatives) including interest rate and cross-currency swap agreements and forward and option contracts to manage its exposure to fluctuations in interest rates, foreign currency exchange rates and commodity prices.
The Company formally documents all relationships between hedges and hedged items as well as its risk management objectives and strategies for undertaking various hedge transactions. The Company primarily enters into two types of derivatives: hedges of fair value exposure and hedges of cash flow exposure. Hedges of fair value exposure are entered into in order to hedge the fair value of a recognized asset, liability, or a firm commitment. Hedges of cash flow exposure are entered into in order to hedge a forecasted transaction (e.g. forecasted revenue) or the variability of cash flows to be paid or received, related to a recognized liability or asset (e.g. floating-rate debt).
The Company designates and assigns the derivatives as hedges of forecasted transactions, specific assets or specific liabilities. When hedged assets or liabilities are sold or extinguished or the forecasted transactions being hedged impact earnings or are no longer expected to occur, the Company recognizes the gain or loss on the designated derivatives.
The Company’s hedge positions are measured at fair value on the balance sheet. Realized gains and losses from hedges are classified in the income statement consistent with the accounting treatment of the items being hedged. The Company accrues the differential for interest rate swaps to be paid or received under the agreements as interest rates change as adjustments to interest expense over the lives of the swaps. Gains and losses on the termination of effective swap agreements, prior to their original maturity, are deferred and amortized to interest expense over the remaining term of the underlying hedged transactions.
The Company enters into derivatives that are not designated as hedges and do not qualify for hedge accounting. These derivatives are intended to offset certain economic exposures of the Company and are carried at fair value with changes in value recorded in earnings. Cash flows from hedging activities are classified in the Consolidated Statements of Cash Flows under the same category as the cash flows from the related assets, liabilities or forecasted transactions (see Notes 8 and 17).
Income Taxes
Deferred income tax assets and liabilities are recorded with respect to temporary differences in the accounting treatment of items for financial reporting purposes and for income tax purposes. Where, based on the weight of available evidence, it is more likely than not that some amount of recorded deferred tax assets will not be realized, a valuation allowance is established for the amount that, in management’s judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized.
A tax position must meet a minimum probability threshold before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than zero percent likely of being realized upon ultimate settlement.
Redeemable Noncontrolling Interests and Contributions from Noncontrolling Interest Holders
Hulu LLC
The Company consolidates the results of Hulu LLC (Hulu), a DTC streaming service provider, which is owned 67% by the Company and 33% by NBC Universal (NBCU). In May 2019, the Company entered into a put/call agreement with NBCU that provided the Company with full operational control of Hulu. Under the agreement, NBCU has the option to require the Company to purchase NBCU’s interest in Hulu (put right) and the Company has the option to require NBCU to sell its interest in Hulu to the Company (call right) at a redemption value based on NBCU’s equity ownership percentage of the greater of Hulu’s equity fair value or a guaranteed floor value of $27.5 billion. In August 2023, certain provisions under the put/call agreement were amended, including the addition of a November 2023 exercise window for the put/call, which would require assessment of Hulu’s equity fair value as of September 30, 2023. In November 2023, NBCU exercised its put right and the Company is obligated to pay NBCU the minimum value (approximately $9.2 billion based on the guaranteed floor value, less the unpaid capital call contributions payable by NBCU to the Company of $0.6 billion) within 30 days of exercise of the put. In accordance with the valuation procedures, Hulu’s equity fair value is not expected to be determined until sometime in calendar 2024. If Hulu’s equity fair value is determined to be higher than the guaranteed floor value, the Company would be required to pay NBCU’s share of the difference between the equity fair value and the guaranteed floor value at that time.
Determining the estimated redemption value requires management to make significant judgments. To the extent the fair value is deemed to exceed the guaranteed floor value, we would recognize NBCU’s share of the additional amount as a charge to “Net income from continuing operations attributable to noncontrolling interests” and thus reduce “Net income attributable to Disney” in the Consolidated Statements of Income.
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In addition, the Company will share 50% of its tax benefit from the purchase of NBCU’s interest in Hulu with NBCU, which payments are expected to be made primarily over a 15-year period.
At September 30, 2023, NBCU’s interest in Hulu is recorded in the Company’s financial statements at $9.1 billion, which is reported as “Redeemable noncontrolling interest” in the Consolidated Balance Sheet.
BAMTech LLC
In November 2022, the Company purchased MLB’s 15% redeemable noncontrolling interest in BAMTech LLC (BAMTech), which holds the Company’s domestic DTC sports business, for $900 million (MLB buy-out). MLB’s interest was recorded in the Company’s financial statements at $828 million prior to the MLB buy-out. The $72 million difference was recorded as an increase in “Net income from continuing operations attributable to noncontrolling interests” in the Consolidated Statements of Income.
During the fiscal year ended 2023, Hearst Corporation (Hearst) contributed $710 million to the domestic DTC sports business, in part to fund its 20% share of the MLB buy-out and in part to fund its share of the domestic DTC sports business’s operating cash requirements, which had been funded by the Company through intercompany loans.
Earnings Per Share
The Company presents both basic and diluted earnings per share (EPS) amounts. Basic EPS is calculated by dividing net income attributable to Disney by the weighted average number of common shares outstanding during the year. Diluted EPS is based upon the weighted average number of common and common equivalent shares outstanding during the year, which is calculated using the treasury-stock method for equity-based awards (Awards). Common equivalent shares are excluded from the computation in periods for which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and, accordingly, are excluded from the calculation.
A reconciliation of the weighted average number of common and common equivalent shares outstanding and the number of Awards excluded from the diluted earnings per share calculation, as they were anti-dilutive, are as follows:
202320222021
Weighted average number of common and common equivalent shares outstanding (basic)1,8281,8221,816
Weighted average dilutive impact of Awards2512
Weighted average number of common and common equivalent shares outstanding (diluted)1,8301,8271,828
Awards excluded from diluted earnings per share24154
3Revenues
The following table presents our revenues by segment and major source:
2023
EntertainmentSportsExperiencesEliminationsTotal
Affiliate fees$7,369$10,590$—$(1,084)$16,875
Subscription fees16,4201,517——17,937
Advertising7,5943,9204—11,518
Theme park admissions——10,423—10,423
Resort and vacations——7,949—7,949
Retail and wholesale sales of merchandise, food and beverage——8,921—8,921
Merchandise licensing619—2,509—3,128
TV/VOD distribution licensing2,645347——2,992
Theatrical distribution licensing3,174———3,174
Home entertainment931———931
Other1,8837372,743(313)5,050
$40,635$17,111$32,549$(1,397)$88,898
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2022
EntertainmentSportsExperiencesEliminations and OtherTotal
Affiliate fees$7,739$10,796$—$(1,010)$17,525
Subscription fees14,1781,113——15,291
Advertising8,6744,3704—13,048
Theme park admissions——8,602—8,602
Resort and vacations——6,410—6,410
Retail and wholesale sales of merchandise, food and beverage——7,838—7,838
Merchandise licensing620—3,349—3,969
TV/VOD distribution licensing3,551351—(1,023)2,879
Theatrical distribution licensing1,875———1,875
Home entertainment1,083———1,083
Other1,8496401,882(169)4,202
$39,569$17,270$28,085$(2,202)$82,722
2021
EntertainmentSportsExperiencesEliminationsTotal
Affiliate fees$8,043$10,609$—$(892)$17,760
Subscription fees11,295725——12,020
Advertising8,7053,7204—12,429
Theme park admissions——3,848—3,848
Resort and vacations——2,701—2,701
Retail and wholesale sales of merchandise, food and beverage——4,957—4,957
Merchandise licensing603—2,995—3,598
TV/VOD distribution licensing4,366429——4,795
Theatrical distribution licensing920———920
Home entertainment1,297———1,297
Other1,2604771,456(100)3,093
$36,489$15,960$15,961$(992)$67,418
The following table presents our revenues by segment and primary geographical markets:
2023
EntertainmentSportsExperiencesEliminationsTotal
Americas$31,414$16,000$25,188$(1,397)$71,205
Europe5,4753703,688—9,533
Asia Pacific3,7467413,673—8,160
$40,635$17,111$32,549$(1,397)$88,898
2022
EntertainmentSportsExperiencesEliminationsTotal
Americas$30,841$15,666$22,890$(1,179)$68,218
Europe5,0983963,186—8,680
Asia Pacific3,6301,2082,009—6,847
$39,569$17,270$28,085$(1,179)83,745
Content License Early Termination(1,023)
$82,722
2021
EntertainmentSportsExperiencesEliminationsTotal
Americas28,469$14,533$12,147$(992)$54,157
Europe4,8363461,508—6,690
Asia Pacific3,1841,0812,306—6,571
$36,489$15,960$15,961$(992)$67,418
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Revenues recognized in the current and prior year from performance obligations satisfied (or partially satisfied) in previous reporting periods primarily relate to revenues earned on TV/VOD licenses for titles made available to the licensee in previous reporting periods. For fiscal 2023, $0.9 billion was recognized related to performance obligations satisfied prior to October 1, 2022. For fiscal 2022, $1.1 billion was recognized related to performance obligations satisfied prior to October 2, 2021. For fiscal 2021, $1.3 billion was recognized related to performance obligations satisfied prior to October 3, 2020.
As of September 30, 2023, revenue for unsatisfied performance obligations expected to be recognized in the future is $15 billion, which primarily relates to content and other IP to be delivered in the future under existing agreements with merchandise and co-branding licensees and sponsors, television station affiliates, DTC wholesalers, sports sublicensees and advertisers. Of this amount, we expect to recognize approximately $6 billion in fiscal 2024, $4 billion in fiscal 2025, $2 billion in fiscal 2026 and $3 billion thereafter. These amounts include only fixed consideration or minimum guarantees and do not include amounts related to (i) contracts with an original expected term of one year or less (such as most advertising contracts) or (ii) licenses of IP that are solely based on the sales of the licensee.
When the timing of the Company’s revenue recognition is different from the timing of customer payments, the Company recognizes either a contract asset (customer payment is subsequent to revenue recognition and subject to the Company satisfying additional performance obligations) or deferred revenue (customer payment precedes the Company satisfying the performance obligations). Consideration due under contracts with payment in arrears is recognized as accounts receivable. Deferred revenues are recognized as (or when) the Company performs under the contract. The Company’s contract assets and activity for the current and prior-year periods were not material. Accounts receivable and deferred revenues from contracts with customers are as follows:
September 30,
2023		October 1,
2022
Accounts Receivable
Current$10,279  $10,886  
Non-current1,212  1,226  
Allowance for credit losses(154) (179) 
Deferred revenues
Current5,568  5,531  
Non-current977  927  
For fiscal 2023, 2022 and 2021, the Company recognized revenues of $5.1 billion, $3.6 billion and $2.9 billion, respectively, that was included in the deferred revenue balance at October 1, 2022, October 2, 2021 and October 3, 2020, respectively. Amounts deferred generally relate to theme park admissions and vacation packages, DTC subscriptions and advances related to merchandise and TV/VOD licenses.
The Company has accounts receivable with original maturities greater than one year related to TV/VOD sales and vacation club properties. These receivables are discounted to present value at contract inception and the related revenues are recognized at the discounted amount. The balance of TV/VOD licensing receivables recorded in other non-current assets was $0.6 billion at both September 30, 2023 and October 1, 2022. The balance of vacation club receivables recorded in other non-current assets was $0.7 billion and $0.6 billion at September 30, 2023 and October 1, 2022, respectively. The allowance for credit losses and activity for fiscal 2023 and 2022 was not material.
4Other Income (Expense), Net
Other income (expense), net is as follows:
202320222021
DraftKings gain (loss)$169  $(663) $(111) 
fuboTV gain—  —  186  
German FTA gain—  —  126  
Other, net(73) (4) —  
Other income (expense), net$96  $(667) $201  
In fiscal 2023, the Company recognized a gain of $169 million on its investment in DraftKings, Inc. (DraftKings), which was sold in the current fiscal year. In fiscal 2022 and 2021, respectively, the Company recognized non-cash losses of $663 million and $111 million to adjust its investment in DraftKings to fair value.
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In fiscal 2021, the Company recognized a $186 million gain from the sale of our investment in fuboTV Inc. (fuboTV gain) and a $126 million gain on the sale of its 50% interest in a German free-to-air (FTA) television network (German FTA gain).
5Investments
Investments consist of the following:
September 30,
2023		October 1,
2022
Investments, equity basis$2,688  $2,678  
Investments, other392  540  
$3,080$3,218
Investments, Equity Basis
The Company’s significant equity investments include A+E (50% ownership), Tata Play Limited (30% ownership) and CTV Specialty Television, Inc. (30% ownership). As of September 30, 2023, the book value of the Company’s equity method investments exceeded our share of the book value of the investees’ underlying net assets by approximately $0.7 billion, which represents amortizable intangible assets and goodwill arising from acquisitions.
Investments, Other
As of September 30, 2023 and October 1, 2022, the Company had securities in publicly and non-publicly traded investments, which were not material.
Gains, losses and impairments on securities are generally recorded in “Interest expense, net” in the Consolidated Statements of Income; these amounts were not material for fiscal 2023, 2022 and 2021. See Note 4 for realized and unrealized gains and losses on securities recorded in “Other income (expense), net” in the Consolidated Statements of Income.
6International Theme Parks
The Company has a 48% ownership interest in the operations of Hong Kong Disneyland Resort and a 43% ownership interest in the operations of Shanghai Disney Resort (together, the Asia Theme Parks), which are both VIEs consolidated in the Company’s financial statements. See Note 2 for the Company’s policy on consolidating VIEs. In addition, the Company has 100% ownership of Disneyland Paris. The Asia Theme Parks together with Disneyland Paris are collectively referred to as the International Theme Parks.
The following table summarizes the carrying amounts of the Asia Theme Parks’ assets and liabilities included in the Company’s Consolidated Balance Sheet:
 September 30, 2023October 1, 2022
Cash and cash equivalents$504  $280  
Other current assets159  137  
Total current assets663  417  
Parks, resorts and other property6,150  6,356  
Other assets234  161  
Total assets$7,047  $6,934  
Current liabilities$720  $468  
Long-term borrowings1,308  1,426  
Other long-term liabilities392  395  
Total liabilities$2,420  $2,289  
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The following table summarizes the International Theme Parks’ revenues and costs and expenses included in the Company’s Consolidated Statements of Income for fiscal 2023:
Revenues$5,095
Costs and expenses(4,265)
Equity in the loss of investees(2)
Asia Theme Parks’ royalty and management fees of $235 million for fiscal 2023 are eliminated in consolidation, but are considered in calculating earnings attributable to noncontrolling interests.
International Theme Parks’ cash flows included in the Company’s fiscal 2023 Consolidated Statements of Cash Flows were $1,753 million provided by operating activities, $898 million used in investing activities and $114 million used in financing activities.
Hong Kong Disneyland Resort
The Government of the Hong Kong Special Administrative Region (HKSAR) and the Company have a 52% and a 48% equity interest in Hong Kong Disneyland Resort, respectively.
The Company and HKSAR have provided loans to Hong Kong Disneyland Resort with outstanding balances of $163 million and $109 million, respectively. The interest rate on both loans is three month HIBOR plus 2%, and the scheduled maturity date is September 2025. The Company’s loan is eliminated in consolidation.
The Company has provided Hong Kong Disneyland Resort with a revolving credit facility of HK $2.7 billion ($345 million), which bears interest at a rate of three month HIBOR plus 1.25% and matures in December 2028. The outstanding balance under the line of credit at September 30, 2023 was $80 million. The Company’s line of credit is eliminated in consolidation.
Hong Kong Disneyland Resort is undergoing a multi-year expansion estimated to cost HK $10.9 billion ($1.4 billion). The Company and HKSAR have agreed to fund the expansion on an equal basis through equity contributions, which totaled $57 million and $148 million in fiscal 2023 and 2022, respectively. To date, the Company and HKSAR have funded a total of $773 million.
HKSAR has the right to receive additional shares over time to the extent Hong Kong Disneyland Resort exceeds certain return on asset performance targets. The amount of additional shares HKSAR can receive is capped on an annual basis and could decrease the Company’s equity interest by up to 6 percentage points over a period no shorter than 10 years.
Shanghai Disney Resort
Shanghai Shendi (Group) Co., Ltd (Shendi) and the Company have 57% and 43% equity interests in Shanghai Disney Resort, respectively. A management company, in which the Company has a 70% interest and Shendi a 30% interest, operates Shanghai Disney Resort.
The Company has provided Shanghai Disney Resort with loans totaling $967 million, bearing interest at rates up to 8% and maturing in 2036, with early repayment permitted. The Company has also provided Shanghai Disney Resort with a 1.9 billion yuan (approximately $0.3 billion) line of credit bearing interest at 8%. As of September 30, 2023, the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $9 million). These balances are eliminated in consolidation.
Shendi has provided Shanghai Disney Resort with loans totaling 8.7 billion yuan (approximately $1.2 billion), bearing interest at rates up to 8% and maturing in 2036, with early repayment permitted. Shendi has also provided Shanghai Disney Resort with a 2.6 billion yuan (approximately $0.4 billion) line of credit bearing interest at 8%. As of September 30, 2023, the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $13 million).
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7Produced and Acquired/Licensed Content Costs and Advances
Total capitalized produced and licensed content by predominant monetization strategy is as follows:
As of September 30, 2023As of October 1, 2022
Predominantly Monetized IndividuallyPredominantly
Monetized
as a Group		TotalPredominantly Monetized IndividuallyPredominantly
Monetized
as a Group		Total
Produced content
Released, less amortization$4,968 $13,555 $18,523 $4,639 $12,688 $17,327 
Completed, not released70 1,786 1,856 214 2,019 2,233 
In-process3,331   6,120   9,451   5,041   6,793   11,834   
In development or pre-production279 133 412 372 254 626 
$8,648 $21,594 30,242 $10,266 $21,754 32,020 
Licensed content - Television Programming rights and advances6,351 5,647 
Total produced and licensed content$36,593 $37,667 
Current portion$3,002 $1,890 
Non-current portion$33,591 $35,777 
Amortization of produced and licensed content is as follows:
202320222021
Produced content
Predominantly monetized individually$3,999$3,448$2,947
Predominantly monetized as a group7,8626,7765,228
11,86110,2248,175
Licensed programming rights and advances13,40513,43212,784
Total produced and licensed content costs(1)
$25,266$23,656$20,959
(1)Primarily included in “Costs of services” in the Consolidated Statements of Income. Fiscal 2023 amounts exclude impairment charges of $2.0 billion for produced content and $257 million for licensed programming rights recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income (see Note 18).
Total expected amortization by fiscal year of completed (released and not released) produced, licensed and acquired film and television library content on the balance sheet as of September 30, 2023 is as follows:
Predominantly Monetized IndividuallyPredominantly
Monetized
as a Group		Total
Produced content
Released
2024$1,069 $3,257 $4,326 
2025600 2,055 2,655 
2026506   1,632   2,138   
Completed, not released
202436   794   830   
Licensed content - Programming rights and advances
2024$4,202 
2025785 
2026495   
Approximately $2.4 billion of accrued participations and residual liabilities will be paid in fiscal 2024.
At September 30, 2023, acquired film and television library content has remaining unamortized costs of $3.1 billion, which are generally being amortized straight-line over a weighted-average remaining period of approximately 15 years.
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Content Production Incentives
Programming and production costs were reduced by $0.8 billion for fiscal 2023 related to the amortization of production tax incentives. We have production tax credit receivables of $1.6 billion as of September 30, 2023, which, based on the expected timing of collection, are reflected in “Receivables, net” or “Other Assets” in our Consolidated Balance Sheet.
8Borrowings
The Company’s borrowings, including the impact of interest rate and cross-currency swaps, are summarized as follows:
   September 30, 2023
 Sep. 30, 2023Oct. 1, 2022
Stated
Interest
Rate(1)
Pay Floating Interest rate and Cross-
Currency Swaps(2)
Effective
Interest
Rate(3)
Swap
Maturities
Commercial paper$1,476  $1,662  —$—5.62%
U.S. dollar denominated notes(4)
43,504  45,091  4.03%11,6254.90%2024-2031
Foreign currency denominated debt1,872  1,844  2.92%1,8784.99%2025-2027
Other(5)
(1,729) (1,653) —
45,123  46,944  3.85%13,5034.92%
Asia Theme Parks borrowings1,308  1,425  1.86%—5.90%
Total borrowings46,431  48,369  3.94%13,5034.95%
Less current portion4,330  3,070  2.35%—5.12%
Total long-term borrowings$42,101  $45,299  $13,503
(1)The stated interest rate represents the weighted-average coupon rate for each category of borrowings. For floating-rate borrowings, interest rates are the rates in effect at September 30, 2023; these rates are not necessarily an indication of future interest rates.
(2)Amounts represent notional values of interest rate and cross-currency swaps outstanding as of September 30, 2023.
(3)The effective interest rate includes the impact of existing and terminated interest rate and cross-currency swaps, purchase accounting adjustments and debt issuance premiums, discounts and costs.
(4)Includes net debt issuance discounts, costs and purchase accounting adjustments totaling a net premium of $1.8 billion and $1.9 billion at September 30, 2023 and October 1, 2022, respectively.
(5)Includes market value adjustments for debt with qualifying hedges, which reduces borrowings by $1.8 billion and $1.7 billion at September 30, 2023 and October 1, 2022, respectively.
Commercial Paper
At September 30, 2023, the Company’s bank facilities, which are with a syndicate of lenders and support our commercial paper borrowings, were as follows:
Committed
Capacity		Capacity
Used		Unused
Capacity
Facility expiring March 2024$5,250$—$5,250
Facility expiring March 20253,000—3,000
Facility expiring March 20274,000—4,000
Total$12,250$—$12,250
These facilities allow for borrowings at rates based on the Secured Overnight Financing Rate (SOFR), and at other variable rates for non-U.S. dollar denominated borrowings plus a fixed spread that varies with the Company’s debt ratings assigned by Moody’s Investors Service and Standard & Poor’s ranging from 0.655% to 1.225%. The 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 September 30, 2023, the Company met this covenant by a significant margin. The bank facilities specifically exclude certain entities, including the Asia Theme Parks, from any representations, covenants or events of default. The Company also has the ability to issue up to $500 million of letters of credit under the facility expiring in March 2027, which if utilized, reduces available borrowings under this facility. As of September 30, 2023, the Company has $1.7 billion of outstanding letters of credit, of which none were issued under this facility.
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Commercial paper activity is as follows:
Commercial paper with original maturities less than three months, net(1)
Commercial paper with original maturities greater than three monthsTotal
Balance at Oct. 2, 2021$—  $1,992  $1,992  
Additions50  2,417  2,467  
Payments—  (2,801) (2,801) 
Other Activity—  4  4  
Balance at Oct. 1, 2022$50  $1,612  $1,662  
Additions238  3,603  3,841  
Payments—  (4,032) (4,032) 
Other Activity1  4  5  
Balance at Sep. 30, 2023$289  $1,187  $1,476  
(1)Borrowings and reductions of borrowings are reported net.
U.S. Dollar Denominated Notes
At September 30, 2023, the Company had $43.5 billion of fixed rate U.S. dollar denominated notes with maturities ranging from 1 to 73 years and stated interest rates that range from 1.75% to 9.50%.
Foreign Currency Denominated Debt
At September 30, 2023, the Company had fixed rate senior notes of Canadian $1.3 billion ($0.9 billion) and Canadian $1.3 billion ($1.0 billion) with maturities of October 2024 and March 2027, respectively, and stated interest rates of 2.76% and 3.057%, respectively. The Company has entered into pay-floating interest rate and cross currency swaps that effectively convert the borrowings to a variable-rate U.S. dollar denominated borrowings indexed to SOFR.
Cruise Ship Credit Facilities
The Company has credit facilities to finance a significant portion of the contract price of two new cruise ships, which are scheduled to be delivered in fiscal 2025 and fiscal 2026. Under the facilities, $1.1 billion became available beginning in August 2023 and $1.1 billion is available beginning in August 2024. Each tranche of financing may be utilized for a period of 18 months from the initial availability date. If utilized, the interest rates will be fixed at 3.80% and 3.74%, respectively, and the loan and interest will be payable semi-annually over a 12-year period from the borrowing date. Early repayment is permitted subject to cancellation fees.
Asia Theme Parks Borrowings
HKSAR provided Hong Kong Disneyland Resort with loans totaling HK $0.9 billion ($109 million). The interest rate is three month HIBOR plus 2% and the maturity date is September 2025.
Shendi has provided Shanghai Disney Resort with loans totaling 8.7 billion yuan (approximately $1.2 billion) bearing interest at rates up to 8% and maturing in 2036, with early repayment permitted. Shendi has also provided Shanghai Disney Resort with a 2.6 billion yuan (approximately $0.4 billion) line of credit bearing interest at 8%. As of September 30, 2023 the total amount outstanding under the line of credit was 0.1 billion yuan (approximately $13 million).
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Maturities
The following table provides total borrowings, excluding market value adjustments and debt issuance premiums, discounts and costs, by scheduled maturity date as of September 30, 2023. The table also provides the estimated interest payments on these borrowings as of September 30, 2023 although actual future payments will differ for floating-rate borrowings:
Borrowings
Fiscal Year:
Before Asia
Theme Parks
Consolidation
Asia 
Theme Parks		Total BorrowingsInterestTotal Borrowings and Interest
2024$4,369$13$4,382$1,733$6,115
20253,6191093,7281,6265,354
20264,578—4,5781,6166,194
20272,921—2,9211,5064,427
20281,599—1,5991,5023,101
Thereafter28,0181,18629,20416,93546,139
$45,104$1,308$46,412$24,918$71,330
Interest
The Company capitalizes interest on assets constructed for its parks and resorts and on certain film and television productions. In fiscal 2023, 2022 and 2021, total interest capitalized was $365 million, $261 million and $187 million, respectively.
Interest expense (net of amounts capitalized), interest and investment income, and net periodic pension and postretirement benefit costs (other than service costs) (see Note 10) are reported net in the Consolidated Statements of Income and consist of the following:
202320222021
Interest expense$(1,973)$(1,549)$(1,546)
Interest and investment income424    90    307    
Net periodic pension and postretirement benefit costs (other than service costs)340 62 (167)
Interest expense, net$(1,209)$(1,397)$(1,406)
9Income Taxes
Income (Loss) Before Income Taxes by Domestic and Foreign Subsidiaries
Income Before Income Taxes202320222021
Domestic subsidiaries (including U.S. exports)$3,086  $5,955  $5,241  
Foreign subsidiaries1,683  (670) (2,680) 
Total income from continuing operations4,769  5,285  2,561  
Loss from discontinued operations—  (62) (38) 
$4,769  $5,223  $2,523  

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Provision for Income Taxes: Current and Deferred
Income Tax Expense (Benefit)
Current202320222021
Federal$1,475  $436  $594  
State402  282  129  
Foreign(1)
867  846  554  
2,744  1,564  1,277  
Deferred
Federal(1,180) 407  (526) 
State4  26  (220) 
Foreign(189) (265) (506) 
(1,365) 168  (1,252) 
Income tax expense on income from continuing operations1,379  1,732  25  
Income tax expense on loss from discontinued operations—  (14) (9) 
$1,379  $1,718  $16  
(1)Includes foreign withholding taxes.
Deferred Tax Assets and Liabilities
Components of Deferred Tax (Assets) and LiabilitiesSeptember 30, 2023October 1, 2022
Deferred tax assets
Net operating losses and tax credit carryforwards(1)
$(3,841) $(3,527) 
Accrued liabilities(1,335) (1,570) 
Lease liabilities(852) (748) 
Licensing revenues(115) (124) 
Other(623) (819) 
Total deferred tax assets(6,766) (6,788) 
Deferred tax liabilities
Depreciable, amortizable and other property7,581  8,575  
Investment in U.S. entities1,271  1,798  
Right-of-use lease assets751  676  
Investment in foreign entities482  543  
Other81  64  
Total deferred tax liabilities10,166  11,656  
Net deferred tax liability before valuation allowance3,400  4,868  
Valuation allowance3,187  2,859  
Net deferred tax liability$6,587  $7,727  
(1)Balances at September 30, 2023 and October 1, 2022 include approximately $1.6 billion and $1.5 billion, respectively, of International Theme Park net operating losses and approximately $1.0 billion at both September 30, 2023 and October 1, 2022 of foreign tax credits in the U.S. The International Theme Park net operating losses are primarily in France and, to a lesser extent, Hong Kong and China. Losses in France and Hong Kong have an indefinite carryforward period and losses in China have a five-year carryforward period. China theme park net operating losses of $0.2 billion, if not used, expire between fiscal 2024 and fiscal 2028. Foreign tax credits in the U.S. have a ten-year carryforward period. Foreign tax credits of $1.0 billion, if not used, expire beginning in fiscal 2028.
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The following table details the change in valuation allowance for fiscal 2023, 2022 and 2021 (in billions):
Balance at Beginning of PeriodCharges to Tax ExpenseOther ChangesBalance at End of Period
Year ended September 30, 2023$2.9  $0.2  $0.1  $3.2  
Year ended October 1, 20222.8  0.4  (0.3) 2.9  
Year ended October 2, 20212.4  0.4  —  2.8  
Reconciliation of the effective income tax rate for continuing operations to the federal rate
202320222021
Federal income tax rate21.0  % 21.0  % 21.0  % 
State taxes, net of federal benefit(1)
5.8 3.1 1.9 
Tax rate differential on foreign income0.1 4.3 12.0 
Foreign derived intangible income(4.3)(3.4)(6.4)
Tax impact of equity awards2.1 — (5.3)
Legislative changes— 1.7 (12.2)
Income tax audits and reserves1.3 2.7 (4.8)
Goodwill impairment3.5 — — 
Valuation allowance(1.8)4.5 2.6 
Other1.2 (1.1)(7.8)
28.9 %32.8 %1.0 %
(1)Fiscal 2023 includes an adjustment related to certain deferred state taxes
Unrecognized tax benefits
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding the related accrual for interest and penalties, is as follows:
202320222021
Balance at the beginning of the year$2,449  $2,641  $2,740  
Increases for current year tax positions98  48  51  
Increases for prior year tax positions273  103  556  
Decreases in prior year tax positions(150) (108) (174) 
Settlements with taxing authorities(153) (235) (532) 
Balance at the end of the year$2,517  $2,449  $2,641  
Balances at September 30, 2023, October 1, 2022 and October 2, 2021 include $1.8 billion, $1.9 billion and $2.0 billion, respectively, that if recognized, would reduce our income tax expense and effective tax rate. These amounts are net of the offsetting benefits from other tax jurisdictions.
At September 30, 2023, October 1, 2022 and October 2, 2021 accrued interest and penalties related to unrecognized tax benefits were $1.0 billion in each period. During fiscal 2023, 2022 and 2021, the Company recorded additional interest and penalties of $210 million, $157 million and $191 million, respectively, and recorded reductions in accrued interest and penalties of $241 million, $119 million and $256 million, respectively. The Company’s policy is to report interest and penalties as a component of income tax expense.
The Company is generally no longer subject to U.S. federal examination for years prior to 2018. The Company is no longer subject to examination in any of its major state or foreign tax jurisdictions for years prior to 2008.
In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to the resolution of open tax matters, which would reduce our unrecognized tax benefits by $0.3 billion.
Other
In fiscal 2023, the Company recognized income tax expense of $93 million for the shortfall between equity-based compensation deductions and amounts recorded based on the grant date fair value. In fiscal 2022 and 2021, the Company recognized income tax benefits of $2 million and $135 million, respectively, for the excess of equity-based compensation deductions over amounts recorded based on the grant date fair value.
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10Pension and Other Benefit Programs
The Company maintains pension and postretirement medical benefit plans covering certain of its employees not covered by union or industry-wide plans. The Company has defined benefit pension plans that cover employees hired prior to January 1, 2012. For employees hired after this date, the Company has a defined contribution plan. Benefits under these pension plans are generally based on years of service and/or compensation and generally require 3 years of vesting service. Employees generally hired after January 1, 1987 for certain of our media businesses and other employees generally hired after January 1, 1994 are not eligible for postretirement medical benefits. In addition, the Company has a defined benefit plan for TFCF employees for which benefits stopped accruing in June 2017.
Defined Benefit Plans
The Company measures the actuarial value of its benefit obligations and plan assets for its defined benefit pension and postretirement medical benefit plans at September 30 and adjusts for any plan contributions or significant events between September 30 and our fiscal year end.
The following chart summarizes the benefit obligations, assets, funded status and balance sheet impacts associated with the defined benefit pension and postretirement medical benefit plans:
 Pension PlansPostretirement Medical Plans
 September 30,
2023		October 1,
2022		September 30,
2023		October 1,
2022
Projected benefit obligations
Beginning obligations$(15,028) $(20,955) $(1,539) $(2,121) 
Service cost(282) (400) (5) (9) 
Interest cost(784) (500) (81) (51) 
Actuarial gain(1)
757  6,159  59  595  
Plan amendments and other(2)
14  39  539  (16) 
Benefits paid633  629  66  63  
Ending obligations$(14,690) $(15,028) $(961) $(1,539) 
Fair value of plans’ assets
Beginning fair value$14,721  $18,076  $749  $889  
Actual return on plan assets1,324  (2,715) 71  (134) 
Contributions73  96  29  61  
Benefits paid(633) (629) (66) (63) 
Expenses and other(43) (107) (2) (4) 
Ending fair value$15,442  $14,721  $781  $749  
Overfunded (Underfunded) status of the plans$752  $(307) $(180) $(790) 
Amounts recognized in the balance sheet
Non-current assets$1,971  $913  $209  $—  
Current liabilities(72) (66) (2) (4) 
Non-current liabilities(1,147) (1,154) (387) (786) 
$752  $(307) $(180) $(790) 
(1)The actuarial gain for fiscal 2022 was due to an increase in the discount rate used to determine the fiscal year-end benefit obligation from the rate that was used in the preceding fiscal year.
(2)The decrease in fiscal 2023 was due to a change in postretirement medical benefit options.
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The components of net periodic benefit cost (benefit) are as follows:
 Pension PlansPostretirement Medical Plans
 202320222021202320222021
Service cost$282  $400  $434  $5  $9  $10  
Other costs (benefits):
Interest cost784  500  457  81  51  47  
Expected return on plan assets(1,149) (1,174) (1,100) (61) (59) (55) 
Amortization of prior-year service costs8  7  11  —  —  —  
Recognized net actuarial loss/(gain)19  585  777  (22) 28  30  
Total other costs (benefit)(338) (82) 145  (2) 20  22  
Net periodic benefit cost (benefit)$(56) $318  $579  $3  $29  $32  
In fiscal 2024, we expect pension and postretirement medical costs to be a net benefit of $155 million compared to a net benefit of $53 million in fiscal 2023.
Key assumptions are as follows:
 Pension PlansPostretirement Medical Plans
 202320222021202320222021
Discount rate used to determine the fiscal year‑end benefit obligation5.94 %5.44 %2.88 %5.94 %5.47 %2.89 %
Discount rate used to determine the interest cost component of net periodic benefit cost5.37 %2.45 %2.28 %5.38 %2.47 %2.28 %
Rate of return on plan assets7.00 %7.00 %7.00 %7.00 %7.00 %7.00 %
Weighted average rate of compensation increase to determine the fiscal year‑end benefit obligation3.10 %3.10 %3.10 %n/an/an/a
Year 1 increase in cost of benefitsn/an/an/a7.00 %7.00 %7.00 %
Rate of increase to which the cost of benefits is assumed to decline (the ultimate trend rate)n/an/an/a4.00 %4.00 %4.00 %
Year that the rate reaches the ultimate trend raten/an/an/a204220412040
AOCI, before tax, as of September 30, 2023 consists of the following amounts that have not yet been recognized in net periodic benefit cost:
Pension PlansPostretirement
Medical Plans		Total
Prior service costs (benefits)$15  $(556) $(541) 
Net actuarial loss (gain)2,929  (137) 2,792  
Total amounts included in AOCI2,944  (693) 2,251  
Prepaid (accrued) pension cost(3,696) 873  (2,823) 
Net balance sheet liability (asset)$(752) $180  $(572) 
Plan Funded Status
As of September 30, 2023, the projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets were $1.2 billion and $1.1 billion, respectively, and the aggregate fair value of plan assets was not material. As of October 1, 2022, the projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets were $1.2 billion and $1.1 billion, respectively, and the aggregate fair value of plan assets was not material.
As of September 30, 2023, the projected benefit obligation for pension plans with projected benefit obligations in excess of plan assets was $1.2 billion and the aggregate fair value of plan assets was not material. As of October 1, 2022, the projected benefit obligation for pension plans with projected benefit obligations in excess of plan assets was $1.2 billion and the aggregate fair value of plan assets was not material.
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The Company’s total accumulated pension benefit obligations at September 30, 2023 and October 1, 2022 were $13.8 billion and $14.1 billion, respectively. Approximately 98% was vested as of both September 30, 2023 and October 1, 2022.
The accumulated postretirement medical benefit obligations and fair value of plan assets for postretirement medical plans with accumulated postretirement medical benefit obligations in excess of plan assets were $1.0 billion and $0.8 billion, respectively, at September 30, 2023 and $1.5 billion and $0.7 billion, respectively, at October 1, 2022.
Plan Assets
A significant portion of the assets of the Company’s defined benefit plans are managed in a third-party master trust. The investment policy and allocation of the assets in the master trust were approved by the Company’s Investment and Administrative Committee, which has oversight responsibility for the Company’s retirement plans. The investment policy ranges for the major asset classes are as follows:
Asset ClassMinimumMaximum
Equity investments30%60%
Fixed income investments20%40%
Alternative investments10%30%
Cash & money market funds—%10%
The primary investment objective for the assets within the master trust is the prudent and cost effective management of assets to satisfy benefit obligations to plan participants. Financial risks are managed through diversification of plan assets, selection of investment managers and through the investment guidelines incorporated in investment management agreements. Investments are monitored to assess whether returns are commensurate with risks taken.
The long-term asset allocation policy for the master trust was established taking into consideration a variety of factors that include, but are not limited to, the average age of participants, the number of retirees, the duration of liabilities and the expected payout ratio. Liquidity needs of the master trust are generally managed using cash generated by investments or by liquidating securities.
Assets are generally managed by external investment managers pursuant to investment management agreements that establish permitted securities and risk controls commensurate with the account’s investment strategy. Some agreements permit the use of derivative securities (futures, options, interest rate swaps, credit default swaps) that enable investment managers to enhance returns and manage exposures within their accounts.
Fair Value Measurements of Plan Assets
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and is generally classified in one of the following categories of the fair value hierarchy:
Level 1 – Quoted prices for identical instruments in active markets
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets
Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable
Investments that are valued using the net asset value (NAV) (or its equivalent) practical expedient are excluded from the fair value hierarchy disclosure. NAV per share is determined based on the fair value using the underlying assets divided by the number of units outstanding.
The following is a description of the valuation methodologies used for assets reported at fair value. The methodologies used at September 30, 2023 and October 1, 2022 are the same.
Level 1 investments are valued based on reported market prices on the last trading day of the fiscal year. Investments in common and preferred stocks and mutual funds are valued based on the securities’ exchange-listed price or a broker’s quote in an active market. Investments in U.S. Treasury securities are valued based on a broker’s quote in an active market.
Level 2 investments in government and federal agency bonds and notes (excluding U.S. Treasury securities), corporate bonds, mortgage-backed securities (MBS) and asset-backed securities are valued using a broker’s quote in a non-active market or an evaluated price based on a compilation of reported market information, such as benchmark yield curves, credit spreads and estimated default rates. Derivative financial instruments are valued based on models that incorporate observable inputs for the underlying securities, such as interest rates or foreign currency exchange rates.
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The Company’s defined benefit plan assets are summarized by level in the following tables:
As of September 30, 2023
DescriptionLevel 1Level 2TotalPlan Asset Mix
Cash$68  $—  $68  —%
Common and preferred stocks(1)
3,517  —  3,517  22%
Mutual funds1,139  —  1,139  7%
Government and federal agency bonds, notes and MBS2,025  442  2,467  15%
Corporate bonds—  750  750  4%
Other mortgage- and asset-backed securities—  120  120  1%
Derivatives and other, net—  12  12  —%
Total investments in the fair value hierarchy$6,749  $1,324  8,073  
Assets valued at NAV as a practical expedient:
Common collective funds3,517  22%
Alternative investments4,352  27%
Money market funds and other281  2%
Total investments at fair value$16,223  100%
As of October 1, 2022
DescriptionLevel 1Level 2TotalPlan Asset Mix
Cash$177  $—  $177  1%
Common and preferred stocks(1)
3,118  —  3,118  20%
Mutual funds1,044  —  1,044  7%
Government and federal agency bonds, notes and MBS2,061  293  2,354  15%
Corporate bonds—  751  751  5%
Other mortgage- and asset-backed securities—  84  84  1%
Derivatives and other, net2  13  15  —%
Total investments in the fair value hierarchy$6,402  $1,141  7,543  
Assets valued at NAV as a practical expedient:
Common collective funds3,479  22%
Alternative investments4,208  27%
Money market funds and other240  2%
Total investments at fair value$15,470  100%
(1)Includes 2.9 million shares of Company common stock valued at $235 million (1% of total plan assets) and 2.9 million shares valued at $273 million (2% of total plan assets) at September 30, 2023 and October 1, 2022, respectively.
Uncalled Capital Commitments
Alternative investments held by the master trust include interests in funds that have rights to make capital calls to the investors. In such cases, the master trust would be contractually obligated to make a cash contribution at the time of the capital call. At September 30, 2023, the total committed capital still uncalled and unpaid was $1.3 billion.
Plan Contributions
During fiscal 2023, the Company made $102 million of contributions to its pension and postretirement medical plans. The Company currently does not expect to make material pension and postretirement medical plan contributions in fiscal 2024. Final minimum funding requirements for fiscal 2024 will be determined based on a January 1, 2024 funding actuarial valuation, which is expected to be received during the fourth quarter of fiscal 2024.
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Estimated Future Benefit Payments
The following table presents estimated future benefit payments for the next ten fiscal years:
Pension
Plans
Postretirement
Medical Plans(1)
2024$768$56
202577655
202682259
202786662
202891164
2029 – 20335,132356
(1)Estimated future benefit payments are net of expected Medicare subsidy receipts of $39 million.
Assumptions
Assumptions, such as discount rates, long-term rate of return on plan assets and the healthcare cost trend rate, have a significant effect on the amounts reported for net periodic benefit cost as well as the related benefit obligations.
Discount Rate — The assumed discount rate for pension and postretirement medical plans reflects the market rates for high-quality corporate bonds currently available. The Company’s discount rate was determined by considering yield curves constructed of a large population of high-quality corporate bonds and reflects the matching of the plans’ liability cash flows to the yield curves. The Company measures service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows.
Long-term rate of return on plan assets — The long-term rate of return on plan assets represents an estimate of long-term returns on an investment portfolio consisting of a mixture of equities, fixed income and alternative investments. When determining the long-term rate of return on plan assets, the Company considers long-term rates of return on the asset classes (both historical and forecasted) in which the Company expects the pension funds to be invested. The following long-term rates of return by asset class were considered in setting the long-term rate of return on plan assets assumption:
Equity Securities6 %to10 %
Debt Securities3 %to5 %
Alternative Investments6 %to11 %
Healthcare cost trend rate — The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates for the postretirement medical benefit plans. The 2023 actuarial valuation assumed a 7.00% annual rate of increase in the per capita cost of covered healthcare claims with the rate decreasing in even increments over nineteen years until reaching 4.00%.
Sensitivity — A one percentage point change in the discount rate and expected long-term rate of return on plan assets would have the following effects on the projected benefit obligations for pension and postretirement medical plans as of September 30, 2023 and on cost for fiscal 2024:
 Discount RateExpected Long-Term
Rate of Return On Assets
Increase (decrease)Benefit
Expense		Projected Benefit ObligationsBenefit
Expense
1 percentage point decrease$201  $2,038  $170  
1 percentage point increase(45) (1,798) (170) 
Multiemployer Benefit Plans
The Company participates in a number of multiemployer pension plans under union and industry-wide collective bargaining agreements that cover our union-represented employees and expenses its contributions to these plans as incurred. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods and benefit formulas. The risks of participating in these multiemployer plans are different from single-employer plans. For example:
•Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
•If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may become the obligation of the remaining participating employers.
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•If a participating employer chooses to stop participating in these multiemployer plans, the employer may be required to pay those plans an amount based on the underfunded status of the plan.
The Company also participates in several multiemployer health and welfare plans that cover both active and retired employees. Health care benefits are provided to participants who meet certain eligibility requirements under the applicable collective bargaining unit.
The following table sets forth our contributions to multiemployer pension and health and welfare benefit plans:
202320222021
Pension plans$316$402$289
Health & welfare plans299401272
Total contributions$615$803$561
Defined Contribution Plans
The Company has defined contribution retirement plans for domestic employees who began service after December 31, 2011 and are not eligible to participate in the defined benefit pension plans. In general, the Company contributes from 4% to 10% of an employee’s compensation depending on the employee’s age and years of service with the Company up to plan limits. The Company has savings and investment plans that allow eligible employees to contribute up to 50% of their salary through payroll deductions depending on the plan in which the employee participates. The Company matches 50% of the employee’s contribution up to plan limits. The Company also has defined contribution retirement plans for employees in our international operations. In fiscal 2023, 2022 and 2021, the costs of our domestic and international defined contribution plans were $378 million, $325 million and $254 million, respectively.
11Equity
The following table summarizes the changes in each component of accumulated other comprehensive income (loss) (AOCI) including our proportional share of equity method investee amounts:
 Market Value
Adjustments
for Hedges		Unrecognized
Pension and 
Postretirement
Medical 
Expense		Foreign
Currency
Translation
and Other		AOCI
AOCI, before tax
Balance at October 3, 2020$(191) $(9,423) $(1,088) $(10,702) 
Unrealized gains (losses) arising during the period70  1,582  41  1,693  
Reclassifications of net (gains) losses to net income(31) 816  —  785  
Balance at October 2, 2021$(152) $(7,025) $(1,047) $(8,224) 
Unrealized gains (losses) arising during the period1,098  2,635  (967) 2,766  
Reclassifications of net (gains) losses to net income(142) 620  —  478  
Balance at October 1, 2022$804  $(3,770) $(2,014) $(4,980) 
Unrealized gains (losses) arising during the period(101) 1,594  (2) 1,491  
Reclassifications of net (gains) losses to net income(444) 4  42  (398) 
Balance at September 30, 2023$259  $(2,172) $(1,974) $(3,887) 
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 Market Value
Adjustments
for Hedges		Unrecognized
Pension and 
Postretirement
Medical 
Expense		Foreign
Currency
Translation
and Other		AOCI
Tax on AOCI
Balance at October 3, 2020$40  $2,201  $139  $2,380  
Unrealized gains (losses) arising during the period(8) (358) (50) (416) 
Reclassifications of net (gains) losses to net income10  (190) —  (180) 
Balance at October 2, 2021$42  $1,653  $89  $1,784  
Unrealized gains (losses) arising during the period(254) (608) 50  (812) 
Reclassifications of net (gains) losses to net income33  (144) —  (111) 
Balance at October 1, 2022$(179) $901  $139  $861  
Unrealized gains (losses) arising during the period12  (384) 17  (355) 
Reclassifications of net (gains) losses to net income103  —  (14) 89  
Balance at September 30, 2023$(64) $517  $142  $595  
 Market Value
Adjustments
for Hedges		Unrecognized
Pension and 
Postretirement
Medical 
Expense		Foreign
Currency
Translation
and Other		AOCI
AOCI, after tax
Balance at October 3, 2020$(151) $(7,222) $(949) $(8,322) 
Unrealized gains (losses) arising during the period62  1,224  (9) 1,277  
Reclassifications of net (gains) losses to net income(21) 626  —  605  
Balance at October 2, 2021$(110) $(5,372) $(958) $(6,440) 
Unrealized gains (losses) arising during the period844  2,027  (917) 1,954  
Reclassifications of net (gains) losses to net income(109) 476  —  367  
Balance at October 1, 2022$625  $(2,869) $(1,875) $(4,119) 
Unrealized gains (losses) arising during the period(89) 1,210  15  1,136  
Reclassifications of net (gains) losses to net income(341) 4  28  (309) 
Balance at September 30, 2023$195  $(1,655) $(1,832) $(3,292) 
Details about AOCI components reclassified to net income are as follows:
Gains (losses) in net income:Affected line item in the Consolidated Statements of Operations:202320222021
Market value adjustments, primarily cash flow hedgesPrimarily revenue$444  $142  $31  
Estimated taxIncome taxes(103) (33) (10) 
341  109  21  
Pension and postretirement medical expenseInterest expense, net(4) (620) (816) 
Estimated taxIncome taxes—  144  190  
(4) (476) (626) 
Foreign currency translation and otherOther income (expense), net(42) —  —  
Estimated taxIncome taxes14  —  —  
(28) —  —  
Total reclassifications for the period$309  $(367) $(605) 
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12Equity-Based Compensation
Under various plans, the Company may grant stock options and other equity-based awards to executive, management, technology and creative personnel. The Company’s approach to long-term incentive compensation contemplates awards of stock options and restricted stock units (RSUs). Certain RSUs awarded to senior executives vest based upon the achievement of market or performance conditions (Performance RSUs).
Stock options are generally granted with a 10 year term at exercise prices equal to or exceeding the market price at the date of grant and become exercisable ratably over a three-year period from the grant date (exercisable ratably over a four-year period from the grant date for awards granted prior to fiscal 2021). At the discretion of the Compensation Committee of the Company’s Board of Directors, options can occasionally extend up to 15 years after date of grant. RSUs generally vest ratably over three years (four years for grants awarded prior to fiscal 2021) and Performance RSUs generally fully vest after three years, subject to achieving market or performance conditions. Equity-based award grants generally provide continued vesting, in the event of termination, for employees that reach age 60 or greater, have at least ten years of service and have held the award for at least one year.
Each share granted subject to a stock option award reduces the number of shares available under the Company’s stock incentive plans by one share while each share granted subject to a RSU award reduces the number of shares available by two shares. As of September 30, 2023, the maximum number of shares available for issuance under the Company’s stock incentive plans (assuming all the awards are in the form of stock options) was approximately 93 million shares and the number available for issuance assuming all awards are in the form of RSUs was approximately 44 million shares. The Company satisfies stock option exercises and vesting of RSUs with newly issued shares. Stock options and RSUs are generally forfeited by employees who terminate prior to vesting.
Each year, generally during the first half of the year, the Company awards stock options and restricted stock units to a broad-based group of management, technology and creative personnel. The fair value of options is estimated based on the binomial valuation model. The binomial valuation model takes into account variables such as volatility, dividend yield and the risk-free interest rate. The binomial valuation model also considers the expected exercise multiple (the multiple of exercise price to grant price at which exercises are expected to occur on average) and the termination rate (the probability of a vested option being canceled due to the termination of the option holder) in computing the value of the option.
The weighted average assumptions used in the option-valuation model were as follows:
202320222021
Risk-free interest rate3.6%1.6%1.2%
Expected volatility31%28%30%
Dividend yield—%—%0.03%
Termination rate5.9%5.8%5.8%
Exercise multiple1.98 1.98 1.83 
Although the initial fair value of stock options is not adjusted after the grant date, changes in the Company’s assumptions may change the value of, and therefore the expense related to, future stock option grants. The assumptions that cause the greatest variation in fair value in the binomial valuation model are the expected volatility and expected exercise multiple. Increases or decreases in either the expected volatility or expected exercise multiple will cause the binomial option value to increase or decrease, respectively. The volatility assumption considers both historical and implied volatility and may be impacted by the Company’s performance as well as changes in economic and market conditions.
Compensation expense for RSUs and stock options is recognized ratably over the service period of the award. Compensation expense for RSUs is based on the market price of the shares underlying the awards on the grant date. Compensation expense for Performance RSUs reflects the estimated probability that the market or performance conditions will be met.
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Compensation expense related to stock options and RSUs is as follows:
202320222021
Stock option$76  $88  $95  
RSUs1,067  889  505  
Total equity-based compensation expense(1)
1,143  977  600  
Tax impact(260) (221) (136) 
Reduction in net income$883  $756  $464  
Equity-based compensation expense capitalized during the period$145  $148  $112  
(1)Equity-based compensation expense is net of capitalized equity-based compensation and estimated forfeitures and excludes amortization of previously capitalized equity-based compensation costs.
The following table summarizes information about stock option transactions in fiscal 2023 (shares in millions):
 SharesWeighted
Average
Exercise Price
Outstanding at beginning of year18    $121.28
Awards granted2    89.85
Awards exercised(1)   60.46
Awards expired/canceled(1)   111.62
Outstanding at end of year18    $120.20
Exercisable at end of year14    $119.78
The following tables summarize information about stock options vested and expected to vest at September 30, 2023 (shares in millions):
Vested
Range of Exercise PricesNumber of
Options		Weighted Average
Exercise Price		Weighted Average
Remaining Years of 
Contractual Life
$40 —$80 1$72.590.2
$81 —$120 9107.133.7
$121 —$160 3148.096.7
$161 —$200 1177.727.4
14
Expected to Vest
Range of Exercise Prices
Number of
Options(1)
Weighted Average
Exercise Price		Weighted Average
Remaining Years of 
Contractual Life
$50 —$100 2$89.899.4
$101 —$150 1146.646.3
$151 —$200 1161.367.8
4
(1)Number of options expected to vest is total unvested options less estimated forfeitures.
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The following table summarizes information about RSU transactions in fiscal 2023 (shares in millions):
 
Units(3)
Weighted Average
Grant-Date Fair Value
Unvested at beginning of year18$144.00
Granted(1)
1889.66
Vested(9) 136.15
Forfeited(3) 118.86
Unvested at end of year(2)
24$109.04
(1)Includes 0.4 million Performance RSUs
(2)Includes 0.8 million Performance RSUs
(3)Excludes Performance RSUs for which vesting is subject to service conditions and the number of units vesting is subject to the discretion of the CEO. At September 30, 2023, the maximum number of these Performance RSUs that could be issued upon vesting is not material.
The weighted average grant-date fair values of options granted during fiscal 2023, 2022 and 2021 were $33.18, $46.76 and $57.05, respectively, and for RSUs were $89.66, $136.36 and $178.70, respectively. The total intrinsic value (market value on date of exercise less exercise price) of options exercised and RSUs vested during fiscal 2023, 2022 and 2021 totaled $829 million, $982 million and $1,175 million, respectively. The aggregate intrinsic values of stock options vested and expected to vest at September 30, 2023 were $4.8 million and $0 million, respectively.
As of September 30, 2023, unrecognized compensation cost related to unvested stock options and RSUs was $77 million and $1,774 million, respectively. That cost is expected to be recognized over a weighted-average period of 1.1 years for stock options and 1.2 years for RSUs.
Cash received from option exercises for fiscal 2023, 2022 and 2021 was $52 million, $127 million and $435 million, respectively. Tax benefits realized from tax deductions associated with option exercises and RSU vestings for fiscal 2023, 2022 and 2021 were approximately $190 million, $219 million and $256 million, respectively.
13Detail of Certain Balance Sheet Accounts
Current receivablesSeptember 30,
2023		October 1,
2022
Accounts receivable$10,179  $10,811  
Other2,266  1,999  
Allowance for credit losses(115) (158) 
$12,330  $12,652  
Parks, resorts and other property
Attractions, buildings and improvements$35,255  $33,795  
Furniture, fixtures and equipment26,358  24,409  
Land improvements7,419  7,757  
Leasehold improvements1,058  1,037  
70,090  66,998  
Accumulated depreciation(42,610) (39,356) 
Projects in progress6,285  4,814  
Land1,176  1,140  
$34,941  $33,596  
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Intangible assetsSeptember 30,
2023		October 1,
2022
Character/franchise intangibles, copyrights and trademarks$10,572  $10,572  
MVPD agreements8,056  8,058  
Other amortizable intangible assets4,016  4,045  
Accumulated amortization(11,375) (9,630) 
Net amortizable intangible assets11,269  13,045  
Indefinite lived intangible assets(1)
1,792  1,792  
$13,061  $14,837  
(1)Indefinite lived intangible assets consist of ESPN, Pixar and Marvel trademarks and television FCC licenses.
Accounts payable and other accrued liabilities
Accounts and accrued payables$15,125  $16,205  
Payroll and employee benefits3,061  3,447  
Income taxes payable2,276 378 
Other209  183  
$20,671  $20,213  

14Commitments and Contingencies
Commitments
The Company has various contractual commitments for rights to sports, films and other programming, totaling approximately $66.8 billion, including approximately $3.0 billion for available programming as of September 30, 2023. The Company also has contractual commitments for the construction of cruise ships, creative talent and employment agreements and unrecognized tax benefits. Creative talent and employment agreements include obligations to actors, producers, sports, television and radio personalities and executives. Contractual commitments for sports programming rights, other programming rights and other commitments including cruise ships and creative talent are as follows:
Fiscal Year:
Sports Programming(1)
Other
Programming		OtherTotal
2024$10,331  $3,286  $4,055  $17,672  
202510,631  1,591  2,803  15,025  
20267,876  941  760  9,577  
20276,687  671  388  7,746  
20284,713  565  146  5,424  
Thereafter19,121  376  2,181  21,678  
$59,359  $7,430  $10,333  $77,122  
(1)Primarily relates to rights for NFL, college football (including bowl games and the College Football Playoff) and basketball, cricket, NBA, NHL, soccer, MLB, UFC, tennis, golf and Top Rank Boxing. Certain sports programming rights have payments that are variable based primarily on revenues and are not included in the table above.
Legal Matters
On May 12, 2023, a private securities class action lawsuit was filed in the U.S. District Court for the Central District of California against the Company, its former Chief Executive Officer, Robert Chapek, its former Chief Financial Officer, Christine M. McCarthy, and the former Chairman of the Disney Media and Entertainment Distribution segment, Kareem Daniel on behalf of certain purchasers of securities of the Company (the “Securities Class Action”). On November 6, 2023, a consolidated complaint was filed in the same action, adding Robert Iger, the Company’s Chief Executive Officer, as a defendant. Claims in the Securities Class Action include (i) violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against all defendants, (ii) violations of Section 20A of the Exchange Act against Iger and McCarthy, and (iii) violations of Section 20(a) of the Exchange Act against all defendants. Plaintiffs in the Securities Class Action allege purported misstatements and omissions concerning, and a scheme to conceal, accurate costs and subscriber growth of the
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Disney+ platform. The Company intends to defend against the lawsuit vigorously. The lawsuit is in the early stages and at this time we cannot reasonably estimate the amount of any potential loss.
Two shareholder derivative complaints have been filed. The first, in which Hugues Gervat is the plaintiff, was filed on August 4, 2023, in the U.S. District Court for the Central District of California. The second, in which Stourbridge Investments LLC is the plaintiff, was filed on August 23, 2023 in the U.S. District Court for the District of Delaware. Each named The Walt Disney Company as a nominal defendant and alleged claims on its behalf against the Company’s Chief Executive Officer, Robert Iger; its former Chief Executive Officer, Robert Chapek; its former Chief Financial Officer, Christine M. McCarthy; the former Chairman of the Disney Media and Entertainment Distribution segment, Kareem Daniel, and ten current and former members of the Disney Board (Susan E. Arnold; Mary T. Barra; Safra A. Catz; Amy L. Chang; Francis A. deSouza; Michael B.G. Froman; Maria Elena Lagomasino; Calvin R. McDonald; Mark G. Parker; and Derica W. Rice). Along with alleged violations of Sections 10(b), 14(a), 20(a), and Rule 10b-5 of the Securities Exchange Act, premised on the same allegations as the Securities Class Action, plaintiffs in both actions sought to recover for alleged breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement and waste. On October 24, 2023, the Stourbridge action was voluntarily dismissed and, on November 16, 2023, was refiled in Delaware state court alleging equivalent theories of liability based on state law. On October 30, 2023, the Gervat action was stayed pending a ruling on an expected motion to dismiss to be filed in the Securities Class Action. The Company intends to defend against these lawsuits vigorously. The lawsuits are in the early stages, and at this time we cannot reasonably estimate the amount of any potential loss.
The Company, together with, in some instances, certain of its directors and officers, is a defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not believe that the Company has incurred a probable material loss by reason of any of those actions.
15Leases
The Company’s operating leases primarily consist of real estate and equipment, including office space for general and administrative purposes, production facilities, land, cruise terminals, retail outlets and distribution centers for consumer products. The Company also has finance leases, primarily for broadcast equipment and land.
Some of our leases include renewal and/or termination options. If it is reasonably certain that a renewal or termination option will be exercised, the exercise of the option is considered in calculating the term of the lease. As of September 30, 2023, our operating leases have a weighted-average remaining lease term of approximately 10 years, and our finance leases have a weighted-average remaining lease term of approximately 29 years. The weighted-average incremental borrowing rate is 3.6% and 6.5%, for our operating leases and finance leases, respectively. At September 30, 2023 total estimated future lease payments for non-cancelable lease agreements that have not commenced of approximately $0.5 billion are excluded from the measurement of the right-of-use asset and lease liability.
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The Company’s operating and finance right-of-use assets and lease liabilities are as follows:
September 30, 2023October 1, 2022
Right-of-use assets(1)
Operating leases$4,211  $3,966  
Finance leases291  303  
Total right-of-use assets4,502  4,269  
Short-term lease liabilities(2)
Operating leases740  614  
Finance leases37  37  
777  651  
Long-term lease liabilities(3)
Operating leases3,258  3,020  
Finance leases206  219  
3,464  3,239  
Total lease liabilities$4,241  $3,890  
(1)Included in “Other assets” in the Consolidated Balance Sheet.
(2)Included in “Accounts payable and other accrued liabilities” in the Consolidated Balance Sheet.
(3)Included in “Other long-term liabilities” in the Consolidated Balance Sheet.
The components of lease costs are as follows:
202320222021
Finance lease cost
Amortization of right-of-use assets$39  $39 $42 
Interest on lease liabilities15  15 20 
Operating lease cost820  796 853 
Variable fees and other(1)
444  363 414 
Total lease cost$1,318  $1,213  $1,329  
(1)Includes variable lease payments related to our operating and finance leases and costs of leases with initial terms of less than one year.
Cash paid during the year for amounts included in the measurement of lease liabilities is as follows:
202320222021
Operating cash flows for operating leases$714  $736  $925  
Operating cash flows for finance leases15  15  20  
Financing cash flows for finance leases41  48  25  
Total$770  $799  $970  
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Future minimum lease payments, as of September 30, 2023, are as follows:
OperatingFinancing
Fiscal Year:
2024$824  $47  
2025792  44  
2026504  38  
2027384  33  
2028318  29  
Thereafter2,265  350  
Total undiscounted future lease payments5,087  541  
Less: Imputed interest(1,089) (298) 
Total reported lease liability$3,998  $243  

16Fair Value Measurement
The Company’s assets and liabilities measured at fair value are summarized in the following tables by fair value measurement Level. See Note 10 for definitions of fair value measures and the Levels within the fair value hierarchy.
 Fair Value Measurement at September 30, 2023
DescriptionLevel 1 Level 2Level 3Total
Assets
Investments$46  $128  $—  $174  
Derivatives
Foreign exchange—  1,336  —  1,336  
Other—  18  —  18  
Liabilities
Derivatives
Interest rate—  (1,791) —  (1,791) 
Foreign exchange—  (815) —  (815) 
Other—  (13) —  (13) 
Other—  (465) —  (465) 
Total recorded at fair value$46  $(1,602) $—  $(1,556) 
Fair value of borrowings$—  $40,123  $1,333  $41,456  
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 Fair Value Measurement at October 1, 2022
DescriptionLevel 1Level 2Level 3Total
Assets
Investments$308  $—  $—  $308  
Derivatives
Interest rate—  1  —  1  
Foreign exchange—  2,223  —  2,223  
Other—  10  —  10  
Liabilities
Derivatives
Interest rate—  (1,783) —  (1,783) 
Foreign exchange—  (1,239) —  (1,239) 
Other—  (31) —  (31) 
Other—  (354) —  (354) 
Total recorded at fair value$308  $(1,173) $—  $(865) 
Fair value of borrowings$—  $42,509  $1,510  $44,019  
The fair value of Level 2 investments are primarily determined based on an internal valuation model that uses observable inputs such as stock trading price, volatility and risk free rate.
The fair values of Level 2 derivatives are primarily determined by internal discounted cash flow models that use observable inputs such as interest rates, yield curves and foreign currency exchange rates. Counterparty credit risk, which is mitigated by master netting agreements and collateral posting arrangements with certain counterparties, had an impact on derivative fair value estimates that was not material.
Level 2 other liabilities are primarily arrangements that are valued based on the fair value of underlying investments, which are generally measured using Level 1 and Level 2 fair value techniques.
Level 2 borrowings, which include commercial paper, U.S. dollar denominated notes and certain foreign currency denominated borrowings, are valued based on quoted prices for similar instruments in active markets or identical instruments in markets that are not active.
Level 3 borrowings include the Asia Theme Park borrowings, which are valued based on the current borrowing cost and credit risk of the Asia Theme Parks as well as prevailing market interest rates.
The Company’s financial instruments also include cash, cash equivalents, receivables and accounts payable. The carrying values of these financial instruments approximate the fair values.
The Company also has assets that are required to be recorded at fair value on a non-recurring basis. These assets are evaluated when certain triggering events occur (including a decrease in estimated future cash flows) that indicate the asset should be evaluated for impairment. In the fourth quarter of fiscal 2023, the Company recorded impairment charges for goodwill as disclosed in Note 18. The fair value of these assets was determined using estimated discounted future cash flows, which is a Level 3 valuation technique (see Note 18 for a discussion of the more significant inputs used in our discounted cash flow analysis).
Credit Concentrations
The Company monitors its positions with, and the credit quality of, the financial institutions that are counterparties to its financial instruments on an ongoing basis and does not currently anticipate nonperformance by the counterparties.
The Company does not expect that it would realize a material loss, based on the fair value of its derivative financial instruments as of September 30, 2023, in the event of nonperformance by any single derivative counterparty. The Company generally enters into derivative transactions only with counterparties that have a credit rating of A- or better and requires collateral in the event credit ratings fall below A- or aggregate exposures exceed limits as defined by contract. In addition, the Company limits the amount of investment credit exposure with any one institution.
The Company does not have material cash and cash equivalent balances with financial institutions that have below investment grade credit ratings and maintains short-term liquidity balances in high quality money market funds. At September 30, 2023, the Company did not have balances (excluding money market funds) with individual financial institutions that exceeded 10% of the Company’s total cash and cash equivalents.
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The Company’s trade receivables and financial investments do not represent a significant concentration of credit risk at September 30, 2023 due to the wide variety of customers and markets in which the Company’s products are sold, the dispersion of our customers across geographic areas and the diversification of the Company’s portfolio among financial institutions.
17Derivative Instruments
The Company manages its exposure to various financial risks relating to its ongoing business operations according to a risk management policy. The primary risks managed with derivative instruments are interest rate risk and foreign exchange risk.
The Company’s derivative positions measured at fair value are summarized in the following tables:
 As of September 30, 2023
 Current
Assets		Other
Assets		Other
Current
Liabilities		Other Long-
Term
Liabilities
Derivatives designated as hedges
Foreign exchange$595  $338  $(123) $(93) 
Interest rate—  —  (1,791) —  
Other12  6  —  —  
Derivatives not designated as hedges(1)
Foreign exchange384  19  (520) (79) 
Other—  —  (13) —  
Gross fair value of derivatives991  363  (2,447) (172) 
Counterparty netting(770) (262) 900  132  
Cash collateral (received) paid(123) (7) 1,257  —  
Net derivative positions$98  $94  $(290) $(40) 
(1)In fiscal 2023, the Company entered into a licensing and promotional arrangement and received warrants to purchase equity that are accounted for as a derivative asset. The warrants are recorded in investments at their fair market value of $128 million at September 30, 2023.
 As of October 1, 2022
 Current
Assets		Other
Assets		Other
Current
Liabilities		Other Long-
Term
Liabilities
Derivatives designated as hedges
Foreign exchange$864  $786  $(228) $(350) 
Interest rate—  1  (1,783) —  
Other10  —  (4) —  
Derivatives not designated as hedges
Foreign exchange336  247  (374) (287) 
Other— — (27)— 
Gross fair value of derivatives1,210  1,034  (2,416) (637) 
Counterparty netting(831) (715) 1,070  476  
Cash collateral (received) paid(341) (151) 1,282  96  
Net derivative positions$38  $168  $(64) $(65) 
Reference Rate Reform
In fiscal 2023, the Company amended its interest rate and cross-currency swap agreements to implement modifications related to changing the reference rates from LIBOR to SOFR and from the Canadian Dollar Offered Rate to the Canadian Overnight Repo Rate Average. In connection with these amendments, the Company applied the hedge accounting relief provided by the Financial Accounting Standards Board (FASB) in ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting to preserve the fair value hedge designation of the interest rate and cross-currency swaps.
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Interest Rate Risk Management
The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows and on the market value of its borrowings. In accordance with its policy, the Company targets its fixed-rate debt as a percentage of its net debt between a minimum and maximum percentage. The Company primarily uses pay-floating and pay-fixed interest rate swaps to facilitate its interest rate risk management activities.
The Company designates pay-floating interest rate swaps as fair value hedges of fixed-rate borrowings effectively converting fixed-rate borrowings to variable-rate borrowings. The total notional amount of the Company’s pay-floating interest rate swaps as of September 30, 2023 and October 1, 2022, was $13.5 billion and $14.5 billion, respectively.
The following table summarizes fair value hedge adjustments to hedged borrowings:
Carrying Amount of Hedged BorrowingsFair Value Adjustments Included in Hedged Borrowings
September 30, 2023October 1, 2022September 30, 2023October 1, 2022
Borrowings:
Current$1,439  $997  $(59) $(3) 
Long-term10,748  12,358  (1,694) (1,733) 
$12,187  $13,355  $(1,753) $(1,736) 
The following amounts are included in “Interest expense, net” in the Consolidated Statements of Income:
 202320222021
Gain (loss) on:
Pay-floating swaps$(14) $(1,635) $(603) 
Borrowings hedged with pay-floating swaps14  1,635  603  
Benefit (expense) associated with interest accruals on pay-floating swaps(510) 31  143  
The Company may designate pay-fixed interest rate swaps as cash flow hedges of interest payments on floating-rate borrowings. Pay-fixed interest rate swaps effectively convert floating-rate borrowings to fixed-rate borrowings. The unrealized gains or losses from these cash flow hedges are deferred in AOCI and recognized in interest expense as the interest payments occur. The Company did not have pay-fixed interest rate swaps that were designated as cash flow hedges of interest payments at September 30, 2023 or at October 1, 2022, and gains and losses related to pay-fixed swaps recognized in earnings for fiscal 2023, 2022 and 2021 were not material.
Foreign Exchange Risk Management
The Company transacts business globally and is subject to risks associated with foreign currency exchange rates. The Company’s objective is to reduce earnings and cash flow fluctuations associated with changes in foreign currency exchange rates, enabling management to focus on core business operations.
The Company enters into option and forward contracts to protect the value of its existing foreign currency assets, liabilities, firm commitments and forecasted but not firmly committed foreign currency transactions. In accordance with policy, the Company hedges its forecasted foreign currency transactions for periods generally not to exceed four years within an established minimum and maximum range of annual exposure. The gains and losses on these contracts offset changes in the U.S. dollar equivalent value of the related forecasted transaction, asset, liability or firm commitment. The principal currencies hedged are the euro, Japanese yen, British pound, Chinese yuan and Canadian dollar. Cross-currency swaps are used to effectively convert foreign currency denominated borrowings into U.S. dollar denominated borrowings.
The Company designates foreign exchange forward and option contracts as cash flow hedges of firmly committed and forecasted foreign currency transactions. As of September 30, 2023 and October 1, 2022, the notional amounts of the Company’s net foreign exchange cash flow hedges were $8.3 billion and $7.4 billion, respectively. Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of the foreign currency transactions. Net deferred gains recorded in AOCI for contracts that will mature in
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the next twelve months total $488 million. The following table summarizes the effect of foreign exchange cash flow hedges on AOCI:
202320222021
Gain (loss) recognized in Other Comprehensive Income$(136) $1,093  $61  
Gain (loss) reclassified from AOCI into the Statement of Operations(1)
446  116  24  
(1)Primarily recorded in revenue.
The Company designates cross currency swaps as fair value hedges of foreign currency denominated borrowings. The impact from the change in foreign currency on both the cross currency swap and borrowing is recorded to “Interest expense, net”. The impact from interest rate changes is recorded in AOCI and is amortized over the life of the cross currency swap. As of both September 30, 2023 and October 1, 2022, the total notional amounts of the Company’s designated cross currency swaps were Canadian $1.3 billion ($1.0 billion), respectively. The related gains or losses recognized in earnings were not material for the fiscal years ended 2023, 2022 and 2021.
Foreign exchange risk management contracts with respect to foreign currency denominated assets and liabilities are not designated as hedges and do not qualify for hedge accounting. The notional amounts of these foreign exchange contracts at September 30, 2023 and October 1, 2022 were $3.1 billion and $3.8 billion, respectively. The following table summarizes the net foreign exchange gains or losses recognized on foreign currency denominated assets and liabilities and the net foreign exchange gains or losses on the foreign exchange contracts we entered into to mitigate our exposure with respect to foreign currency denominated assets and liabilities by the corresponding line item in which they are recorded in the Consolidated Statements of Income:
Costs and ExpensesInterest expense, netIncome Tax Expense
202320222021202320222021202320222021
Net gains (losses) on foreign currency denominated assets and liabilities$(37) $(685) $(30) $(15) $82  $(47) $(91) $212  $(7) 
Net gains (losses) on foreign exchange risk management contracts not designated as hedges(159) 547  (83) 10  (82) 47  64  (208) 2  
Net gains (losses)$(196) $(138) $(113) $(5) $—  $—  $(27) $4  $(5) 
Commodity Price Risk Management
The Company is subject to the volatility of commodities prices, and the Company designates certain commodity forward contracts as cash flow hedges of forecasted commodity purchases. Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of commodity purchases. The notional amount of these commodities contracts at September 30, 2023 and October 1, 2022 and related gains or losses recognized in earnings were not material for fiscal 2023, 2022 and 2021.
Risk Management – Other Derivatives Not Designated as Hedges
The Company enters into certain other risk management contracts that are not designated as hedges and do not qualify for hedge accounting. These contracts, which include certain total return swap contracts, are intended to offset economic exposures of the Company and are carried at market value with any changes in value recorded in earnings. The notional amount of these contracts at both September 30, 2023 and October 1, 2022 was $0.4 billion, respectively. The related gains or losses recognized in earnings were not material for fiscal 2023, 2022 and 2021.
Contingent Features and Cash Collateral
The Company has master netting arrangements by counterparty with respect to certain derivative financial instrument contracts. The Company may be required to post collateral in the event that a net liability position with a counterparty exceeds limits defined by contract and that vary with the Company���s credit rating. In addition, these contracts may require a counterparty to post collateral to the Company in the event that a net receivable position with a counterparty exceeds limits defined by contract and that vary with the counterparty’s credit rating. If the Company’s or the counterparty’s credit ratings were to fall below investment grade, such counterparties or the Company would also have the right to terminate our derivative contracts, which could lead to a net payment to or from the Company for the aggregate net value by counterparty of our derivative contracts. The aggregate fair values of derivative instruments with credit-risk-related contingent features in a net liability position by counterparty were $1,587 million and $1,507 million at September 30, 2023 and October 1, 2022, respectively.
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18Restructuring and Impairment Charges
Content Impairment
As a result of our strategic change in approach to content curation, we removed content from our Entertainment Direct-to-Consumer services and terminated certain third-party license agreements for the right to use content primarily on our Entertainment Direct-to-Consumer platforms. We recorded charges of $2.6 billion in fiscal 2023, including a $2.0 billion write-off of produced content costs and $0.6 billion to terminate license agreements. We paid approximately $0.4 billion of cash to terminate these license agreements. The charges are recorded in “Restructuring and impairment charges” in the Consolidated Statements of Income.
Goodwill Impairment
In the fourth quarter of fiscal 2023, the Company performed a quantitative goodwill impairment test under both the previous segment reporting structure and the new segment reporting structure. There were no goodwill impairments under the previous reporting structure. The change in reporting structure requires judgment to identify new reporting units, allocate goodwill to these reporting units (based on relative fair values) and assign other recorded assets and liabilities to these reporting units. See Note 2 for additional information regarding the quantitative goodwill impairment assessment.
Our future cash flows are based on internal forecasts for each reporting unit, which consider projected inflation and other economic indicators, as well as industry growth projections. Significant judgments and assumptions in the discounted cash flow model relate to future revenues and certain operating expenses, terminal growth rates and discount rates. Discount rates for each reporting unit are determined based on the inherent risks of each reporting unit’s underlying operations. We believe our estimates are consistent with how a marketplace participant would value our reporting units. If we had established different reporting units or utilized different valuation methodologies or assumptions, the impairment test results would differ.
Based on our projections, the carrying amounts of our entertainment and international sports linear networks reporting units exceeded their fair values, and we recorded non-cash goodwill impairment charges of approximately $0.7 billion in “Restructuring and impairment charges” in the Consolidated Statement of Income. Goodwill, net of impairments recorded was $77.1 billion as of September 30, 2023
Other
In fiscal 2023, the Company recorded charges of $0.4 billion of severance, $0.1 billion for an impairment of an investment and $0.1 billion for exiting our businesses in Russia. In fiscal 2022, the Company recorded charges of $0.2 billion, primarily due to asset impairments related to exiting our businesses in Russia. In fiscal 2021, the Company recorded restructuring and impairment charges of $0.7 billion, primarily related to the planned closure of an animation studio and a substantial number of our Disney-branded retail stores in North America and Europe as well as severance at our parks and experiences businesses. These charges are reported in “Restructuring and impairment charges” in the Consolidated Statements of Income.
19New Accounting Pronouncements
Accounting Pronouncements Adopted in Fiscal 2023
Disclosures by Business Entities about Government Assistance
In November 2021, the FASB issued guidance requiring annual disclosures about transactions with a government that are accounted for by analogizing to a grant or contribution accounting model, including: the nature of the transactions, the accounting for the transactions and the effect of the transactions on the financial statements. The Company adopted the new guidance prospectively in the fourth quarter of fiscal 2023. The adoption did not have a material impact on our financial statements other than additional disclosures related to content production incentives. See Notes 2 and 7 for additional information.
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