The Walt Disney Company (DIS) CEO Bob Chapek Presents at Morgan Stanley Technology, Media and Telecommunications Conference (Transcript)

The Walt Disney Company (NYSE:DIS) Morgan Stanley Technology, Media and Telecommunications Conference Call March 1, 2021 8:45 PM ET

Company Participants

Bob Chapek - Chief Executive Officer

Conference Call Participants

Ben Swinburne - Morgan Stanley

Ben Swinburne

Hello, everybody, welcome back. I'm Ben Swinburne Morgan Stanley's media analyst. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/research disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

We are really excited to have with us for our next keynote conversation, Bob Chapek. He is the Chairman and CEO of the Walt Disney Company. Before becoming the seventh CEO in Disney's nearly 100-year history, Bob served as Chairman of Disney Parks Experiences and Products, basically since that segment was created. And before that was running the parks and resorts business. Bob, it's great to see you. And thank you so much for being with us.

Bob Chapek

Thanks for having me Ben, I appreciate it.

Ben Swinburne

It's sort of unbelievable that it's been basically a year since you've been named CEO. We were just chatting about what a year it's been. I'm sure nothing that any of us could have imagined. When you step back and sort of think about where the company is today, compared to when you took the job a year ago, how would you size it up for us when you look out from here?

Bob Chapek

Well, overall, I think I'd say that despite all the significant challenges that have been laid in our path over the last year, we feel as optimistic now, as ever, about the future course of the company. We had three priorities, when it was apparent what was COVID, and what it was going to do to our company and our outlook. And the first one was really to stabilize the company. And our CFO, Christine McCarthy did a tremendous job of ensuring that we had the liquidity necessary for the long haul, if it ended up being a long haul. And certainly, she had the foresight to recognize that, yes, it was going to be a long haul. But the other two things are important from the business standpoint.

And the first one is obviously the already established pivot to direct to consumer. And so we essentially had to make a decision, are we going to stay the course, are we going to slow down because obviously an investment would be sort of an important thing when you're trying to reserve cash and be careful. But we stepped on the throttle pretty heavily, and accelerated, figuring this was the time to really make a giant leap forward, if you will. And we did that in two ways.

Number one, we increased our dramatic - our investment dramatically in content. And you saw the fruits of that labor at the Investor Conference a few months ago. But then we also reorganized the company to facilitate really a complete alignment of all of our interest towards our strategic imperative of direct-to-consumer. So - and then the second one would be the parks. We wanted to make sure that we took this opportunity, I mean, obviously nobody wants to have the parks closed for up to a year.

But at the same time, we realized that was a unique opportunity maybe to advance some things that would have been difficult, if not impossible, for us to go change in an operating environment. And so we've made some moves already, but we're going to make further moves. And they're designed to improve the guest experience, while at the same time yielding those moves for the benefit of our shareholders. And at the same time maintaining the expansion, because we've got this wealth of intellectual property.

So we took the highest priority projects and kept going on them, even though obviously, capital was a consideration at the time. So frankly, it's been a rough year, but we're exiting it now as optimistic as ever.

Question-and-Answer Session

Q - Ben Swinburne

That's a great start. And maybe we're going dive into the direct to consumer and parks businesses in more detail. But one thing I wanted to ask you at the top was about what it means for the Disney Company to have a scale distribution business where you have a direct customer relationship with hundreds of millions of people around the world. That's something that the company has never had before. You've been in lots of different businesses inside Disney, you typically sold through retailers. What do you think it means long term beyond just the streaming business to have this kind of customer relationship at scale around the world?

Bob Chapek

Well, we've actually, I think, done a pretty good job of having a direct relationship with our customer in the parks business, whether you look at our Disney Vacation Club business, our Annual Pass Holders that we've got. We've had a pretty good insight as to what our guests prefer, what they do, how they act, and have catered to that throughout the years. I think the difference now with D2C is that we've got the opportunity to increase the frequency of our engagement and the number of touch points. And so I think there's an exponential benefit when you take the deep knowledge that we have of our parks guests, and then the number of touch points that we've done in the frequency of engagement with our D2C. And you put them all together, all enabled by technology and a keen sense of what we want to do from a marketing standpoint. And obviously, with our parks closed, right.

So we've never really had the two perfectly aligned where our parks are cranking, and our D2C business is anything but embryonic. Well that moment's about to come. And so we feel really enthusiastic about what's going to happen when we take one plus one and make it three.

Ben Swinburne

Makes sense? You guys - as you mentioned earlier, Bob had your second Investor Day around streaming not too long ago. You increased your outlook for Disney Plus subscribers pretty substantially, you were at 60 million to 90 million. If we go back to April 2019, now it's 230 million to 260 million. And even if we back out the Hotstar subs, it's still 150 million plus. We all know you've had a really strong first year out of the gate, but what else could you tell us, informs your view and the team's view that the opportunity is this much larger than you thought?

Bob Chapek

Right? Well, what's the same is the total addressable market we knew was 1.1 billion households. So implied in that, given that our sub numbers are so much higher, that we've had much higher penetration. So we step back, and we ask ourselves, what, what happened to make that that be a reality. And the first one, we know our product, we know our library, but we were even surprised at the global appeal of our product and the level of engagement that we're seeing in our services across the world. And that really comes down to the following. It's the four-quadrant appeal, what we didn't realize was the non-family appeal, that a service like Disney Plus would have.

In fact, over 50% of our global marketplace don't have kids, our subscribers don't have kids. And that is the big difference. And so now you can see that sort of, I'm sure we'll be talking about Star, but you can see where those strategies get born, when 50% of the people in Disney Plus don't have kids, you really have the opportunity now to think much more broadly about the nature of your content.

Ben Swinburne

That makes sense. That's interesting. You guys have been also raising your investment appetite around the business, as you mentioned earlier. And there's a lot of focus, as you know, Bob, in the investment community and in the press about the streaming wars and all this capital being put to work and streaming. What gives you confidence that at the end of this process, you're left with a profitable business? Because I know you're a numbers guy at the end of the day.

Bob Chapek

Yeah, first of all, I think I would challenge the idea that it's a war in the sense that there's one winner. We think there's going to be multiple winners. At the same time, though, we're highly confident that we're going to be one of them. I think if you look at our unparalleled brands, the franchises that make up those brands, the tremendous content creators, we have leading each one of our segments, as evidenced by the way last night with our success at the Golden Globes. And then the actual content that's pouring out and the amount of content that's pouring out, we think that we're tremendously positioned for the future for our DT service - D2C services.

Ben Swinburne

And how do you guys think about budgeting the business? In other words, you guided to $8 billion to $9 billion of investment at Disney plus by '24. Obviously, we don't - no one has a crystal ball, but how do you think about the amount of capital needed to get where you want to go from a revenue and sub point of view?

Bob Chapek

Right? Well, within an approach of discipline, we sort of look at where the needs are. And we really come down to three basic area that we want to fund. And the first obviously is no surprise is going to be the original content under our powerhouse, five core brands that go into Disney Plus. That's obviously priority one.

But the second priority two is really these general entertainment offerings that I mentioned earlier, because of the success that we've had with broad appeal beyond just the family households. So that was another one. And again, that was relatively no news. We knew that we had interest in those general entertainment offerings, but didn't really realize how important they could be towards our overall proposition, if you will.

And then third, because we are in international markets, the importance of local content. So you add those three things together, and all of a sudden, you're in a position where you're spending a lot more money than you originally envisioned, but were being rewarded in the marketplace by the number of subs escalating as well. So really, I think it's really about discipline in budgeting and application of those budgets to get you sort of the best overall result to keep the fire burning.

Ben Swinburne

Yeah, you guys have been very transparent. If we go back to April '19, and your disclosure in terms of letting us track your progress in D2C. And you've continued to emphasize or expect that '21 will be the year of peak losses for the business and then profitability in fiscal '24. I'm wondering about how you would describe your priorities. As we go through these next few years, is there anything that you think would either lead you to bring profitability forward, or conversely, actually spend more money as we get into '22 and beyond than you're currently planning?

Bob Chapek

Well, we obviously blew our expectations and everyone else's expectations away in terms of number of subs. But then we took up commensurately our investment. And we did that to build a strong foundation. So you mentioned what's the number one priority? The number one priority is to build a strong foundation for the future. And obviously, it's a very dynamic environment. And guidance can change and years that you hit profitability can change. But we're pretty happy with the projections that we gave you two months ago at the Investor Conference. And I will say that we're very pleased with all of our rollouts across the world. So no reason for any pessimism here.

Ben Swinburne

You guys, I think, unveiled 100 new titles at your Investor Day, back in December, which was certainly impressive. You also emphasized flexibility, Bob, in terms of how you bring these titles to market. I'm wondering if you could talk about how you balance the benefits and costs of shifting content windows, especially around theatrical. As you know, that's a huge focus for investors because they understand the power of your tentpole product.

Bob Chapek

Right, well we believe in the power of exhibition, to build our franchises. Obviously, in 2019, the last normal year, we had, we had 11 $1 billion films. And so that is a big deal to us. And that'll continue to be a big deal, we believe. But we realize that this is a very fluid situation. And it's fluid for two reasons, obviously, the short-term impact are longer than we want it to be, but the short-term impact of COVID on the number of screens that are open, consumers' willingness to actually go back into theaters.

But then there's also the fundamental changes that are happening in consumer behavior, which for me, are much more profound. And of course, they're catalyzed by the first issue, which is COVID itself. And so we're watching very carefully consumer behavior and preferences, and to see how long term those preferences are going to shift. And that's one of the reasons we talk about flexibility so often. We want to have a nimble organization. That's one of the reasons we did the reorganization, knowing that the sands under our feet are shifting, consumer behavior is shifting, consumer preferences are shifting. And we want to make sure that as that happens, we're on the front end of the wave, anticipating those changes. But we've got a - we're pretty happy with our three-pronged strategy in terms of, how we'll go to market and we think that's the best program right now.

Ben Swinburne

I know from your home entertainment days, you're quite familiar with all the windowing debates in the movie business. It doesn't seem like at least my opinion that we're going go back to the way the theatrical business was pre-COVID. It seems like some things will probably change. Do you see an argument for Disney to have a shorter theatrical window around your tentpole releases? Or is it still sort of to be determined?

Bob Chapek

Well, I think, I think, with our three options for commercializing content, one is B, it goes straight to theatrical, and then window as you suggest, to the service. Option two is obviously doing a premiere access, which is a day and date with theatrical. And option three is going direct to the subs. I think within that concede [ph], we're going to continue to evaluate given the recovery that's at hand. But I think the consumer is probably more impatient than they've ever been before. Particularly since now, they've had the luxury of an entire year of getting titles at home, pretty much when they want them. And so I'm not sure there's going back.

But we certainly don't want to do anything like cut the legs off a theatrical exhibition run. But I don't think the consumer again - we'd like to let the consumer be our guide in almost all situations. And I don't think they'll have much of a tolerance for a title say being out of theatrical for months, yet it hasn't had its chance to actually be thrown into the marketplace in another distribution channel just sort of sitting there getting dust. So…

Ben Swinburne

You've got your second premiere access title coming up here very shortly with RIAA. What do you - does this play a big role premiere access in your go-to-market over the long term, based on what you know, so far?

Bob Chapek

It's going to be one of our strategies. It certainly makes a lot of sense right now, in a COVID world to have an option. RIAA, obviously, theaters aren't going to be 100% back. But it's nice to know that we've got the ability if people do want to enjoy it in their homes, because they don't quite feel confident in going to a movie theater, that they've got that choice. What this looks like in the future? Well, we're going to gain a lot of experience and a lot of data points.

Ben Swinburne

Yeah. Let's shift gears to general entertainment, you mentioned that earlier, Bob. And I think Star was launched basically, last week, I believe, as the sixth tile in a lot of markets. Why did that make the most sense for you from a strategy point of view? There was certainly a lot of talk about Star being its own business on the streaming side?

Bob Chapek

Well, as you know, across the world, we've had a different strategy for going to market. And that's because the variables are so different across the world, variables, like what are the consumer preferences in terms of their content appeal? What's our suite of our content that we've got in terms of rights? That varies across the world. What are the local content obligations or preferences for the consumers?

What's the value of our library in various parts of the world? What are the demographics, and importantly, what are their affinities for sports? So all these variables are unique. And each one in - and in Europe, again, we saw the power of general entertainment content to augment our family content, that would lead you to believe that maybe a more integrated option would be great with Star as a six-brand tile. And so that's what we did.

So rather than trying to mandate a one size fits all across the world, we're actually reading all these variables and making our determination, given what the consumer is looking for and what we have to deploy.

Ben Swinburne

We talked a lot about - or you showed us a lot of content back in December. We didn't spend a ton of time on local original programming, though. My sense is, that's actually a pretty big part of what's happening right. Now. Let's start, can you give us a sense of your appetite for local programming? And if that's if we think out a few years, is that going to be a pretty substantial part of the Star playbook overseas?

Bob Chapek

We believe it is. Our overall strategy is to make sure that content for Star is rooted in properties and content that we own, as opposed to third party properties. So therefore, as we know how important local properties our local content is going to be, then yes, we have to crank up the production machines for local driven content. And we're doing that that, of course, will augment the unbelievable quality of global high volume, franchise-driven content that we have that will serve the world. But we will have a lot of program that's specifically programmed to subscribe within each market. In fact, we're thinking that by FY24, we'll have 50 originals on Star, original titles.

Ben Swinburne

50 local originals on Star?

Bob Chapek

Yes.

Ben Swinburne

Got it. And you guys, as I mentioned earlier, you launched overseas, in a lot of markets with Star last week, you also took up price at the same time. I know, it's probably way too early, but I thought I'd ask whether you feel like that was received well, or how the launch has gone relative to your expectations.

Bob Chapek

Well, as you know, we took the price up EUR2 and we think that's very reflective of the price value addition, we have actually conservative. And I would say that we're very pleased with how the market has received that new offering, despite the increase of the price at EUR2.

Ben Swinburne

Got it. You guys came in - you launched in the U.S. And among other things, you had your Verizon Partnership, which I think has been quite a success for both Disney and Verizon. Globally, you're doing a lot of the same, kind of deals around, distribution deals. Can you talk about the trade-offs that these agreements represent in terms of the benefits and what you give up going through a third party on the digital side?

Bob Chapek

Right? Well, the benefit is that they really help us accelerate growth at a relatively efficient marketing spend. The detriment, obviously, is the fact that you're going to get a lower ARPU because of it because now you've got someone else who's participating in the revenue stream. So we're very selective. We've got guidelines in terms of what percentage of our overall constituency, we want to come from a third party, so that we can get the - extract the benefits of those type relationships. And the important thing is those relationships have to be organic.

We're not just going to go ahead and do promotions with businesses that don't make a lot of sense. They have to be directly involved in the media world, and help us get the benefit of the faster sub growth and lower marketing, cost of acquisition. But going forward, we're going to keep our eye open for the right deals when they pop up. But we're pretty happy with our balance right now of retail versus wholesale subs.

Ben Swinburne

You give up anything on the wholesale side in terms of data or your customer relationship and knowing your customer?

Bob Chapek

No, no.

Ben Swinburne

I think, at least from my perspective, I feel like the market still doesn't have a great view of or well understood view of what Star represents for Disney. And what Hotstar Disney Plus can be over time. This was a business that at least, was when it was inside of Fox always had a lot of promise, but often wasn't delivering on the expectations in the marketplace. What can you tell us about Star overall as a business that you guys were able to acquire through that transaction? And what's the opportunity in Southeast Asia and India from that business, both on the streaming and kind of traditional side?

Bob Chapek

Right. Well, I think if it's confusing it's because there's so much there, there's so much to unwind and unpack, and that's good for us. First, from a broadcaster standpoint, it's India's number one broadcaster. India's one of the few markets in the world, where television viewing is actually up. We've got the leading sports portfolio in India, which is, as you know, critically important there. And we've got the leading local content engine with Fox Star Studios.

So even just from a studio standpoint, it's a very vibrant business, but then you layer on the Hotstar business, it's got 17,000 hours of original programming every year, that we've got, which is fantastic. And we believe it's the ultimate streaming in destinations in Southeast Asia. And in India, it's the exclusive home for cricket events. And we're really pleased with the way that that business has unfolded in Southeast Asia and India.

Ben Swinburne

I ask you the same question about Hotstar I asked you about Disney Plus earlier, what is it that informs your view that business can go from kind of 30 million paid subs today to your new guidance of 70 million to 100 million or so by fiscal '24?

Bob Chapek

Well, it's really the programming investment in entertainment and sports that we're making. But at the same time, we realize this is a very unique market. So we've got distribution partnerships, Jio in India, and Telkomsel in Indonesia. But it doesn't even end there. Because the product localizations are absolutely critical here, because there's low broadband speeds, and it's a mobile first market. So all that has to be taken into consideration as you sort of create your plan.

And again, one of the things I think we're doing a fairly decent job of is being very specific in various markets in terms of the program. This is not a one size fits all. And India certainly is sort of the, if you will, the shining example of the need to be unique and cater to that market.

Ben Swinburne

Why don't we shift gears to Hulu, which is a business that has been really the first in the U.S. into streaming at scale, built a big a VOD business has a real brand. You guys have obviously guidance out there on that how big that business is expected to be. How does Hulu fit into your broader direct to consumer strategy? And how do you get the business to profitability? Because you've got a substantial revenue base today, but it's still losing money?

Bob Chapek

Yeah, well, we're really thrilled with everything that Hulu's accomplished. And keep in mind that we only got management control less than two years ago, of Hulu. But in the meantime, we've been able to scale the business, I think, in a fairly impressive way. The secret weapon with Hulu is obviously the rapid growing, robust advertising business, that's inherent in this. That plus the Disney bundle. And those two things are - sort of make it a very impressive force for us. And when it features great content, like No Man's Land, which obviously won last night. That's sitting up there on the big, brand Barker [PH]. It's going to draw people in.

So the combination of great content, really being part of the Disney bundle, and the very impressive growth in advertising is, I think, going to make that a winner for us.

Ben Swinburne

And then lastly, on the direct-to-consumer portfolio front is ESPN Plus, another one that you've increased your guidance significantly, actually doubling the guidance from your first investor day to the next. What is it that you think is going to take that business to the next level over the next several years?

Bob Chapek

Well, our ESPN Plus business is one that is absolutely critical to us going forward in the future. And we're going after mass market penetration in that business to be an even broader appeal to global to our sports fans in the U.S. I think our updated guidance of $20 million to $30 million households really is a function of the uptake once again, of the incredibly successful streaming bundle that we've got. And I would say that, rights are always obviously an important thing. And we're steering as many rights as possible towards ESPN Plus.

As a matter of fact, we won't contemplate rights deals going forward, that don't envision ESPN Plus being a major player in the use of those rights, if you will. But our subscriber guidance that we've given so far doesn't really take into account any transformative changes either way, either on the upside or downside. In other words, we predicted basically on a static basis, what it would be going forward. So we're really pleased. And whenever we get into any kind of rights negotiations with ESPN Plus, we are making sure that yes, with our rights holders, we're making sure that ESPN Plus is going to be a really big part of that, in terms of our flexibility, because as the consumer flexes once again, we want to be able to flex with him.

Ben Swinburne

Got it, I want to come back to the right stuff in a little bit. But I want to shift gears right now to the parks business. Obviously, one that was - has been massively impacted by the pandemic. We can look back at prior economic cycles, Bob, and try to assess, how we think the business will react as we come out of this downturn. But this is just a totally different situation than anything we've been in, in the past. What's your expectation for the parks business as you come out of the pandemic? And do you subscribe to this idea of sort of pent-up demand that we keep hearing about including earlier today, from some of the other conversations?

Bob Chapek

Yeah, we are thrilled with the way that our guests have responded to the precautionary measures that we have put in to our parks, at least in terms of those that we've been able to reopen. I think that speaks to brand confidence. And I think that actually then sort of fuels the fire once, COVID sort of breaks, and we can actually either increase the penetration in our theme parks, or get to a position where we can open some of those that have not been still part of the brand promise and that brand security that they expect is actually something that's been out there.

That said, the actual recovery itself is going to be a function of a couple of variables, the speed of the vaccine, that's a big deal. Travel readiness from our guests. What is their willingness to actually go on vacation, and go sort of put themselves out there? But while we're figuring all this out, we're also importantly making sure that when we re-enter into the marketplace in a bigger way, that we're going to have a better guest experience.

And this gives us an opportunity to make some step function changes on things we've always wanted to do in the park in terms of improving the guest experience, and then yielding those changes for the advantage of our shareholders. And so this is a perfect opportune time to make operations changes. But we're seeing right now, extremely strong consumer sentiment. We're very happy with that. And we think that demands going to rebound quite handsomely, when - if and when we can either increase the number of folks that we're putting into our parks or open them up for the first time.

Ben Swinburne

There's a lot of technology that's at work at your parks. I'm sure much more than any of us see when we're there. But I want to come back to your point and see what I can get you to tell us about, because this idea of trying things, a step function change in sort of the way you go about running that business is really fascinating. Anything you would be willing to share with us at this point about the sort of digitization efforts or anything else you're doing on the tech side that may make that business better for consumers, but also more efficient on the other side of this.

Bob Chapek

Sure, we - I guess I would say we think of the application and technology in our parks and resorts business in two different ways. One is really about more immersive storytelling, using technology to better tell a story, increase the sense of realism without having the technology be apparent. And you are and I, before we started, were chatting up, the Galaxy's Edge, the Star Wars Land and the Rise of the Resistance. And that is a perfect example of using technology to tell a story. There's a million lines of code in that in that program that runs Rise of the Resistance, which makes it extremely complicated, but it also makes it extremely immersive storytelling.

And so we imagine that that's sort of the world going forward, really in-depth storytelling, and increased levels of personalization. But the other area that we do it in, and it's a little more pedestrian, but equally important in terms of guest experience are things that enable us to simplify and enable a more frictionless experience that the guests would have at our parks, things like keyless check in, let's say, mobile order of food. So there's no waiting in the park. You get to wherever you want to have lunch, and your food's ready for you. Contactless screening, which of course, again, is an outgrowth of COVID. But it's going to be something that's going to have some persistence as we move forward.

And even things like itinerary planning and fully leveraging the information we have in terms of preferences, sort of going back to one of the earlier questions about the different ways that we can gather information from across the company, and all of our guests or our consumers, and really make things customized and personalized. So really a big opportunity, I think, going forward to use that technology in a seamless, sort of invisible way to enhance the guest experience.

Ben Swinburne

There's a lot of exciting opportunities there. You guys, before the pandemic, Bob had been implementing dynamic pricing over a number of years. Is there still an opportunity, you think, on the pricing side for optimization and yield maximization when we get out of this pandemic?

Bob Chapek

Yeah, I guess, Ben, the way I would look at it is that maybe the ultimate expression of yielding is when you're so constrained on the number of people you can put into a park, that all that benefit of the learnings that we've had over the last five, six, seven years of dynamic pricing now come into play. I'm now going to blend in the idea that we just talked about with technology, because, frankly, when we got involved in this dynamic pricing, we really didn't have systems that were actually built to do that. So now you take the capabilities of the system to truly build in, true sort of, world class dynamic pricing, plus this idea that, we've been doing it a while, and now we've got this test case, where we're artificially constraining the demand for our park.

And we're getting pretty good at this, supply demand thing. And but the key is that every one of these programs that we're putting in place will improve the guest experience, so that in the end, it's a win-win for everybody.

Ben Swinburne

Yeah, I know, you get the question all the time, Bob about long term margin potential of the park's business, but it sounds like these are all things that create at least the opportunity for margins to continue to be not just impressive, but maybe higher than they were pre-pandemic?

Bob Chapek

Right? Well, Ben, it's - there's no doubt that when we reopen a park after it's been closed for a prolonged period of time, there's going to be some reopening costs. We've got to go rehire labor, which we're more than glad to do. We want to put people back to work. But at the same time, there is a fundamental shift, where we can be more efficient practice these yield management strategies in a more profound and unlimited way, if you will. We've made some changes already. You've heard about some changes in our annual pass program at Disneyland, which in a non-COVID environment would have been a pretty tough one to make, because they just keep renewing and renewing.

But when you start lapping a year, without anybody going for an annual pass program, that gives you the chance. And so we're going to use that though, in order to have an even better guest experience at Disneyland. And really manage the crowd so that no matter what day you go to Disneyland, you're going to have an extraordinary experience.

Ben Swinburne

Got it? All right. We've got about 10 minutes left. So I want to shift to all the studio production businesses and some of the content businesses at the company. Maybe starting with Marvel, I can remember when you guys announced that acquisition. To say it's paid off would be an understatement. But at the same time, there's always concerns about superhero fatigue and how long this IP can continue to resonate with consumers. Not every studio that has comic book IP has had the same success that you have had. What are you guys doing - what are you and Kevin and the team doing to make sure that Marvel continues to thrive, particularly as you weave in Disney Plus, and the amount of content coming to us is going up, pretty dramatically.

Bob Chapek

I would say the situation is the same for Marvel as it is Lucas. If you look at it, we've averaged over a $1 billion of film since the acquisition of both Lucas and Marvel, which I think is an absolutely incredible statistic. And it goes to speak to the talent of not only Kevin and his team, but Kathy Kennedy and her team over at Lucas. And we're really fortunate to have both groups being led by such stellar creative talent.

But in terms of fatigue, I guess that's borne out in the numbers right, some extent, and they keep finding a way, let's just go back and take Marvel, for example. You've got one division which is about the most unique, creative take on Marvel mythology, but it's done in a unique all different way, which I think it's fascinating. It's riveting. It's certainly riveting to me. But then you've got, the upcoming Falcon and Winter Soldier, which is really an epic, almost cinematic type experience. I mean, it's big and bold. And if it were strung together in a movie theater, you would - it would be completely legitimate.

And then you have Loki, which I'm not going which I'm not going to say too much about, because it's not out yet, but let's just say it will be equally creative and inventive, and another chance for our creative team to do what they do best, and that's make great content. So the creative canvas, if you will, is very broad for both Lucas and Star Wars as well as Disney, and very multi dimension. So yes, it's superheroes in Marvel's case. But it's more. And yes, it's a galaxy far, far away for Lucas. But it's very more. And they are just going to keep on growing because of the great creative talent we have.

Ben Swinburne

Yeah, it must be interesting to see how the television product on Disney Plus reinforces the film product. And that should be something that we see play out now over the next couple of years I'd imagine.

Bob Chapek

Yeah, that's where they're at their best, managing that methodology, so that there's little pieces here and there that they dribble out and they all connect and it's really amazing. Geniuses, yeah,

Ben Swinburne

Yeah, no, no question. On the, I guess, the sports studio, the way you guys are now running the business, particularly around ESPN, you've got some big rights renewals, right in front of you. There's been obviously some press about the NFL and Monday Night Football. Can you just give us a sense for what your kind of strategic priorities are when you are staring at what are enormous numbers, no matter where they fall? These are big dollars. And your eyes are wide open, Bob about the challenges facing the linear television business. So what can you tell us about how you're approaching deals like that the NFL and Major League Baseball?

Bob Chapek

Our approach is really simple. If it's accretive to shareholder value, we'll do it. If it's not accretive to shareholder value, we won't do it. It's not a mandate to us that we get these rights. But we certainly had long relationships with most of the league's very symbiotic relationships, if you will. And we'd like to continue that. But if they deliver economic value for us, we'd love to remain in business with them. So it's not a deal in any price type situation, as I think I made clear at the earnings call, the last earnings call, but one that reflects the marginal value to our viewers and to our business. So we'll approach it with discipline.

And once again, ESPN plus will be a critical component to any rights deal we do in the future.

Ben Swinburne

My guess is we'll be hearing more about that shortly. Maybe just to wrap up on the studio side, you guys announced, as you mentioned, Bob at the beginning a pretty massive reorg. And I think I asked you this question back, I think maybe in November about how the organization has absorbed these changes. I think about some of the executives, Jimmy Pitaro with ESPN, Dana Walden, Peter Rice, John Landgraf, these are people who've risen up to the most senior levels and been very successful in the entertainment business. And they're now no longer running a P&L. They're in charge of running very important, powerful studios. But it's a big change, nonetheless.

I'm just wondering if you could talk about the implications of all this, any growing pains and whether it's playing out as you had hoped? Are you achieving your goals that you - when you put this in place last year?

Bob Chapek

Sure. Well, just like Kevin and Kathy and Shawn at the studio, Jimmy, Dana, Peter and John are, absolute treasures for us from a creative standpoint, driving these machines and giving you the kind of content that you saw at the Investor Conference. Obviously, way before the rest of the world knew what we were going to do, from an organizational standpoint, I began a socialization process of the idea. And these very same people that you've talked about, I socialized this idea, sort of expressing the benefit of this. And I'll tell you, we've had very strong buy in. People liked the idea of clear accountability. They liked the ability to be nimble, to be able to pivot and to respond in a way that the consumers going.

And it requires a very collaborative environment, which I'm pleased to say we're seeing, but in very clear swim lanes. And certainly, it's changed. And change can be disruptive. But I have to say, all the folks that you mentioned have been spectacular, in terms of their flexibility, and their willingness to be elastic, and understand the bigger organizational benefits. And as a result, we're seeing the advantages in this dynamic, fast moving world that we're competing in.

Ben Swinburne

Yeah, that makes sense. Well, great. Listen, we're more or less out of time, Bob. I wanted to wrap up. I remember when we first met you, on the sell side, I think it was in February, in New York last year. And among other things I recall you describing herself as the guy that delivers the numbers. I don't know if you remember that, or I'm remembering it myself. But it stuck with me. I'm just curious, when we look out over the next kind of three to five years, how do you think we should be measuring success for the Walt Disney Company?

Bob Chapek

Well, we're about to hit our 100th anniversary. And I think success in the future is going to be to have the second 100 years be as innovative, as creative, as full of growth as the first century was. We're all about magical entertainment. And if we can continue to sort of define and redefine magical entertainment in this new world, respect legacy, but never stop innovating. I think we'll have a successful second 100 years as we did our first 100 years. And we're proud of the team and all the work that they've done to sort of dig us out of the pandemic hole. But the best is yet to come.

Ben Swinburne

That's a great note to end on. Bob, I really want to thank you for your time today. Appreciate it. It's great to see you. And thank everybody who joined us on the webcast. And we will see you tomorrow for day two. So thanks again.

Bob Chapek

Thank you very much.