In fiscal 2026, Disney expects to spend $24 billion on content across entertainment and sports, up about $1 billion from $23 billion in FY25 (which ended Sept. 27). CFO Hugh Johnston expects the company’s total content budget to continue to grow, but he said it won’t be at the levels of recent years when Disney and others were “overproducing” original content.
The $24 billion content-spending forecast splits about half sports on the ESPN side of the house and half on entertainment, Johnston said, speaking Wednesday at the Wells Fargo Technology, Media, and Telecom Summit in Rancho Palos Verdes, California.
“I think that split will hold” going forward, although spending on entertainment “may grow a little faster than sports,” Johnston said. Disney plans to invest more in local content in certain markets, he added: “We have rights to succeed with respect to Disney content, but we need to supplement that with local content. So the strategy is very much to do that.”
Going forward, Disney’s content spending will continue to grow from $24 billion in FY26. But it won’t be at the levels that Disney and other media companies were spending during the peak of the battle to acquire streaming subscribers a few years back. In fiscal 2022, Disney had expected to spend $33 billion on content. “A lot of people were overproducing” content, Johnston commented, noting that “we weren’t happy” with the quality of some of the content coming out at the time.
Johnston said Disney’s total content spending will not grow faster than its direct-to-consumer revenue, which he wants to see in the double digits in the years ahead.
Regarding Disney+’s original go-to-market strategy, he said, “The goal first was to achieve scale, and we did do that,” he said. The company had 195.7 million Disney+ and Hulu subscribers globally as of the end of September. Johnston added, “That said, there’s still opportunity to expand on that sub base.”
During his appearance at the conference, Johnston reiterated that Disney doesn’t see the need for “major M&A” or additions to its IP portfolio. That comes as initial bids for all or part of Warner Bros. Discovery are due Thursday, Nov. 20, with Paramount Skydance, Comcast and Netflix expected to be among the bidders.
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Johnston, echoing comments made by his boss, CEO Bob Iger, said Disney+ has opportunities to expand into commerce and gaming. Over time, Disney+ will become a “portal” for how consumers “interact with Disney in any way,” he said.
Johnston spoke about Disney’s work to merge Hulu into Disney+ in a unified app experience, which the company expects will increase retention and reduce churn. “More than anything, we just need to get the technology, we need to get the product right,” he said. The team, led by Adam Smith, chief product and technology officer for Disney Entertainment and ESPN, is “working double-time” on the project, Johnston said.
Regarding ESPN Unlimited, the standalone streaming service that launched in August, Johnston said the company is “very, very happy with the start” and that “the numbers are off to a very good start” (but he didn’t provide details). With features including fantasy sports and betting, it’s a product for sports fans that is “more interactive than watching on TV,” he said. Disney is offering an introductory bundle with Disney+, Hulu and ESPN Unlimited for $29.99/month for the first 12 months, which is the same price as the standalone version of ESPN Unlimited. Johnston noted that 80% of ESPN Unlimited customers took the three-way bundle, but that isn’t surprising given the sizable discount of the promo offer.
Disney, in reporting its fiscal fourth quarter 2025 results last week, told investors it remains on track to deliver double-digit growth in earnings per share over the next two years.
For full-year fiscal 2026, Disney forecast operating margin of 10% for Disney+ and Hulu, fueled by continued streaming growth and recent price hikes. For the entertainment segment overall, the company projects double-digit percentage segment operating income growth “weighted to the second half of the year.”
In the September quarter, Disney’s streaming business topped Wall Street expectations, as Disney+ notched a net gain of 3.8 million subscribers and Hulu netted 8.6 million, helped by the introductory promo pricing of the ESPN Unlimited/Disney+/Hulu bundle. In addition, Hulu’s gains were largely due to the expansion of its distribution deal with Charter to bundle Hulu with Spectrum TV Select. It’s the last quarter Disney is disclosing those subscriber numbers, following the lead of Netflix. The company’s entertainment direct-to-consumer streaming revenue increased 8% to $6.25 billion and operating income hit $352 million, up 39%, for the quarter.
Last week, Disney extended Johnston’s employment agreement through 2029. The former longtime PepsiCo exec joined Disney in December 2023.
Pictured above: James Cameron’s “Avatar: Fire and Ash,” due in theaters Dec. 19
From Variety US