Summary
Walt Disney Co. (DIS) has filed an 8-K to provide updated segment financial information for the nine months ended July 1, 2023, and fiscal years 2022 and 2021. This recast is primarily driven by a reorganization of their media and entertainment businesses, effective with the fourth quarter of fiscal 2023. The former 'Disney Media and Entertainment Distribution' segment is being split into two distinct segments: 'Entertainment' and 'Sports'. This change aims to provide greater transparency and detail on the performance of their linear networks and sports operations. Furthermore, the company is reintroducing an intersegment revenue allocation for consumer products. The 'Entertainment' segment will now receive an allocation of revenue from the 'Experiences' segment (formerly 'Disney Parks, Experiences and Products') representing royalties on merchandise licensing. This aligns with their prior reporting methodology before 2020 and reflects the value of intellectual property created by the Entertainment segment, bringing it closer to industry peer practices. Importantly, these changes do not impact historically reported net income or earnings per share.
Key Highlights
- 1Reorganization of Media and Entertainment into 'Entertainment' and 'Sports' segments for increased transparency.
- 2Effective with Q4 fiscal 2023, the new segment structure will be implemented.
- 3Introduction of intersegment revenue allocation for Consumer Products, crediting the 'Entertainment' segment for IP royalties.
- 4This consumer products revenue share aligns with prior reporting practices and industry norms.
- 5The recast segment information covers the nine months ended July 1, 2023, and fiscal years 2022 and 2021.
- 6These reporting changes do not affect reported Net Income or Earnings Per Share (EPS).