Walt Disney, one of the world’s leading media and entertainment companies, has announced that it will reorganize its business into two segments: entertainment and sports. The change will take effect from the fourth quarter of 2023, following a restructuring of the company announced earlier this year.
Why Disney is making this change
Disney said that the new segment classification will provide more transparency and clarity into its financial performance and strategic priorities. The company also said that the change will align with its vision of becoming a global leader in direct-to-consumer content and services.
The entertainment segment will include Disney’s linear networks, streaming services, and revenue earned from licensing films and television content. The segment will encompass Disney+, Hulu, Hotstar, Disney Channels, ABC, Freeform, FX, National Geographic, and Star-branded international channels.
The sports segment will include ESPN and ESPN+, Star-branded sports channels in India, and fee earned from licensing sports content. The segment will focus on delivering live and on-demand sports programming to fans across multiple platforms and regions.
How Disney’s financial results will be affected
Disney also revealed historic results according to the new segment classification for the first nine months through July 1, 2023, as well as for its fiscal years 2022 and 2021. The company said that the new segments are not expected to have a material impact on its consolidated financial results.
According to the data provided by Disney, the entertainment segment generated $51.4 billion in revenue and $8.9 billion in operating income for the first nine months of 2023. The sports segment generated $12.6 billion in revenue and $2.4 billion in operating income for the same period.
For the fiscal year 2022, the entertainment segment had $63.6 billion in revenue and $10.5 billion in operating income. The sports segment had $15.8 billion in revenue and $3 billion in operating income.
For the fiscal year 2021, the entertainment segment had $54.7 billion in revenue and $8.1 billion in operating income. The sports segment had $13.4 billion in revenue and $2.1 billion in operating income.
What Disney’s future plans are
The move comes as Disney scouts strategic partners for its sports network ESPN. It is also exploring the sale of some of its assets in India, Reuters reported in July.
The company in February announced a sweeping restructuring that created three internal units and included trimming the company’s workforce by nearly 4 per cent3. Disney last changed its reporting structure in 2020.
Disney’s CEO Bob Chapek said that the company is committed to accelerating its growth in the rapidly changing media landscape. He said that the new segments will enable Disney to leverage its creative strengths, technological capabilities, and global reach to deliver compelling content and experiences to consumers around the world.
