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I want Disney to be the most admired company in the world.

Bob Iger

Letter to Shareholders from Chief Executive Officer, Robert A. Iger…(ps. every calls him Bob)…

Over the past year, we have made significant progress to strategically realign The Walt Disney Company for growth and shareholder value creation. Upon my return as CEO last fiscal year, we embarked on a necessary and unprecedented transformation of the Company to confront a number of internal and external challenges and seize the tremendous opportunities before us. First, the Company was completely restructured, restoring creativity to the center of our business. We made important management changes and efficiency improvements to create a more cost-effective, coordinated and streamlined approach to our operations. We aggressively cut costs across the enterprise, putting the Company on track to achieve roughly $7.5 billion in cost reductions – approximately $2 billion more than we originally targeted. And perhaps most importantly, we drastically improved our direct-to-consumer operating income as we approach profitability in streaming.

The underlying strength of our company and the remarkable amount of work we have accomplished in such a brief amount of time has allowed us to move beyond a period of fixing and begin building our businesses again. To that end, we are focused on four key building opportunities that will be central to our success.

First is achieving significant and sustained profitability in streaming. Over the past fiscal year, we have reset this business around economics designed to deliver on this goal, and we believe we are well on the path toward making it a reality. We are rationalizing the volume of content we make and what we spend; perfecting our pricing and marketing strategies; maximizing our enormous advertising potential; and moving toward a more unified one-app experience by making extensive Hulu content available to bundle subscribers via Disney+.

Next is taking ESPN – already the world’s leading sports media brand – and turning it into the preeminent digital sports platform. There is tremendous value in sports, demonstrated by the immense popularity of ESPN’s programming and its growth in both revenue and operating income for the past two fiscal years amidst a backdrop of notable linear industry declines. Today, we are preparing ESPN for a future in streaming that will further harness the power of live sports and entertainment in innovative new ways.

The third building priority is improving the output and economics of our film studios, which produce the content and intellectual property that generate value across the entire company. We are focusing heavily on the core brands and franchises that fuel all our businesses, and reducing output overall to enable us to concentrate on fewer projects and improve quality, all while continuing our effort around the creation of fresh and compelling original IP.

Finally, we are turbocharging growth in our Experiences business, including Domestic and International Parks and our Cruise Line. Historically, investments in this business have yielded attractive returns for shareholders. Given our wealth of stories and characters, innovative technology, buildable land and unmatched creativity, we are confident about the growth potential of our new investments.

We have already made considerable progress on all four of these opportunities, and we are continuing to move forward with urgency and clarity.

Over the past year, we’ve also greatly enhanced the strength of our senior management team. We recently welcomed Hugh Johnston as Senior Executive Vice President and Chief Financial Officer. Hugh joins Disney after 34-years with PepsiCo, where he earned a sterling reputation as one of the best CFOs in America. Sonia Coleman, a 15-year veteran of the Company, was named Senior Executive Vice President and Chief Human Resources Officer, and she has been an invaluable asset throughout our ongoing transformation, particularly the implementation of our new operating structure. Asad Ayaz was named Disney’s first-ever Chief Brand Officer, in addition to his longtime role as President of Marketing for Disney Entertainment Studios, and is now responsible for stewarding and elevating the Disney brand globally across the entire ecosystem of company touchpoints and consumer experiences. These seasoned and skilled leaders join a deep bench of tremendously talented senior executives who are charting Disney’s path forward.

I’m immensely proud of the irrefutable progress we’ve made transforming Disney for the future, and I’m committed to finishing the job so this company is strongly positioned when my successor takes the helm.

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