Risk factor changes · DIS

What changed in Disney's risk factors

Item 1A (Risk Factors) of Disney's FY2025 10-K compared with its FY2024 10-K, sentence by sentence.

Newer: 10-K filed 2025-11-13 · Older: 10-K filed 2024-11-14

New in the latest 10-K 32

• In addition, the implementation of our DTC strategy may further contribute to such declines.
• We face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products, which impacts demand for our entertainment offerings and products and services and our results of operations.
• In addition, as a global entertainment company with a global consumer base, the success of our businesses depends on our ability to predict and adapt to constantly evolving and often divergent consumer tastes and preferences across various domestic and international markets.
• Evolving tourist preferences regarding travel to destinations in the U.S. and other geographical regions where our parks and experiences businesses operate sometimes affect travel to those businesses.
• Moreover, we incur costs to protect against such incidents.
• Hurricanes have caused park closures and other impacts to the operations of Walt Disney World Resort, adversely affecting segment results, and may do so in the future.
• For example, in recent years, we have expanded our fleet of cruise ships, with announced plans for further fleet expansion, and increased investment in our parks and resorts; completed the acquisition of Hulu and of a 70% interest in Fubo; and made substantial investments related to DTC offerings.
• Accordingly, we may not achieve our forecasted outcomes.
• Increased competitive pressures impact our revenues, increase our costs and impact our results of operations.
• For example, our advertising revenue is negatively impacted by the increased supply of advertising tools and platforms on which to place advertising, including search, social media, online marketplaces and other ad-supported DTC services, which depresses advertising rates across our DTC streaming services and linear networks and creates demand uncertainty.
• Renewal negotiations with certain MVPDs for distribution contracts scheduled to expire in fiscal 2026 could lead to temporary or longer-term service blackouts, negatively impacting our results of operations.
• On October 30, 2025, the Company s channels were removed from YouTube TV following the expiration of the parties distribution contract without agreement on renewal terms, and the Company cannot predict how long this service blackout will last or reasonably estimate the adverse impact on our results of operations.
• From time to time, these negative claims and publicity have led, and may lead in the future, to calls for consumer or other action, including boycotts, litigation, investigations or regulatory actions.
• These negative perceptions and other damage to our reputation or brands could persist, negatively impacting our sales, business opportunities, results of operations, financial condition and price of our common stock.
• The success of our DTC streaming services will be impacted by the success of our content curation and investment decisions and ability to offer compelling content and product features; our ability to grow subscription and advertising 21 TABLE OF CONTENTS revenues, including by increasing subscriber and viewership levels and managing churn; our pricing, bundling, product features and content distribution determinations, including across windows; and our ability to contain costs.
• Further, periods of elevated indebtedness could have the effect of, among other things, reducing our financial flexibility and our ability to respond to changing business and economic conditions and other uncontrollable events, including by reducing funds available for investments, capital expenditures, share repurchases and dividends and other activities, and putting us at a competitive disadvantage relative to companies with lower debt levels.
• Further, the cost of providing medical insurance and other medical benefits for our employees have increased, and we expect will continue to increase.
• For example, the copyright term for the short film Steamboat Willie (1928) and early versions of characters depicted in this film have expired.
• The unauthorized use of our IP typically increases our costs, including in connection with our efforts to protect rights in our IP, and may reduce our revenues.
• For example, from time to time, the Company s streaming services and technology are the subject of patent infringement litigation and other claims seeking damages and injunctive relief, and the resolution of these matters in aggregate may negatively impact our results of operations.
• We face risks from claims, litigation, governmental investigations and other proceedings to our businesses, reputation, results of operation and financial condition.
• We are subject to various actual and threatened claims, litigation, investigations and other proceedings, including private individual actions, class actions and actions and investigations by governmental and other regulatory authorities, relating to a range of issues, including securities; competition and antitrust; intellectual property, including patent and copyright; employment and labor; taxes; privacy and data protection; data security; personal injury and property damage; consumer protection; contractual and commercial disputes; the production, distribution and licensing of our content; and other matters.
• For example, a private securities class action lawsuit was filed in federal court against the Company and certain current and former senior management on behalf of certain purchasers of securities of the Company seeking unspecified damages, plus interest and costs and fees, and an adverse final judgment or the terms of a settlement of such matter could result in the payment of substantial monetary damages.
• See Note 14 to the Consolidated Financial Statements for more details regarding this lawsuit and above in these risk factors regarding patent infringement litigation and other claims.
• In addition, from time to time, we pursue litigation against third parties seeking to vindicate our rights.
• Actual and threatened proceedings and investigations increase our costs, divert management resources and disrupt business operations and may negatively impact our reputation and brands.
• The outcomes of such matters are inherently unpredictable, and determining legal reserves or potential losses from such matters involves judgment.
• If the losses to resolve such matters exceed the amounts recorded in any given reporting period, our results of operations for that interim or annual reporting period could be materially adversely affected.
• Further, from time to time, adverse resolutions or settlements of such matters result in substantial monetary damages or substantial future payment obligations and injunctive relief or other orders or actions that limit or prevent our implementation of our business plans, including our ability to complete strategic transactions and offer certain products and services, impact the enforcement or validity of our property and other (including intellectual property) rights, franchises and licenses or cause us to alter our business practices, which individually or taken together, negatively impact our business prospects, our results of operations, our financial condition and price of our common stock.
• Regulations applicable to our businesses impact the profitability of our businesses.
• In 2025, tariffs were announced with respect to and by certain U.S. trading partners, which could, depending on how these or future tariffs or other regulations with respect to trade are implemented, have a significant impact on our results of operations, including by impacting the macroeconomic environment, increasing costs or adversely affecting demand for our products and services.
• Further, volatility in the price of our common stock may negatively impact one or more of our businesses, including by increasing stock awards for our employees who participate in our stock incentive programs or limiting our financing options for acquisitions and other business expansion.

Reworded 107

Removed words are struck through; added words are highlighted.

• In addition to the factors affecting specific business operations identified in connection with the description of these operations and the financial results of these operations elsewhere in our filings with the SEC, the most significant factors affecting our business include the following: RISKS RELATED TO OUR BUSINESSES AND INDUSTRY Declines in U.S., global and regional economic conditions adversely affect the profitability of our businesses. results of operations and financial condition.
• Declines in U.S., global and regional economic conditions, such as recessions, other less severe slowdowns in economic activity and/or inflationary conditions in the U.S. and other regions of the world in which we do business typically adversely affect demand for our products and services and/or costs to operate our businesses, reducing our revenue and earnings.
• While a number of different factors affect the demand for our products and services, actual or perceived declines in economic conditions could contribute to typically have impacts across our businesses, including, among others, lower attendance or and spending at our parks and experiences businesses, prices that MVPDs pay fees received for our cable programming, programming and DTC services, including as a result of declines in subscription levels, purchases of and prices for advertising on our DTC products services and linear platforms, subscription levels for our cable programming or DTC platforms networks or licensing fees, while in the case of inflationary conditions, also continuing to increase increasing the prices we pay for goods, services and labor. labor, as well as typically our borrowing costs due to elevated interest rates, making it more difficult to obtain financing for our operations and investments on favorable terms.
• Even if when inflationary pressures moderate, we expect certain costs, such as for labor, to remain elevated.
• In addition, an increase in price levels generally, or in price levels in a particular sector, could result in a shift in consumer demand away from the entertainment and experiences we offer, which could also adversely affect our revenues and, revenues, while at the same time, increase our costs, including borrowing costs as a result of elevated interest rates, making it more difficult to obtain financing for our operations and investments on favorable terms. costs.
• A decline in economic conditions or a failure of conditions to improve as anticipated could impact implementation or success of our business plans, such as our plans to increase investment in plans for our Experiences segment, the realignment of our cost structure and plans for our DTC ad-supported services, enhancements, product offerings, pricing structure and price increases. increases and plans for strategic investments.
• The adverse impact on our businesses of actual or perceived declines in economic conditions or a failure of conditions to improve as anticipated will depend, depends, in part, on their severity and duration duration, and our ability to mitigate these impacts on our businesses is limited.
• Fluctuations in foreign currency exchange rates impact our revenues and the profitability results of operations, including our businesses. revenues and costs.
• Fluctuations in foreign currency exchange rates against the U.S. dollar impact our revenues and the profitability results of our businesses, operations, including by impacting the cost in U.S. dollars of providing our goods and services, our revenues in U.S. dollars generated by our international businesses and the international demand for our domestic products and services.
• The current An increase or continued sustained strength in the value of the U.S. dollar adversely impacts the U.S. dollar value of revenue we receive and expect to receive from other markets and contributes to reduced international demand for our domestic products and services, including international travel to our domestic parks and resorts.
• A decrease or sustained weakness in the value of the U.S. dollar often increases the cost of labor, goods and services in, or originating from, as applicable, non-U.S. markets.
• Although we hedge exposure to fluctuations in certain foreign currencies, any such hedging activity may not substantially offset the negative financial impact of exchange rate fluctuations and is not expected to offset all such negative financial impact, particularly in periods of sustained U.S. dollar strength or weakness relative to multiple foreign currencies.
• Further, economic or political conditions in certain countries outside the U.S. also have reduced, and could continue to reduce, limit, our ability to hedge exposure to currency fluctuations in those countries or our ability to repatriate revenue from those countries.
• Changes in technology, in consumer consumption patterns and in how entertainment products and services are created affect demand for our entertainment products, for, the revenue we can generate from these products and the cost of producing or distributing these products. our entertainment offerings and our results of operations.
• The media entertainment and technology businesses in which we participate increasingly depend on our ability to successfully adapt to new technologies technologies, including shifting patterns of content consumption and how entertainment products and services are generated.
• New technologies affect the demand for our products, products and services, the manner in which our products entertainment offerings are distributed to consumers, the ways we charge for and receive revenue for our entertainment products and services and the stability of those revenue streams, the sources and nature of competing content entertainment offerings, the time and manner in which consumers acquire and view some of our entertainment products offerings and the options available to 17 TABLE OF CONTENTS advertisers for reaching their desired audiences.
• In addition, theater-going to watch movies has remained below pre-pandemic levels. levels that existed prior to the COVID-19 pandemic.
• Rules Regulations governing new technological developments, such as developments in artificial intelligence (AI), including generative AI and large language model tools, remain unsettled, and these developments may affect aspects of our existing business model, models, including revenue streams for the use of our IP, how we create our entertainment products offerings and the competition we face.
• In order to respond to the impact of new technologies on our businesses, we regularly consider, and from time to time implement implement, new initiatives and changes to our business models, including by developing, developing and investing in and acquiring DTC products, reorganizing our media streaming services and entertainment businesses to advance our DTC strategies content offerings and developing new media offerings.
• In addition, declines in certain traditional forms of distribution impacts impact the cost of content allocable to our DTC offerings, negatively impacting the profitability of our DTC offerings.
• As part of our DTC strategy, we forgo certain revenue from certain traditional sources as we invest in our DTC offerings. sources.
• Since launch, Initially, our DTC streaming services experienced significant losses.
• There can be no assurance that the DTC model and other business models we may develop will each be or remain profitable or be as profitable over the long term as our historic business models. 18 TABLE OF CONTENTS We face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products, which impact demand for our entertainment offerings and products and the profitability of our businesses.
• The success of our businesses depends on our ability to consistently produce compelling creative content, which may be distributed, among other ways, through DTC platforms, broadcast, cable, services, linear networks and theaters and used in theme park attractions, hotels and other resort facilities and travel experiences and consumer products.
• Demand for certain out-of-home entertainment experiences, such as theater-going to watch movies, has not returned to pre-pandemic levels. levels that existed prior to the COVID-19 pandemic.
• Moreover, we must often make substantial investments in content production and acquisition, acquisition of sports and other programming rights, theme park attractions, cruise ships or hotels and other facilities or customer facing platforms before we know the extent to which these products will earn consumer acceptance, and the market, economic or social conditions are sometimes significantly different from the ones we anticipated at the time of the investment decisions.
• Further, preferences of some consumers are affected by their perceptions of our position on matters of public interest, including regarding environmental and social issues. issues, and such perceptions sometimes lead to consumer boycotts.
• Generally, revenues from, and profitability of, each of our businesses results of operations and financial condition are adversely impacted when our entertainment offerings and products, products and services, as well as our methods to make our offerings and products and services available to consumers, do not align with constantly evolving and often conflicting consumer preferences and tastes or achieve sufficient consumer acceptance.
• A variety of uncontrollable events disrupt our businesses, reduce demand for or consumption of our products and services, impair our ability to provide our products and services or increase the cost or reduce the profitability of providing our products and services. services, adversely impacting our results of operations and financial condition.
• The operation and profitability of our businesses of, and demand for and consumption of our products and services, particularly our parks and experiences businesses, are highly dependent on the general environment for travel and tourism, including in the specific regions in which our parks and experiences businesses operate.
• The operation of our businesses and businesses, the environment for travel and tourism, as well as the demand for and consumption of our other entertainment products, is products and services and ultimately our results of operations and financial condition are subject to significant adverse impact impacts from a variety of factors beyond our control in the U.S., globally or in specific geographic regions as a result of a variety of factors beyond our control, around the world where we operate, including: health concerns; adverse weather conditions arising from short-term weather patterns or long-term climate change, including longer and more regular excessive heat conditions, catastrophic events or natural disasters (such as excessive heat or rain, hurricanes, wildfires, typhoons, floods, droughts, tsunamis and earthquakes); international, political or military developments, including trade tariffs and other trade and international disputes and social unrest; legal and 18 TABLE OF CONTENTS regulatory developments; macroeconomic conditions, including a decline in economic activity, inflation and foreign exchange rates; and terrorist attacks.
• These events and others, such as fluctuations in travel and energy costs, supply chain disruptions and malware and other cyber-related attacks or intrusions or other widespread computing, telecommunications or payment processing failures, from time to time have disrupted, and may in the future disrupt, disrupt our ability to provide our products and services, raise the cost of providing our products and services or and in certain instances may affect our ability to obtain insurance coverage with respect to some of these events.
• An incident or other event that affected our property directly, including a security incident, earthquake or hurricane, would have a direct impact on our ability to provide goods products and services and could result in closure of impacted operations or have an extended effect of discouraging consumers from attending our facilities.
• The Company has paused ceased certain operations in certain regions, including in response to sanctions, trade restrictions and related developments and the profitability of certain operations has been impacted as a result of events developments, resulting in the corresponding regions. impairment charges.
• In addition, we derive affiliate fees and royalties from the distribution of our programming, sales of our licensed goods products and services by third parties, and the management of businesses operated under brands licensed from the Company, Company and advertising revenues from the purchase of advertising on our various platforms, including DTC services and linear networks, and we are therefore dependent on the successes of those third parties for that portion of our revenue.
• The profitability of one or more Our results of our businesses operations could be adversely impacted by the a significant contraction of distribution channels for our products and services, 19 TABLE OF CONTENTS including through third-party licensees or sellers of our licensed goods and services. services, or a contraction in the number or kind of advertisers purchasing advertising on our platforms, including as a result of legal or regulatory developments.
• A wide variety of factors could influence the success of those third parties and if negative factors significantly impacted a sufficient number of those third parties or materially impacted a supplier of a significant product or service, the profitability of one or more of our businesses results of operations could be adversely affected.
• We face risks related to changes in our business strategy, strategies and plans, which have affected and may continue to affect our cost structure, the profitability value of our businesses assets and/or the value of our assets. results of operations.
• We adjust our business strategies and plans from time to time in connection with changes in senior management and in our efforts to respond to changes in technology, consumer purchasing and consumption patterns, acceptance of our entertainment offerings, the market for advertising, macroeconomic conditions and other changes in the business environment.
• For example, in October 2025, we completed a combination of certain Hulu Live TV assets with Fubo to acquire a 70% interest in Fubo; in fiscal 2024, 2025, we announced entering into a definitive agreement plans for ESPN to transfer acquire the NFL Network and certain other media assets owned and controlled by the NFL in exchange for a 10% noncontrolling interest in ESPN; in fiscal 2024, we transferred Star India into a joint venture and recorded related impairment charges; charges and announced an investment in a multi-year project with Epic Games; in fiscal 2023, we reorganized our media and entertainment operations, which had been previously reported in one segment, into two segments, Entertainment and Sports; in fiscal 2023 we announced that we would review content, primarily on our DTC services, for alignment with a strategic change in our approach to content curation, resulting in removal of certain content from our platforms and related impairment charges; in fiscal 2022, we announced plans to introduce an ad-supported Disney+ service, new pricing model and price increases and cost realignment; and from time to time, we have announced announce exploration of a number of new types of businesses.

Removed since the previous 10-K 33

• Past declines in economic conditions reduced or resulted in slower growth than expected in, among other things, guest spending at our parks and resorts, purchases of and prices for advertising on our platforms and purchases of Company-branded consumer products, and we expect similar impacts as such conditions recur.
• Recent inflationary conditions increased certain of our costs, including at our parks 17 TABLE OF CONTENTS and resorts.
• In addition, many of our businesses depend on acceptance of our offerings and products by consumers outside the U.S.
• The success of our businesses therefore depends on our ability to successfully predict and adapt to continually evolving consumer tastes and preferences outside as well as inside the U.S.
• Moreover, the costs of protecting against such incidents reduces the profitability of our operations.
• Hurricanes, such as Hurricanes Helene and Milton, which in the case of Hurricane Milton caused Walt Disney World Resort theme parks in Florida to close for one full and partial day, have impacted the operations and profitability of Walt Disney World Resort and may do so in the future.
• Changes in strategy, such as was the case with the most recent reorganization of our media and entertainment operations, can lead to workforce disruptions.
• For example, in fiscal 2024, we announced plans for additional expansion of our fleet of cruise ships, and in recent years to expand investment in our Experiences segment.
• In addition, in recent years, we have made significant investments in our businesses, such as expansion and renovation of certain of our theme parks, additional cruise ships, the acquisition of TFCF Corporation (TFCF) and investments related to DTC offerings.
• Accordingly, we may not achieve our forecasted outcomes. 20 TABLE OF CONTENTS Increased competitive pressures impact our revenues, increase our costs and impact the profitability of our businesses.
• Each of these competitive pressures could reduce our revenue and increase our marketing costs.
• U.S. and international regulators, investors and other stakeholders are increasingly focused on environmental, social and governance matters.
• Damage to our reputation or brands could impact our sales, business opportunities, profitability, recruiting and valuation of our securities.
• The success of our DTC strategy and profitability of our DTC streaming services will be impacted by the success of the reorganization of our media and entertainment business and the strategic change in our approach to content curation initiated in fiscal 2023; our ability to drive subscriber additions and retention based on the attractiveness of our content, manage churn, achieve the desired financial impact of our DTC pricing, bundling and distribution determinations, the Disney+ ad supported service, monetization and cost containment strategy and the launch of the ESPN flagship DTC service; and the effects of our determinations with regard to distribution for our creative content across windows.
• S&P Global Ratings long- and short-term debt ratings for the Company were A- and A-2 (Positive), respectively; and Fitch Ratings long- and short-term debt ratings for the Company were A- and F2 (Stable), respectively.
• Elevated indebtedness or leverage ratios could adversely affect us, including by decreasing our business flexibility.
• Elevated indebtedness could have the effect of, among other things, reducing our financial flexibility and our ability to respond to changing business and economic conditions and other uncontrollable events.
• Debt repayment obligations could also reduce funds available for investments, capital expenditures, share repurchases and dividends, and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels.
• Our leverage ratios increased as the result of COVID-19 s impact on financial performance, which caused certain of the credit ratings agencies to downgrade their assessment of our credit ratings.
• Downgrades to our credit ratings may negatively impact our cost of borrowings and/or make it more difficult for us to obtain financing on acceptable terms.
• In July 2024, members of SAG-AFTRA commenced a work stoppage against video game employers, which is ongoing.
• The seasonality of certain of our businesses and timing of certain of our product offerings could exacerbate negative impacts on our operations.
• Further, certain conditions in the healthcare industry, such as prolonged workforce shortages or rising prescription drug prices, may lead to an increase in the cost of medical insurance and expenses.
• We face risks related to costs and expenses in connection with the acquisition of NBC Universal s (NBCU) equity interest in Hulu and the TFCF acquisition.
• On November 1, 2023, NBCU exercised its right to require the Company to purchase NBCU s equity interest in Hulu under a put/call arrangement between the parties.
• The purchase price for NBCU s equity interest in Hulu will be determined based on NBCU s equity ownership percentage of the greater of Hulu s equity fair value as of September 30, 2023 based on a contractual appraisal process, and a guaranteed floor value.
• Further, the Company will share with NBCU 50% of the Company s tax benefit from the purchase of NBCU s interest in Hulu, which payments are expected to be made primarily over a 15-year period.
• In May 2024, the Company and NBCU entered into a confidential arbitration to resolve a dispute regarding the contractual appraisal process, in which the parties seek declaratory relief, equitable relief and unspecified damages (see Note 2 of the Consolidated Financial Statements for additional information).
• In addition, we may incur significant costs and expenses in connection with the TFCF acquisition, including costs for which we have established reserves or which may lead to reserves in the future.
• The cost to purchase NBCU s equity interest in Hulu and related obligations to NBCU and any such other costs could negatively impact the Company s cash position and result in the Company incurring additional indebtedness.
• The unauthorized use of our IP may increase the cost of protecting rights in our IP or reduce our revenues.
• For example, as previously disclosed in the Company s Form 10-Q for the third quarter of fiscal 2024, in fiscal 2024 over a terabyte of data from one of the communications systems used by the Company was improperly exfiltrated and released.
• In addition, we provide confidential, proprietary and personal information to third parties in certain cases, which information and related systems have been compromised and are also subject to the risk of future material compromise.

Source: SEC EDGAR filings, compared sentence by sentence by EdgarStack. Sentence matching is automated and may pair or split passages imperfectly; check the linked filings before relying on any passage. A software tool, not financial advice. Not affiliated with the U.S. Securities and Exchange Commission.