Walt Disney Co. (DIS) - Q3 2026 10-Q Summary
Business Context and Reporting Period
This report covers the fiscal quarter ended June 27, 2026, and the nine-month period ended on the same date. The Company operates through three primary segments: Entertainment, Sports, and Experiences. Significant strategic developments during the period include the consolidation of financial results from the NFL media assets (acquired January 31, 2026) and FuboTV Inc. (combined October 29, 2025). The Company reported 1,726,686,902 shares of common stock outstanding as of July 29, 2026.
Key Financial Metrics
| Metric (in millions, except per share) | Q3 2026 | Q3 2025 | 9M 2026 | 9M 2025 |
|---|---|---|---|---|
| Total Revenues | $25,248 | $23,650 | $76,397 | $71,961 |
| Net Income (Attributable to Disney) | $2,638 | $5,262 | $7,287 | $11,091 |
| Diluted EPS | $1.51 | $2.92 | $4.12 | $6.12 |
| Operating Cash Flow (9M) | $12,515 | $13,627 | ||
| Total Debt (Borrowings) | $46,041 | $42,026 | ||
| Cash & Equivalents | $5,185 | $5,695 | ||
| Share Repurchases (9M) | $7,245 | $2,496 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 7% ($1.6 billion) in Q3 and 6% ($4.4 billion) for the nine months, driven by growth in Experiences (parks, resorts, cruises) and higher subscription/affiliate fees in Entertainment and Sports.
- Profitability Decline: Net income attributable to Disney decreased 50% in Q3 and 34% for the nine months. This decline is primarily due to a non-recurring $3.3 billion tax benefit in the prior-year Q3 related to Hulu's tax classification change, which is absent in the current period.
- Restructuring & Impairments: Charges increased significantly to $900 million in Q3 (vs. $185 million prior year) and $1.1 billion for the nine months. The current period includes an $812 million impairment of the investment in A+E Global Media.
- Segment Performance:
- Entertainment: Operating income surged 64% in Q3 to $1.68 billion, driven by subscription growth.
- Sports: Operating income declined 17% in Q3 to $858 million due to higher programming costs (NBA contract renewal timing) despite revenue growth from the NFL transaction.
- Experiences: Operating income grew 20% in Q3 to $3.0 billion, fueled by higher park attendance, resort occupancy, and cruise passenger days.
Guidance, Outlook, and Risks
- Capital Allocation: The Company repurchased $7.2 billion of stock in the first nine months of 2026 and targets at least $9 billion in repurchases for the full fiscal year. Dividends were declared at $0.75 per share in Q3.
- Investment Outlook: Fiscal 2026 content spend is projected at approximately $24 billion (up from $23 billion in 2025). Capital expenditures are expected to be approximately $9 billion, driven by Experiences expansion.
- Legal & Regulatory Risks:
- Securities Litigation: A class action lawsuit regarding Disney+ subscriber growth and costs is set for trial in November 2027; damages are currently unquantifiable.
- Antitrust: Ongoing antitrust actions regarding bundling practices and the Fubo acquisition. A settlement in principle was reached for YouTube TV/DirecTV Stream claims, but the fuboTV class action remains pending.
- Contract Renewals: Risks associated with renewing long-term sports and distribution contracts, including recent blackouts with Comcast Xfinity (NFL Network) and YouTube TV.
- Subsequent Event: In July 2026, Disney agreed to sell its 50% interest in A+E to Hearst for approximately $1.2 billion, expected to close by the end of fiscal 2026.
Investor Verification Checklist
- Verify A+E Impairment: Confirm the $812 million impairment charge and the subsequent agreement to sell the remaining stake for $1.2 billion to assess the net impact on the Entertainment segment.
- Review Tax Normalization: Analyze the effective tax rate (22.0% in Q3 2026 vs. -85.1% in Q3 2025) to understand the true operating profitability excluding the one-time Hulu tax benefit.
- Monitor Sports Rights Costs: Track the impact of the NBA contract renewal and NFL transaction on future programming costs and operating margins in the Sports segment.
- Assess Legal Exposure: Monitor the status of the securities class action trial (Nov 2027) and the antitrust settlement approvals for potential future liabilities.
- Check Liquidity Covenants: Verify continued compliance with the interest coverage covenant (3x EBITDA) given the increased debt levels and restructuring charges.