Dive Brief:

• Disney CFO Hugh Johnston is continuing to focus on slashing costs as the entertainment company looks to fund “big bets” including streaming and its parks and cruises, he said Monday during a fireside chat at the UBS Global Technology and AI Conference in Scottsdale, Arizona.
• “We need to continue to focus on eliminating unnecessary costs to put money back into the big bets that we're making as a company,” Johnston said, referring to streaming and the company’s cruise fleet.
• The Burbank, California-based company is looking to execute on an ambitious growth plan, with Disney announcing in February that it would be spending $60 billion in capital over the next decade on its Experiences division, “to enhance and expand domestic and international parks, as well as cruise line capacity.”

Dive Insight:

Johnston’s continued focus on paring down costs to boost investment in key areas comes a year after he first took the CFO seat at the company. A longtime alum of beverage giant PepsiCo, Johnston more than doubled his annual compensation with the move, inking a $2 million base salary as Disney’s top finance executive, CFO Dive previously reported.

The appointment came as Disney was fielding several challenges, including declining subscriber numbers for its streaming business, a shareholder lawsuit, strikes by writers and actors and a continued tug-of-war with activist investor Nelson Peltz, CFO Dive reported at the time.

In taking the seat, Johnston honed in on slashing costs with the twin goal of using the company’s assets “more effectively” and enabling better communication with investors, he said Monday.

“The company clearly is emerging from that disruptive period as a winner, which is kind of what I was assuming going in,” he said of the move. “And I thought there were a couple of places that I could probably add to that improved performance of the company.”

After seeing subscriber numbers fall last year, Disney’s direct-to-consumer streaming segment posted its first-ever operating profit during its Q3 of fiscal 2024 to the tune of $47 million. The entertainment company kept up the momentum in the following quarter, with the segment logging a $253 million operating profit for Q4, CFO Dive previously reported. During its Q4, Disney also gained 4.4 million paid subscribers.

While narrowing costs and boosting subscriptions was a key mandate for Johnston as incoming CFO, the company has also taken steps forward on its $60 billion growth strategy for its Experiences division.

As part of the strategy, the company is shining a spotlight on its cruise business, an area of its Experiences division which has “lots of untapped global growth potential,” Johnston said Monday. The focus comes as growth in the company’s theme parks begins to slow, with Disney seeing operating income for its parks decline in Q4.

Cruises are “going to be a significant contributor” as a driver of growth for its Experiences segment, Johnston said. The company recently launched its latest cruise ship, the Disney Treasure, after announcing plans in August to expand its fleet by four new ships by 2027 in August. The expansion is set to bring Disney’s fleet up to 13 ships.

“If you're ever going to look at an investment and say, ‘does it have layers of advantage, does it have attractive financials? Does it have a consumer proposition?’ This is the one that does,” Johnston said of cruises. “And as a result, it will become a bigger and bigger piece of the line of business over time.”