The Quick Take
Disney reported Q1 FY2026 earnings this morning. We ran our trigger evaluation against the monitoring framework from our original analysis. Result: zero triggers fired, two returned insufficient data, and the overall thesis is tracking positively. No changes to our assessment are required.
Trigger Check Dashboard
| Trigger | Threshold | Q1 Data | Status |
|---|---|---|---|
| ESPN DTC Subs | <5M Year 1 = concern | "Positive early adoption" - no count | Insufficient Data |
| DTC Operating Margin | <$1B = concern | +50% earnings YoY (per call) | Insufficient Data |
| Linear TV Decline | -15% = warning | Sub +8%, Ad -6% | Not Triggered |
| Parks Performance | Attendance decline | +1% attendance, +4% per cap | Not Triggered |
| Goodwill Impairment | Any charge | No impairment | Not Triggered |
Three triggers not fired, two returned insufficient data. No trigger crossed its threshold.
What's Tracking Positively
Streaming
Revenue up 12% YoY, earnings up 50% YoY per earnings call. Management raised streaming margin target to 10% for FY2026 (vs 5% in FY2025). Bundling with Hulu and ESPN is reducing churn.
Parks (Experiences)
First quarterly revenue exceeding $10B ever. Domestic attendance +1%, per capita spending +4%. WDW bookings up 5% for full year. Hotel occupancy 87% vs 85% prior year.
Box Office
$6.5B global box office in calendar 2025, third-highest year ever. Three $1B+ films (Avatar: Fire and Ash, Zootopia 2, Lilo and Stitch). Strong theatrical slate ahead including Toy Story 5 and Avengers: Doomsday.
What We're Still Watching
ESPN DTC Subscriber Count
This remains the largest single uncertainty in our thesis. ESPN Limited launched in August 2025, and management described "positive early adoption and engagement" but provided no subscriber count. We need hard numbers to assess the sports transition success.
Epic Universe Opening
Universal's Epic Universe opens in summer 2025. WDW bookings are up 5%, suggesting Disney's competitive position may be holding, but we won't know the real impact until post-opening data.
Entertainment Segment Disclosure Change
Disney consolidated entertainment reporting, no longer breaking out linear vs streaming separately. Management says it reflects how they "manage the business as a single entity," but it reduces transparency on streaming-specific metrics.
New Information This Quarter
OpenAI Sora Deal
Three-year licensing agreement enabling Sora-generated 30-second videos of 250 Disney characters. No human voice or face allowed. Disney plans to curate this content on Disney+ as a short-form engagement feature.
Fubo Acquisition Closed
October 2025 transaction added $1.5B goodwill and created the largest vMVPD under Disney's Entertainment umbrella. Adds execution risk but also scale in live TV streaming.
NFL Network Acquisition Closed
January 2026 transaction gave NFL 10% equity in ESPN, diluting Disney's effective ownership to 72%. In exchange, Disney secured NFL Network and Red Zone assets ahead of the 2026 season.
Disney+/Hulu Unified App
Fully integrated Disney+ and Hulu app experience expected by end of calendar year. Already seeing reduced churn from current bundle and integration efforts.
Bottom Line
No triggers fired. No signal re-assessments required. We'll continue monitoring quarterly and update our assessment when: (a) ESPN DTC subscriber metrics are disclosed, (b) Epic Universe opens and competitive impact is measurable, or (c) a monitoring trigger fires.