Bloomberg Audio Studios podcasts radio news. The earnings and focus on Disney. The company's first quarter earnings topping estimates, fueled by success in its movie studios and streaming business. The stock is positive. And joining us now is the Disney CFO, Hugh Johnston. Hugh, welcome back to the program, sir. We'll talk about how solid these numbers are in just a moment. There's one headline that leaps out at me. We were talking about it a little bit earlier this morning. We'd love an explanation from you on it. Just seeing a second quarter decline in Disney Plus subscribers quarter on quarter. Hugh, could you explain that? Are we testing the limit of price tolerance of consumers? What's going on there?
Good morning, Jonathan. No, I don't think so at all. Actually, that's really sort of more seasonal decline than anything else. Year-over-year, we'll certainly be up, so certainly not concerned from that perspective. More broadly, the streaming business is doing extremely well. This is a business we invested pretty heavily in a couple of years ago, and what you're seeing now is the benefit of those investments. Our expectation is we'll continue to grow subs, we'll improve margins. We should make more than a billion dollars in that business this year, and next year we're looking at double-digit margins in that business. So certainly a ton of positive momentum. Now, you get into the question of why. A lot of it is the great content that's coming from the studio side of the house, both on the TV and the movie side of our entertainment business. Moana 2, Inside Out 2, Deadpool, all terrific hits. And on the TV side, the combination of Abbott Elementary, Shogun, and High Potential causing viewership to grow. We're seeing higher engagement, we're seeing churn ultimately coming down over the course of this year. So we feel like the streaming business is going to be one of the big drivers for our company going forward.
You know how much I love Shogun, and I can say I love Moana 2 as well. So the content slate is looking pretty good so far. I did want to talk about the cost issue though, and clearly not an issue from you, so I appreciate the explanation. The conversation we've had over the last few days or so is if we get tariffs, can companies pass on the cost? I'd like to know from your perspective and for the company, the additional tariffs that have gone onto China, how that could impact your business. How are you thinking about things?
Yeah, right now, based on what's been proposed, and obviously this is a rapidly evolving environment, so we're going to react as we learn things. The impact would be immaterial to us. So from that perspective, really, the Walt Disney Company will be fine based on what's on the table right now.
At the same time, there's a question about the American brand at a time when there are increasing tensions between the US and China, the US and Europe. Given the fact that the experiences side of your business has been such a driver of growth for you, are you concerned? Have you seen any pullback in attendance in some of the areas like Shanghai, like France, like Paris, that could potentially have some feelings around the negotiations?
Now, broadly speaking, the international parks business did very well. Profitability was up 28% for the quarter. Attendance, broadly speaking, was up. So from that perspective, we certainly feel good. Disneyland Paris actually had a terrific quarter, so quite positive in that regard. Candidly, in many ways, what the Walt Disney Company represents is an opportunity to get away from all of the things that are happening in the world. Our job is to basically bring families joy, bring them together, give them smiles. So I think in many ways, we're not a part of that conversation.
At the same time, and it's sort of pulling together the idea of experiences and the smiles and the streaming business, the idea that how much are people willing to pay for this? John was alluding to that with tariffs, but just more broadly, how much are you seeing consumers push back against some of the price increases, whether it's at the parks or whether it's at the streaming services, just simply because of how much prices have already gone up?
Yeah, we're not. To be perfectly candid, and I think it's always important to remember from a consumer perspective, price is what you pay and value is what you get. And if you deliver sufficient value to the consumer, they are willing to pay the price. And you see that going on broadly with companies these days. Companies that deliver a lot of value, their pricing is being accepted by consumers. And if you look at the value of a Disney vacation, if you look at the value of all the things that we're able to deliver on the streaming service, people are willing to pay the price for that because frankly, they're getting a lot for it. So we haven't seen pushback really in a material way at all in that regard.
You, speaking of the streaming business, can we talk about Hulu just a little bit? Where are we with the negotiations with Comcast? Are we making any progress?
