Disney Earnings and Rising Health Costs 11/13/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. It's over. The longest government shutdown wrapped. The House extends federal funding through January. And that's it. They left town again after they voted. They weren't in session for more than 50 days. Just how happy and healthy are American consumers? Entertainment and vacation giant Disney reported quarterly numbers. CFO Hugh Johnston joins us. Our consumer is operating in a very healthy way. On streaming, spending, and leisure. I think they're being more choiceful, but when it comes to something as significant as a Disney experience, you don't want to cheap out on that.

0:44When you're taking the family, you want to go all in. And Obamacare. Fifteen years after its passing into law, it remains a political football. We have a wide-ranging conversation with Oscar Health's Mark Bertolini. 50 % of American small businesses use the Affordable Care Act. Small businesses are 50 % of our GDP. They're the engine of our economy. 27 % of farmers use the Affordable Care Act. Before he ran the exchange-based healthcare company, he was CEO of Aetna. And Bertolini weighs in on these sticky cost questions when it comes to health insurance. 75 % of the people in the ACA today are from red states.

1:22100 million Americans don't have access to employer-sponsored health insurance. Plus, when will flights fly normally again? And where might we go when they do? Florida's got the weather. No taxes. No, they don't, but yes, they got the weather. Until hurricane season. It is Thursday, November 13th, 2025. Squawk Pod begins right now. Stand back to you by in 3, 2, 1. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. And yeah, the Dow closing at a record level once again yesterday.

2:04It closed above 48 ,000 for the first time ever. The government shutdown, even though the government's back open, we're probably not going to be getting the numbers for the latest CPI because the government was closed during those collection weeks, so they never collected the data. It's going to be a while, not just for the airlines, for the government data. lots of other things to kind of get back on track too. The yays are 222, the nays are 209. The bill is passed. The motion is adopted. Without objection, the motion to reconsider is laid on the table. And it's an honor now to sign this incredible bill and get our country working again.

2:41Thank you. We've got the president signing that bill to fund the government, ending what is now the longest shutdown in U.S. history. Emily Wilkins joins us in Washington with the latest. Good morning. Hey, Andrew. Well, yeah, after 43 days, the government shutdown is now over, longest in history. So that vote last night, you saw all but two House Republicans voting to reopen the government. You saw six Democrats that crossed the aisle to join them. And then, of course, as you're seeing there, Donald Trump signing that bill last night. And the government's already telling furloughed employees to come back to work today.

3:17All of them will be getting the paychecks that they have missed in back pay over the next few days. Now, some of this will depend on how quickly agencies can process the pay. I've heard for some workers who are going to be paid maybe by Friday, some might not be paid until early next week when the funds hit their bank accounts. We're also waiting to see exactly what the plan is for federal data, because while things like the September jobs report, that was ready to go before the shutdown. But as Becky just mentioned, no one was really collecting the data for the October reports. Although, of course, some could be collected retroactively.

3:49We're keeping an eye on what BLS's plans are there now that they've reopened. And on Capitol Hill, the race is now on for lawmakers to see if they can extend those Affordable Care Act premium tax credits before they expire at the end of the year. But many Republicans who I spoke with yesterday, including Speaker Mike Johnson, want to see wider health care reforms. Am I going to guarantee a vote on ACA unreformed COVID era subsidies that is just a boondoggle to insurance companies and robs the taxpayer? We got a lot of work to do on that. The Republicans would demand a lot of reforms before anything like that was ever possible.

4:26And we have to go through that deliberative process. After voting last night, lawmakers again left town. They'll be in next week to start catching up on everything they missed in the last 50 some days. And that includes seeing if they can work out those longer term updated fundings for the many parts of the government that are still under that stopgap funding. And we'll see if they're able to do that and avoid another potential shutdown on January 30th. Guys. Emily, they left town again after they voted. They weren't in session for more than 50 days. Yep. They are coming back on Monday. You know, that is a really great question.

5:06I think for a lot of them, they weren't exactly sure when they were coming back. And I think it's just for a lot of them, they necessarily weren't expecting it and weren't planning on it. But I think, Becky, there is really a big question because you saw the Senate in this entire time. You saw them move forward with major defense bills. You saw them make progress on crypto. You saw them move a lot of nominations and some legislation. And I think there's a huge question of like, all right, what are all the things that the House planned to do? And some of the members who were back yesterday, they were like, yeah, there are definitely things that we feel are now in the backlog that we're going to have to rush and push to get done.

5:41We'll be interested to see if they make some changes for their schedule for the rest of the year to try to get some of those bills in. OK, I meant to tell you guys I'm going to be gone for 50. You're going to be gone for a couple of days? 50. 50 days. And then when you come back, you'll look at that smile. Look at that smile. But nobody's smiling about this. What you're about to talk about. It is. Air traffic controllers will begin to get paid now that the government shutdown is over. The Department of Transportation and the FAA say flight reductions at dozens of major airports can be capped at 6 percent.

6:14Not going to go to 10 anymore. It was going to rise to 10 percent by the end of the week. And a DOT release says there has been a rapid decline now in air traffic controller call outs. and Transportation Secretary Sean Duffy said it could take, though, up to a week to start rolling back flight restrictions. They were at 11 ,000, which was 30 percent below what was needed to operate what they would consider safely. So they cut back on on some of the flights. Hopefully it happens more quickly. It looks like it is not going to 10 percent. But Thanksgiving calls. It's not far off. It's not. I heard one of the major airline CEOs commenting yesterday saying, I'm sorry, I forget which one it was, but he was saying we should be back on a normal schedule by Thanksgiving.

7:09That's how long it's going to take the airlines to kind of catch up because they canceled so many flights. They have people who have to be rebooked and their own internal operations on some of these things. So nothing bounces back quickly. It's not like you flip a switch and everything goes back to normal. For a while, Stucky's is looking good. You know what I mean? Oh, the drive. Driving. A lot of the places. A lot of the places where you stay got a. Pilot. No, got a free breakfast, too. Open, waffle maker. I don't even know what you're talking about. I'm headed to Teterboro after this. Yeah, I know.

7:42I don't even know what you're. You know what that entire area is. You refer to it all the time. Flyover country. You don't even know it. You don't even know it exists, really, do you? But the book tour. I've been in a lot of. Sure. And you and it was like, oh, my God, it's nice here. You said that yesterday. Oh, my God. You were right dead center. Texas. Oh, Austin, Texas. I love Austin, Texas. But that's like the middle of the country. It's a little bit different. A little bit of an oasis for your kind. Not really. No, it's it's it's not really. It's very aggressive. It's very mixed. Absolutely.

8:17It's a combination of all sorts of people. It's really, by the way, you just see all, by the way, a lot of coastal people have moved there. That's true. Yeah. But then there's a lot of Texans there. It's really quite. Elon was talking about, I mean, people do love it. The great golf course. It's great. It's great. But by the way, it is growing so fast that there's traffic now. There's buildings going up everywhere. I mean, every neighborhood is like changing in front of you, which is probably a great thing and probably a complicated thing for a lot of people. There's a lot of room out there for expansion in that state, I think.

8:50Outside of the city. Yeah, outside of the city. Yeah, outside of the city. Austin has the statehouse, too. By the way, for them, it really is a temporary job. They're only supposed to be there part of the time, but they're probably clocking as many days as our Congress is, our federal Congress is. We've got to go long, Texas. I don't know how you can do that. There's no ETF for that. There probably is. You could probably bet something on Polymarket. It might be an ETF on Texas-related businesses and industries. Texas and Florida. Florida's got the weather. No taxes. Until they don't, but yes, they got the weather.

9:23Until hurricane season. Yeah. Although they got really cold this week, too. We just went through hurricane season. They got really cold, too. Did you blink? They weren't complaining. It was in the 30s down in Florida. They're not used to wearing pants. Did anything make landfall? I don't think anything. We had Melissa. That wasn't great. No, there were people in Florida who were saying, send us pants. Sports betting player FanDuel partnering with Derivatives Marketplace CME Group in a predictions market platform that's now set to be released next month. It's going to allow users to bet on financial metrics and sports outcomes, even in places where sports gambling is illegal.

9:54Now, prediction markets are federally regulated and considered trading platforms, not gambling platforms. The CEO of FanDuel's parent company telling Jim Cramer that the sports prediction product won't be available in areas where users can access FanDuel sports betting. The state of Nevada disagrees, considers sports prediction markets a form of gambling. That state's gaming control board now announced that FanDuel has surrendered its license to operate in Nevada as a result of all this and said DraftKings has also agreed to withdraw all pending applications for sports wagering in the state. Neither company offered their online sportsbook in that state, but FanDuel had a license as an information services provider.

10:32It's very complicated. A lot of different component parts here. And DraftKings has a license application as described as, quote, inactive at the moment. Now, in a statement, the regulator there calling the foray into sports events contracts unlawful and said this conduct is incompatible with their ability to participate in Nevada's gaming industry. So you have sort of two forms of gambling. You have what used to be the traditional form of gambling, which was state-regulated, like Nevada. Now you have this prediction market situation. Some of these guys want this all to come together, which is what I always thought, by the way, would be the ultimate outcome, given that there's so many...

11:07And that's basically what they've just said, is like, forget it. We'd rather be able to operate in the predictions market than be able to operate in the state of Nevada. Exactly. And so this is going to be very complicated very quickly, but it also means I would think that maybe Polymarket, maybe Calci, maybe any of these guys, either all get merged up. Either they all, either Polymarket and Calci, ultimately get into the sports business, gambling business, or the sports gambling guys get into the prediction market business, and it's all one thing. I just can't see how there's like a separation.

11:40Well, it's interesting to watch this trickle down. In Nevada, the traditional casinos are feeling threatened by this, by the sports books, by the FanDuel and the like. They're feeling threatened now by the predictions market. So it's, you know, iterations and steps and kind of pick your regulator, too. I thought there was zero. Well, I didn't think there was zero, but I thought illegal gambling. No one needs it. Why do you need a bookie? Right. Until the recent stories that there's the same four families are still involved in all. That's like rigging. I know. But what? Right. But what is the how much is left?

12:18The bets that you can't make somewhere else. Bets that you are bookies still in business around the country. I never had one. I never had one. Some of my friends had, some of my friends did have. My grandfather used to have a bookie. Yeah. And we would go and the guy would literally sit at the bar at lunchtime. I won't say where. Why? He's no longer alive. I mean, my grandfather isn't. Because this, because. Why don't you say which bar? Well, because who knows? Maybe, maybe these people are all, maybe they're all still in business. Oh yeah, the place is still open. Anyway. And then you'd go. It's house off camera.

12:51And, and you'd, you know, there'd be an envelope that would get exchanged. one way or the other, depending on what was going on that week. And my grandfather would bet on usually the football games on the weekends. And then Monday or Tuesday, there was a transfer. I'm sure there's a number by some Wall Street firm that follows the gaming industry that knows exactly what the percentage of illegal gambling is left. What would you guess? 50 % is left? 10 %? 80 %? What is left from that business? I don't know. It's got to be tiny, because you can do everything. I would think it would be tiny. You know what there's not a lot left of?

13:27Pennies. There's not a lot of pennies. The last one, they've minted the last pennies yesterday. It costs three and a half cents to make a penny. Three point seven cents. Three point seven cents. By the way, it's still costing. But all of a sudden, seeing this makes me want to go out and hoard pennies. You brought that up because you know that's basically what I'm betting on a lot of these things. By the way, a nickel costs more than a nickel to make. Yeah. Really? That might be next. Tens a day. Does anyone use cash anyway? No, that's what I mean. I didn't have to go find pennies. They gave me some change the other day, I'm like, just keep it.

13:55And then you put it in that little thing, it's like, I don't know what... Yeah.

14:02Cheese will be next. Coming up, Disney feeling the heat from the ongoing dispute with YouTube TV, blacking out the company's channels for some consumers. We're in the middle of negotiations right now. Things are live, they're happening. Obviously, as we entered the year, we knew this was going to be a challenging battle, and we prepared ourselves for it, and we're ready to go as long as they want to. Squawk Pod will be right back.

14:30Welcome back. This is Squawk Pod. Up in Andrew. Q. You are watching the one and only Squawk Box right here on CNBC. I'm Andrew Ross Dorkin, along with Joe Kernan and Becky Quick. We've got a whole bunch of big stories to tell you about. The longest government shutdown in history. Ah, it's finally over, folks. President Trump signing a funding bill, furloughed federal employees, headed back to work, or at least we hope, and will start getting those missed paychecks. Let's check on the markets. And we were actually talking. I thought someone wrote the book in 1999 Dow 50 ,000. It wasn't. We used to talk about it all the time.

15:06It was Jim Glassman and some guy named Hassett. It was insane at the time. Dow 36 ,000. Not Kevin Hassett. No, not Kevin Hassett. Dow 36 ,000. What was the time frame that they put it in? I guess it was not 20. I don't think they actually, if you're a decent strategist, you never do time and price. But that we thought was crazy. And now, and I thought it was 50. Someone else wrote a book about 40 ,000. So here we are. Just to give you some perspective on how far we've come in. The S &P is just below 7 ,000, which was a lot of people's year-end targets. Then they switched them after April and went back down to 6 ,000 on Liberation Day or whatever we called it.

15:52And there is the 10-year, which is 4.08. Disney might be down a little. That might be why the Dow, sorry, Hugh, but that might be why the Dow is a little bit negative. Well, we've got him. Disney reporting fourth quarter results just moments ago. We're going to get to walk through all of this. Here's what happened. Earnings at$1.11 a share, six cents better than estimates. It's revenue coming in at$22.5 billion. Now, that was slightly below expectations. And as Joe mentioned, the man is here. Joining us first on CBC, Hugh Johnston, the Disney CFO. Also with us, our own Julia Forston. Good morning, good morning, good morning.

16:26Okay, so there's a whole bunch of things going on in this earnings report. There's some beats. There's some misses. There's buyback plans, dividends. Let's walk through it. Yeah, in some ways, good morning. It's, I think, important to take a little bit of a step back And so how are we doing over a longer period of time? For the year, we delivered 19 % EPS growth, which is, I think, pretty darn good. And in the context of the media and entertainment space, I think is very, very good. And over the last three years, we've actually delivered 19 % EPS growth per year for the last three years. So overall, the company strategy seems to be working awfully well.

17:04Diving a little bit deeper into what I think are some of the most important metrics for the analysts. Number one, DTC, terrific quarter. 12.5 million sub-ads, 40 % operating income growth, hit$1.3 billion this year compared to$100 million last year. And then the experiences business grew revenue 6 % and grew operating income 13%. So overall, we're leaving the year with a lot of momentum, both on entertainment and on the experiences business. And as a result of that, we got into double-digit EPS growth for the year, doubled the share repurchase, 50 % increase in the dividend. Overall, we feel good about being what I refer to as an earnings compounder.

17:46And I think eventually investors are going to get conviction around that as well. I know everyone's got questions at the table. What was the dividend choice, meaning to do this? A number of things. Number one, obviously, when you commit to a dividend, that's a commitment forever. So it's awfully hard to cut the dividend unless some dramatic crisis happens. And we wanted to send a signal, our cash flow is strong and it's going to be strong for a sustained period of time. Same thing with share of purchase. The double the share of purchase to$7 billion, that's a signal that says, look, we expect cash flow not to be strong just for this year, but for a number of years going forward.

18:20Give us some insight into what's happening in the streaming division. You added more subscribers than expected, but you also had the charter deal and you also launched the ESPN app. What are you seeing in terms of putting all your ESPN content on streaming due to the value of the bundle? Yeah, it's actually doing very well in the things that we find most important. Number one, reducing churn, and number two, increasing engagement. If you look at the sub increase in total, as you mentioned, about half of it, and this was expected, was the charter deal and those wholesale subs. But the other half was retail, and with that retail, over half of that was international, which is strategically quite important for us.

19:00And the balance of it was the bundles that we're doing with Disney Plus. With ESPN, one of the things I think we're most excited about is fully 80 % of those new retail subs on ESPN are actually bundled subs, which again, should contribute to engagement, should contribute to retention, and frankly, make the service more valuable over time. And then in terms of the parks division, can you give a little bit more color to what you're seeing in terms of the health of the consumer? Yeah. Whether it's bookings, the hotel rooms, the consumer spending. Is the consumer resilient? Are they making plans for the holidays and beyond?

19:38I think they're being more choiceful, but when it comes to something as significant as a Disney experience, you don't want to cheap out on that. When you're taking the family, you want to go all in. So a couple of facts on that. Number one, bookings for the first quarter are up 3%. So we feel good that we've got continued momentum there. Number two, per caps, So the amount spending per head at Walt Disney World was up 5 % for the quarter. So again, people are spending. And then number three, cruise ships. Despite the fact that we've added a lot of capacity in cruise ships, we're selling out at the same rate that we had been previously.

20:10So that added capacity is filling up quickly. So overall experiences, our consumer is operating in a very healthy way. Hugh, I made a point yesterday. This should be the best time in the world for media companies, I would think. I mean, Dow's at an all-time high. there's just there's a lot of wind at the back of a lot of business in in in the United States and I just it's just not happening and I made the point that if anyone looked set up for success in media I mean all your the assets that you have seem to help each other you you build a brand you put it in a theme park you have great content from from studios you put it on streaming all these things work perfectly.

20:52You're at the$200 billion market cap and Netflix is 500. Came out of nowhere with only streaming. What does it look like? Joe, I think you make a great point. As I just opened with, 19 % EPS CAGR for three years says to me, we are an earnings compounder and we're a great cash generator. In addition to that, to your point about the Disney ecosystem, let's use Lilo and Stitch as an example. So it was a billion dollar movie for Biggest movie this year, Lilo and Stitch, looking phenomenally good. In addition to that, we put it on the streaming service. Had 14 million views in five days. So super content.

21:29You're making a great case, but my point was, why is it down from a much higher level? Well, you have to take out the... Is it mispriced, the stock? I believe it's underpriced. I really do. I believe investors are going to build conviction over time. And we actually see some investors doing that right now. But I think we need to continue to prove the case that, you know what, as we go through this transition, we are going to emerge one of the winners. In fact, we're already one of the winners. So all those other things are additive. They're not a drag on. No, I actually think quite the opposite.

22:01I think that that integrated ecosystem works really, really well. This whole idea of splitting up assets and all that. That's when you do what you do when you don't have a great business. Netflix is showing everyone, making everyone think differently. Well, they've got a great business, too. But they're very narrow, but they're deep on general entertainment. Our strategy is different. We run broad in terms of DTC. We have news. We have sports. We have broad-scale entertainment, kids' entertainment. Who knows? Ultimately, on the service, you may see gaming and things like that as well. So I think it's basically the portal into all things Disney.

22:36And with the IP that we have, we're going to monetize it well. Okay, yesterday we had Tom Rogers on, and he said that this battle that you're in with YouTube right now, The idea that you've stayed off for that long and that it hasn't been broken even though we're in football season and all these other things that you would normally see both sides come together and reach a deal over. And he said that that shows some of the problems with the legacy broadcasting and how the power has really been diluted. Do you think that's the case? And where do things stand with YouTube right now? No, I think that's an exaggeration.

23:07With all due respect to Tom, I know he founded CNBC. But I do think that's an exaggeration and a bit more than is a reality. We're in the middle of negotiations right now. Things are live. They're happening. Obviously, as we entered the year, we knew this was going to be a challenging battle, and we prepared ourselves for it. And we're ready to go as long as they want to. So beyond that, I'd rather not come than I should imagine. One of the concerns, I think, is that Google, oddly enough, given how small a piece of their overall business is YouTube, from a leverage perspective, they may not care as much as somebody else.