Segment Information

6 Months Ended

Apr. 01, 2017

Segment Information

Segment Information

The operating segments reported below are the segments of the Company for which separate financial information is available and for which results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance.

Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, interest expense, income taxes and noncontrolling interests. Segment operating income includes equity in the income of investees. Corporate and unallocated shared expenses principally consist of corporate functions, executive management and certain unallocated administrative support functions.

Equity in the income of investees is included in segment operating income as follows:

	Quarter Ended						Six Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Media Networks	$	88		$	151		$	207		$	293
Parks and Resorts	(3		)	—			(5		)	—
Consumer Products & Interactive Media	—			—			1			—
Equity in the income of investees included in segment operating income	85			151			203			293
Vice Gain	—			—			—			332
Other	—			(1		)	—			(1		)
Total equity in the income of investees	$	85		$	150		$	203		$	624

During the six months ended April 2, 2016, the Company recognized its share of a net gain recorded by A+E Television Networks (A+E), a joint venture owned 50% by the Company, in connection with A+E’s acquisition of an interest in Vice Group Holding, Inc. (Vice) (Vice Gain). The Company’s $332 million share of the Vice Gain is recorded in “Equity in the income of investees” in the Condensed Consolidated Statement of Income but is not included in segment operating income. See Note 3 for further discussion of the transaction.

Segment revenues and segment operating income are as follows:

	Quarter Ended				Six Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Revenues (1):
Media Networks	$	5,946	$	5,793	$	12,179	$	12,125
Parks and Resorts	4,299		3,928		8,854		8,209
Studio Entertainment	2,034		2,062		4,554		4,783
Consumer Products & Interactive Media	1,057		1,186		2,533		3,096
	$	13,336	$	12,969	$	28,120	$	28,213
Segment operating income(1):
Media Networks	$	2,223	$	2,299	$	3,585	$	3,711
Parks and Resorts	750		624		1,860		1,605
Studio Entertainment	656		542		1,498		1,556
Consumer Products & Interactive Media	367		357		1,009		1,217
	$	3,996	$	3,822	$	7,952	$	8,089

⁽¹⁾ Studio Entertainment segment revenues and operating income include an allocation of Consumer Products & Interactive Media revenues, which is meant to reflect royalties on sales of merchandise based on certain film properties. The increase to Studio Entertainment revenues and operating income and corresponding decrease to Consumer Products & Interactive Media revenues and operating income totaled $107 million and $180 million for the quarters ended April 1, 2017 and April 2, 2016, respectively, and $288 million and $442 million for the six months ended April 1, 2017 and April 2, 2016, respectively.

A reconciliation of segment operating income to income before income taxes is as follows:

	Quarter Ended						Six Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Segment operating income	$	3,996		$	3,822		$	7,952		$	8,089
Corporate and unallocated shared expenses	(161		)	(162		)	(293		)	(298		)
Restructuring and impairment charges	—			—			—			(81		)
Interest expense, net	(84		)	(67		)	(183		)	(91		)
Vice Gain	—			—			—			332
Infinity Charge(1)	—			(147		)	—			(147		)
Income before income taxes	$	3,751		$	3,446		$	7,476		$	7,804

⁽¹⁾ In the prior-year quarter, the Company discontinued its Infinity console game business, which is reported in the Consumer Products & Interactive Media segment, and recorded a charge primarily to write down inventory. The charge also included severance and other asset impairments. The charge was reported in “Cost of products” in the Condensed Consolidated Statement of Income.