The Walt Disney Company will report fiscal second-quarter results before Wall Street opens on Wednesday May 6. The earnings webcast is set for 8:30 a.m. Eastern. The Street consensus, polled by FactSet and reported by MarketBeat, is for revenue near $23.4 billion and adjusted earnings per share of $1.49, against $1.21 in the comparable quarter last year. [1] The numbers will be the headline. The footnote architecture will be the news.

The paper argued yesterday that Wednesday is the first earnings print since the Federal Communications Commission's early-renewal review of the eight ABC owned-and-operated station licenses was set, with a May 28 filing cliff for the renewal applications themselves. The proceeding is real. The cliff is dated. What is not yet established is the choice Disney's disclosure committee is going to make between the 8-K's headline release, which is the document the algorithms read in the first two seconds, and the 10-Q's narrative section, which is the document the litigators read in the first two days.

Microsoft has supplied the template. On its own fiscal-second-quarter 10-Q, filed January 28, the company disclosed that approximately 45 percent of its $625 billion remaining performance obligation backlog — roughly $281 billion — is tied to a single counterparty, OpenAI. The disclosure is on page nine of the filing. It is not in the 8-K. It is not in the prepared remarks the company's chief financial officer delivered on the call. [2] It exists; it is required; it is also placed where the placement does not change Microsoft's headline narrative for any reader who stops at the press release. The architectural choice — 10-Q narrative, not 8-K headline — is the asymmetric-disclosure pattern the paper has been documenting across the cohort. Disney now has the same choice to make in a different industry.

The case for placing the FCC matter in the 8-K is straightforward and statutory. The Securities and Exchange Commission's Item 8.01 of Form 8-K covers "Other Events" of "material" character, and a license-renewal proceeding affecting the eight ABC O&Os — stations that, in aggregate, contribute somewhere in the high single-digit percent of Disney's linear-television revenue — would, on most analyst models, qualify as material. The conservative practice on the West Coast and at certain New York-counsel firms is to disclose. The aggressive practice is to weigh whether the matter has crystallized into a "reasonably likely" risk and, if it has not, to defer to the 10-Q's risk-factor and contingency sections. [3] Disney's outside counsel of record on FCC matters is Wiley Rein. Disney's SEC counsel of record is Cleary Gottlieb. The two firms will not have agreed in writing on the placement until the filing is locked. The filing locks Tuesday afternoon for Wednesday morning release.

The reading exercise on Wednesday morning is therefore mechanical. The 8-K will print at 6:30 a.m. Eastern. Investors, analysts and the FCC's own Media Bureau staff will read the document in roughly that order. Three things would each tell a different story. If the FCC license proceeding appears in the 8-K under Item 8.01 with a sentence naming the May 28 filing cliff, Disney's general counsel has decided to put the matter in front of the equity holder. If the proceeding appears only in the prepared remarks for the call, the matter has been routed to the analyst rather than to the algorithm. If the proceeding does not appear until the 10-Q, due within forty days of quarter-end, the architecture is Microsoft's. [4]

The 10-Q itself is the second document. The cautionary-statement section in a media-company 10-Q runs to roughly twenty pages of single-spaced risk factors. The relevant language to watch is whether the FCC license-renewal section names the proceeding by docket number, names the May 28 filing date, names the FCC chair's published remarks about the petitions to deny, or merely incorporates the standard "broadcast licenses are subject to FCC renewal" boilerplate that has appeared verbatim in every Disney 10-Q since 2007. [5] The boilerplate would not be wrong. It would also not be the disclosure. The proceeding is now of the kind that, by the lights of the conservative practice, requires a paragraph of its own.

Wednesday at 6:30 a.m. Eastern the test runs.

-- THEO KAPLAN, San Francisco