Lowell Singer - Senior Vice President, Investor Relations Robert A. Iger - President, Chief Executive Officer, Director Thomas O. Staggs - Chief Financial Officer, Senior Executive Vice President

Jessica Reif-Cohen - BAS-ML Benjamin Swinburne - Morgan Stanley Spencer Wang - Credit Suisse Douglas Mitchelson - Deutsche Bank Securities Imran Khan - J.P. Morgan Michael Nathanson - Sanford C. Bernstein Mark Wienkes - Goldman Sachs Michael Morris - UBS Richard Greenfield - Pali Research Alan Gould - Natixis Bleichroeder David Miller - Caris & Company

Good day, ladies and gentlemen, and welcome to the first quarter Walt Disney earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Lowell Singer, Senior Vice President of Investor Relations of Walt Disney.

Good afternoon, everyone and welcome to the Walt Disney Company’s first quarter 2009 earnings call. Our press release was issued a few minutes ago. It’s now available on our website at www.disney.com/investors. Today’s call is also being webcast and the webcast can be accessed via our website. After the call a replay and the transcript of today’s remarks will also be available on our website. Joining me in Burbank today for the call are Bob Iger, Disney’s President and Chief Executive Officer, and Tom Staggs, Senior Executive Vice President and Chief Financial Officer. Bob and Tom are going to lead off with some comments. We will of course turn it over to you for your questions. So with that, let me turn the call over to Bob and we will get started. Robert A. Iger: Disney had a challenging first quarter with all of our lines of business to various degrees by what is likely to be the weakest economy in our lifetime. Consumers and companies both are scaling back expenditure, emphasizing savings over spending, and it is unclear when this will change. At the same time, certain of our businesses are experiencing signs of secular change as competition for people’s time is increasing and the abundance of choices allowing consumers to be more selective. This clearly has had an impact on broadcast television and may have a long-term potential impact on the DVD business. In essence, we don’t believe the changes we are seeing in consumer behavior can all be attributed to a weak economy and we feel it is important for us to address them as more than just cyclical issues. The combination of these changes with the severe economic downturn has caused us to examine much of what we do, guided by privatism and an appreciation of the advantages afforded to us by the strength of our creativity, our brands, our assets, and the integrated way we manage our businesses. Fundamentally, we remain in a great competitive position but circumstances require us to be even smarter in day-to-day management. We believe we have a real opportunity to strengthen our brands and to make our businesses even more efficient. With respect to the downturn we are taking numerous steps to mitigate its impact. These efforts are company-wide but each business segment is adjusting according to its own conditions and needs. We continue to look for ways to adjust our cost base to changes in demand, provided that these actions do not compromise the quality of our products or the guest experience we offer. Cost savings are only part of what we are aiming to accomplish. We are also addressing the challenges created by the secular changes I mentioned earlier. On the broadcast side, we are more focused than ever on creating great entertainment that we own and can distribute across multiple platforms in multiple territories. The consolidation of ABC Entertainment and ABC Studios creates a more sustainable cost structure, increases accountability, and underscores our commitment to this content-creation strategy. On the local broadcasting front, audience fragmentation and a weakened advertising environment is making the business much tougher. Our local television businesses have been extremely disciplined on the cost front and while it might be tempting to reduce expenses even more, we will not do so at the expense of our local news brands, which we have concluded are the single most valuable assets of these stations and where we believe additional reductions would have a long-term negative impact. Our position as a market leader in local news provides us an opportunity to increase the value of these assets, even as competitors cut back. In our film business we started taking measures three years ago to focus primarily on Disney-branded movies, allowing us to trim our output and expenses, to leverage the Disney name, and to create opportunities for other Disney businesses, thus aiming to improve returns. Today our focus is only intensifying as we address the changes affecting the DVD market. To that end we plan to reduce production, marketing, and distribution expenses at our home video business and to implement strategies that enhance the price-to-value relationship of our products. We believe the unique nature of our brand and the quality of our movies helps us to stand out in this environment but we must also innovate in order to generate attractive returns. Consumer affinity for the Disney parks remains extraordinary in this tough economy. The strength of the best experience we offer combined with new marketing and pricing strategies has enabled us to do reasonably well in terms of attendance and advance bookings. Although we can cut some costs to compensate for somewhat lower revenue levels, we are determined to protect quality. Our goal is to offer the consumer a great experience at prices that are affordable in today’s climate. We believe this is the right thing to do in order to deliver long-term value. This quarter, for the first time, we are separately reporting the results of our Interactive Media Group, composed of our console, mobile, and online gaming operations as well as Disney.com and the technology backbone that serves all of Disney. Products developed by this newly formed group play a critical role in building our brands and in deepening our relationship with the consumer. Investment in this unit is substantial but so is the opportunity to both grow its own businesses and to buttress the dismay, ABC, and ESPN brands. Disney.com remains an important destination for entertainment and information, as well as a growing online commerce business and will be the anchor of our company-wide CRM efforts. Finally, as we address these challenges, I don’t want you to lose sight of the strength and commitment we have brought to launching new and growing existing creative franchises that resonate with consumers around the world, create value across the company, and are the core of our competitive advantage. Last quarter Disney Fairies got an enormous boost with an original direct-to-home DVD that has so far sold over 6.0 million copies worldwide. This year we will have a new Disney channel series and a new feature film from the Jonas Brothers, a new Hannah Montana feature film, a new 3-D version of Toy Story and the introduction of our latest Disney princess in the Princess and the Frog. Production or development is underway on sequels to Toy Story, Cars, Pirates, and High School Musical as well. As we work through this downturn our aim is to bolster our creative capabilities, to protect our assets and cash flow and to look for additional opportunities to expand our businesses. It is an incredibly challenging time but we are clear in our objectives and disciplined in our execution. Our strengths remain the creativity of our people, our embracive innovation, and our great belief that nothing substitute for quality when it comes to setting yourself consistently apart in the eyes of consumers. By staying focused we believe we are positioning Disney for sustained long-term success. And with that, I will turn it over to Tom. Thomas O. Staggs: I am going to take a few minutes to discuss the key drivers of our Q1 performance and I will then touch on the trends we are seeing thus far in Q2. Let me start with Parks and Resorts. Last year we had record-high first quarter attendance at our domestic parks. In this year’s Q1 our domestic parks attendance came in 5% below those levels, with roughly equal percentage declines at Walt Disney World and Disney Land. Desk spending at our domestic parks came in flat compared to the prior Q1, as slightly higher average ticket prices helped to offset lower merchandise spending. Occupancy levels in both Orlando and Anaheim were 85%, down mid-single percentage points versus last year and average spending at our hotels was up modestly. At our international parks attendance increased, both at Disney Land Resort Paris and Hong Kong Disney Land. Operating income, however, was lower as the prior Q1 results benefited from higher real estate sales at Disney Land Resort Paris. As Bob mentioned, while our parks team manages costs based on demand, they are committed to maintaining the premium guest experience that sets us apart. That commitment helps drive the long-term value of this business. In the shorter term, it can impact margins as it did Q1. Margins in the quarter were also affected by mark-to-market adjustments for fuel hedges of approximately $40.0 million. In fact, this fuel hedge impact alone accounted for 40% of our margin decline for parks in the quarter. At Media Networks, cable operating income was down 12%. At ESPN, increased affiliate revenue more than offset lower advertising revenue but operating income was impacted by higher rights cost, administrative expenses, and receivables reserves. ESPN’s current ad sales declined by high-single digit percentage points in the quarter, consistent with what we saw in Q4. The decrease was due in part to softness in several categories, including consumer electronics and automotive. Results in our domestic Disney channel were also down as a result of the great success of High School Musical 2 on DVD last year. At broadcasting, lower profits reflected ratings declines at ABC and a soft ad market, although lower programming costs at the networks helped to partially offset these factors. Q1’s results were also reflected by bad debt expense associated with the Tribune bankruptcy filing. Scattered CPNs came in above up-front pricing levels by roughly 10% but were significantly lower than Q1’s scatter pricing in the prior year. Our TV stations are exceptionally well positioned in their markets and have gained ad revenue share but weakness in the local ad market drove a revenue decline at the stations of approximately 15% despite higher political ad spending in the quarter. As I mentioned last December, student entertainment faced very difficult Q1 home video comparisons as the prior-year quarter because of the DVD release of Pirates of the Caribbean 3 and High School Musical 2. In addition, we in the industry as a whole realized lower conversion rates on new releases and softer demand for catalogue titles, which contributed to a decrease in DVD unit sales. These lower sales were easily the biggest factor in reduced results at the studio in the quarter. In Consumer Products Q1 earned license royalties were roughly flat versus prior year despite the difficult retail environment. The presence of Disney Stores North America revenue this year as opposed to royalty payments on the stores last year drove the segments revenue increase in the quarter but also hurt margins. We are now reporting the financials for Disney Bright Interactive business under a separate segment called Interactive Media. As Bob detailed, this new segment contains a collection of digital businesses that we believe offer attractive long-term opportunities. We expect to continue to invest further in these businesses and particularly in Disney-branded video games, websites, and virtual worlds for the next few years. In Q1, for this new segment, our increased losses were due to lower results in video games. Our unit sales for video games were up somewhat but competition and the difficult market put pressure on pricing. We also saw higher unit cost of sales and marketing expenses on video games in the quarter. As Bob and I have indicated, we expect the difficult economic environment to continue. Having said that, room reservations at our domestic resorts for fiscal Q2 and Q3 are currently running slightly ahead of prior year, with strength in Q3 more than offsetting a slight decrease in Q2. The Easter holiday falls in Q3 this year, versus fiscal Q2 last year, which helps explain this disparity between the quarters. The strength in these bookings is coming from Walt Disney World on the success of our Buy Four Get Three Free promotion. Of course this promotion is resulting in greater discounting for these reservations. Given the success of the promotion, we have extended the booking window to March 29, and as of this coming Monday we will increase the travel window from June 27 to August 15. There is no question that the tough environment has an impact on our parks business. At the same time, the relatively modest attendance declines in the first quarter and the success of this promotion, also help demonstrate the differentiated appeal of our theme parks and resorts and the content they feature. We continue to see weakness in the ad market. Ad pacings at our TV stations are significantly behind last year, in part due to the lack of political spending in this year’s fiscal Q2. At the network scatter pricing is running slightly above up-front pricing but the pace of sales for Q2 is still below this time last year. At ESPN pacing thus far in Q2 versus the prior year are slightly behind the comparison we saw in Q1. Pacings at ABC Family are up so far in Q2. In our Consumer Products businesses we are well positioned with strong license character properties. However, a persistent slowdown in the retail environment does impact our results of retail and over time, our earned royalties. Like others, we are faced with a tough environment. In responding, our focus is on managing with financial discipline, including reducing costs where prudent. At the same time we are also pursuing investments in additional high-quality products, increased innovation, and future growth. Disney’s brand strength and unmatched assets provide tremendous competitive advantages that will help us weather this economic cycle and we believe they position us well to deliver long-term growth and value to investors. With that, I will turn back to Lowell for Q&A.

We are ready for the first question.

(Operator Instructions) Your first question comes from Jessica Reif-Cohen - BAS-ML. Jessica Reif-Cohen - BAS-ML: Bob, you said you plan to spend less on films, do you mean you are spending less per film or overall in the film business? And Tom, can you discuss the free cash flow outlook for the year? Robert A. Iger: Our goal is to openly spend less in total on films but because we are making fewer films and there is a greater percentage of those films that are what we call [ten fold] the average price for a film isn’t necessarily going down significantly. We do believe, though, that the cost of both producing the DVDs, distributing and marketing the DVDs, needs to be addressed and that’s exactly what we’re doing with an eye toward not only reducing the cost and what I will call the investment in extras for the DVD, but also focused on improving the price to value in relationships. For instance, we are finding that when we sell a blue-ray DVD with a standard DEP file and also a downloadable file, we can actually offer a price to the consumer that is viewed by the consumer as delivering greater value, which is enabling us to drive revenue at a level that is slightly better than we might have if we had not added those basically valuable extras to the DVD. But definitely cost of basically the system needs to come down. Thomas O. Staggs: On free cash flow I won’t guidance per se, the biggest determinate, of course, will be the operating results as we go through the year. I would say a couple of things about investment. There are a couple of places where we are making investments, first of all in the programming side. I expect to invest a little more in programming at ABC given the strike last year, on a year-over-year basis. We continue to invest in programming at the Disney channels around the world. On the capital side we are investing in increased capacity up at Pixar and we’re putting some money into that this year. And on the park side, the major drivers, I would expect capital expenditures to be up somewhat, because we are investing in California venture, which we talked about last year. we continue to invest in the new ships that are due for the cruise business, in a couple of year. and we also continue to invest in vacation club facilities. So as both Bob and I mentioned, we continue to try to make sure that we are being disciplined about our investments, that we are putting investment towards quality product that we think cuts through the clutter and on assets that we think will drive long-term growth for the company. And so that you should expect to continue.

Your next question comes from Benjamin Swinburne - Morgan Stanley. Benjamin Swinburne - Morgan Stanley: On the parks front, Tom, I think you said that hotel spending was up modestly in the quarter and we obviously saw the impact of the promotions, the Buy Four Get Three Free, which you have extended. Is that how you think you will see hotel spending pace for the rest of the year, obviously within some kind of a range. I guess what I’m trying to understand is do you think this offer in the market sort of keeps us in that range going forward. And then secondly, on the DVD side, I think we are all struggling with figuring how much of this cyclical versus secular. To some extent the DVD business really fell off last year, as retail overall fell off. I was wondering if you have any view on how Walmart’s activity or overall shelf space at retail for the DVD business might have been responsible for some of the numbers we have seen and whether that changes or can be changed as we head in through 2009. Thomas O. Staggs: I will give you one note on the spending. I did mention that per-room spending was roughly on par with the prior year in Q1. Bear in mind that the Buy Four Get Three Free promotion did not have travel periods in the first quarter, so that promotion did not impact guest spending or ADRs in the first quarter and that remains to be seen. I talked about you have got Q2, Q3 we are up in room reservations on the books. Those room reservations have more discount in them than you would have seen at this point last year and I think that will show up in the ADR as we report Q2 and Q3 later in the year. Robert A. Iger: So regarding DVDs and whether we are cyclical or secular change, I think it is clear that the economy has an impact on DVD sales. And if you look at sales for the year, they worsened in the fourth calendar quarter, or our first fiscal quarter, significantly, suggesting that maybe there was a direct correlation between the cataclysmic events that occurred around the beginning of that quarter and DVD sales. However, we have been taking a hard look at this business for awhile with the belief that as consumer choice grows, and we all know this to be true, if you look at the availability of games online as a for instance, or videos in multiple places, or multi-channel TV, you name it. That pressure on the business has only grown. And that consumers can afford, because of all that choice, to simply be more selective and potentially to buy things that they believe that they believe they are absolutely going to want to watch instead of things that might just be nice to have. Just as a for instance, the average U.S. DVD household owns about 80 DVDs already and the avid movie buyer or user at home that has DVD player owns somewhere in the neighborhood of 135 to 140. That suggests that economy or not, that going forward people potentially will be more selective about what they buy because they already own a pretty decent collection. So we are mindful of that. We believe that there are some secular changes affecting that business. We can’t quantify it. We can’t point, for instance, just at shelf space issues. Then to reference your question about Walmart. That is necessarily a key ingredient that is obviously something we are also watching very carefully. What we believe we need to do is we need to be mindful of these changes, to address it when it comes to our cost structure. We have been focused a lot on the Disney brand because we believe that really does give us an advantage and we think it shows in both our conversion rates and in our pricing where we have slight advantages, and really be careful about the timing of product that we put into the marketplace and generally speaking, we need to be even more selective about what we choose to make and what we choose to distribute. Benjamin Swinburne - Morgan Stanley: Does this change your view on Day-and-Date and Video on Demand at all? Robert A. Iger: Well, by view on Day-and-Date, which was pretty radical about three years ago, has modified somewhat over time so I don’t know that it necessarily changes my view at all. I’m not advocating being more aggressive on the windowing right now, I’m advocating being more focused on the cost of the system and being more focused on the quality of the marketing and making sure we deliver the right price to value relationship. What it does confirm, though, is that, particularly when it comes to library product because we saw that in 2008 while library product was somewhat flat with where it was in 2007, there seemed to be some trends that, from a pricing perspective, we need to be mindful of. But when you bring a deep Disney DVD out and create an event out of that, not only is it something that can drive traffic to a mass retailer, which is obviously helpful, but it seems to be something that consumers are still willing to pay a decent price for, rather than buying lots of library product in two-for-$5 or two-for-$10 discount bins. So we like where we are positioned there with the Disney brand and a limited library and an event strategy. And that will continue to be our focus.

Your next question comes from Spencer Wang - Credit Suisse. Spencer Wang - Credit Suisse: Bob, you mentioned earlier that you were taking a close look at costs and they were mostly being handled at divisional level, but maybe you could quantify if there is some sort of target number you are hoping to achieve in fiscal 2009. And, Tom, at cable networks were there any affiliate revenue deferrals in the quarter and secondly, did you size the bad debt charge at broadcasting? Robert A. Iger: We have been spending, as a lot of companies have, a lot of time exploring or analyzing our cost structure and this is clearly a time that demands that, and also an opportunity to really look not just at cost but at the overall structure of our businesses and by restructuring, crate efficiencies and simply become better at what we do. And this is across the board. Some announcements have already been made. You probably read about. Some you will see in the months ahead. We are not going to quantify what our target is in terms of our overall cost reduction. By the way, it’s more than just the business units, it’s at the corporate level as well. But I can tell you that the number is going to be very significant. Because not only do these times demand that but we just feel that it is really appropriate for us to take a look at a number of issues that go beyond, as I mentioned, just an economic downturn. The feeling being that when the economy rebounds, which it inevitably will, the normal that we see isn’t necessarily going to look like the normal that we were used to. And that is probably because of some of the secular changes that we have referenced. So we are being very aggressive, we’re very responsible. Maybe in due course we will be a little bit more specific about the number. Other than to tell you that it is quite significant I don’t think it would be appropriate, since a lot of this is a work in progress, to get any more detailed. Thomas O. Staggs: With regard to revenue deferrals at ESPN, incremental deferral of deferred revenue in Q1 was not a big factor in the quarter. One thing to bear in mind, by the way, when you think about the first quarter for ESPN, it’s actually the quarter in which the relationship between advertising revenues to deferred revenues is highest because we defer some [inaudible] revenues and we have a big quarter in terms of advertising because we have a lot of football in the quarter that drives a fair amount of advertising revenue. In broadcasting, you asked about the charge that we took with regard to the bankruptcy filing. That was about $60.0 million. Robert A. Iger: And I just want to come back to one thing regarding cost reductions. Clearly there have been and there will be reduction of personnel. The cost reductions that I speak of, though, go well beyond that and encompass a number of other things, like reducing the cost of distributions, production, marketing, etc. And so it is an across the board process that does not just involve eliminating jobs.

Your next question comes from Douglas Mitchelson - Deutsche Bank Securities. Douglas Mitchelson - Deutsche Bank Securities: Tom, you mentioned for ESPN that the NFL was some pressure on costs. I thought that was just a standard amortization increase each year. so if you could explain why the NFL was benched into this year. and at theme parks you mentioned hotel bookings up slightly for Q2, Q3. How is the drive-up attendance correlated with the hotel bookings? Has that been pretty similar? And should we think of Easter as a 4% shift from Q3 to Q2? Thomas O. Staggs: With regard to the NFL, because the ESPN was down modestly, the driver there being higher cost, I was just trying to enumerate where the cost increases were. NFL was one of those places. It wasn’t an anomalous year, it’s the normal amortization schedule you have come to expect. We’re just trying to illuminate where those things come from. When you say drive up attendance, when you look at theme park attendance, the resident sector has tended to be among the softness, in terms of attendance origin. And that has been true in prior downturns, it’s true this last quarter. Although I will say that annual pass attendance at Disney Land has been quite good. I think there you’ve got folks that are really attracted to the value of an annual pass visit to Disney Land. And that’s has held up relatively well. But in terms of the otherwise residence attendance, that’s been the softer piece of it. So in answer to your question, it doesn’t correlate very well necessarily with occupancy trends. Robert A. Iger: If you look at our advanced bookings and our recent attendance experience, what it suggests to us is that demand for that product is still really robust but as you would expect in these tough economic times, the demand is tied pretty much to price as well. And we have decided that it was important for us to satisfy that demand and to address the economic issues that the world is facing, with reduced pricing rather than try to maintain prices and ultimately not attract as many people as possible. The experience that people have when they visit our parks is one that is very good for our brand. There is also a strong word-of-mouth factor as well. People who go tell other people what their experience was, etc., and so on. And so, keeping the pump primed, so to speak, is very important for this business. Even though it has resulted in some reduction in margins for us. Thomas O. Staggs: On the Easter shift, think of it this way. Last year when you had an Easter shift, it moved about $40.0 million of operating income from one quarter to the other. Depending on the pace of business this year, we will be in that same ballpark, I would guess.

Your next question comes from Imran Khan - J.P. Morgan. Imran Khan - J.P. Morgan: On ESPN, I am trying to better understand what are some of the initiatives you can take to potentially reduce some of the cost structure in ESPN and whether you are taking or not on those areas. And secondly, Interactive segment is roughly 3% of the revenue and I am assuming you are breaking it down because you expect it to grow and you talked about investment in this area. Can you help us understand what kind of investment you are talking about, and the growth, whether it will be organic or acquisitions? Robert A. Iger: On the ESPN front, clearly you can’t do much in terms of your long-term commitment to sports rights. Although they have been more selective over the past few years on what rights they buy. You can reduce your cost of production somewhat but the quality of that production is a pretty important ingredient to the quality of the view experience and brand equity. We have reduced somewhat some of our investments in certain areas, or slowed them down mostly, or delayed. We continue to invest in new media for instance, but at a slightly slower pace. But the new media component of ESPN is also deemed pretty important, not only to in current day brand equity and experience, but in future growth. So the cost reductions at ESPN I would call, compared with some of the potential cost reductions in our other businesses, relatively modest and across the board. In other words, when I say that I mean from here and there as opposed to a significant reduction from any one specific area. Thomas O. Staggs: With regard to Interactive Media let me see if I can frame the investment for you a little bit. First of all, most of the investment we are making in that business shows up on the expense line. The capital part of the equation is not terribly significant and part of the reason for that is if we expense the production and development costs as gains as they are incurred. I would expect to see the investment in 2009 be up somewhat from 2008. The biggest driver of that will likely be increased investment in the games business, so in the development of games. We invested about $170.0 million in video game development last year. I think that in the neighborhood of $40.0 million to $50.0 million more of investment this year is probably in the right ballpark on that one. We will also see increased investment in Disnsey.com as we build out its both branding and CRM capabilities, as Bob referenced, although a much more modest pace of the increase in the investment there. And then our investment in Virtual World will continue and I think we will ramp up somewhat. We believe that is a business that can ramp to profitability actually reasonably quickly and show some nice returns for us. of course, Club Hangman is already profitable but I think there is more for us there in that property and in the other properties that we are developing. Those are the large projects. We also have mobile content and services initiatives. There we will make some incremental investment, but again, that’s one that I think that you will see ramp to profitability relatively quickly. So we feel good about where we’re going, but again, there’s increased investment on the horizon this year and we will continue to invest for the next couple of years before we start to show that being a driver of growth for the company overall.

Your next question comes from Michael Nathanson - Sanford C. Bernstein. Michael Nathanson - Sanford C. Bernstein: Bob, just going back to Imran’s question, what percentage of the cost base would you characterize as programming [inaudible] investment? Robert A. Iger: We don’t break down the rights component versus the production or the investment component at ESPN. Except I can say that given the cost of rights to certain high quality, very popular events, you would expect that rights cost, generally speaking, is the largest component of ESPN’s expense structure. Michael Nathanson - Sanford C. Bernstein: On cable networks, the past few years you have grown your affiliate use to double digits. In the near term do you think do you think that’s still achievable? Robert A. Iger: We have deals that are locked in for the next few years and we are just starting to have discussions with some of the large cable operators about extending those deals. But it’s way too early to either discuss or predict just what the rates will be. Our investment in those brands, those programs, has clearly paid off. Just look at the results at ABC Family, at Disney Channel, at ESPN. And we are finding in our discussions with the operators, while there is pressure on cost for everyone, including them, something that we need to be mindful of, the popularity of our channels is clearly delivering value for them in making their multi-service business attractive to their customers. But also it is providing value to them, particularly at ESPN, their ability to sell local ads. Michael Nathanson - Sanford C. Bernstein: The fuel hedge, have you benefited from previous years with a fuel hedge and what is the risk if fuel prices stay where they are that there are future quarters of large market losses? Thomas O. Staggs: If fuel prices stay where they are, there wouldn’t be any more mark-to-market on those particular hedges. That’s by nature of the hedges taken at a price that was higher than the price fell to and therefore there was an embedded loss in the hedge. The accounting for hedges on fuel isn’t the same as accounting for certain other financial instruments for the deemed hedge effectiveness, so it’s a mark-to-market kind of item. So if you felt that fuel was going to drop materially from these levels, and I’m not making any such prediction, then you would essentially have more exposure on those fuel hedges. But at this point I don’t expect that to be true. This is the largest sort of swing from a fuel hedge mark-to-market that I can recall, certainly by a large measure. But of course, this is the largest amount of volatility we have seen in fuel in recent memory.

Your next question comes from Mark Wienkes - Goldman Sachs. Mark Wienkes - Goldman Sachs: Let’s see if we can get to the cable nets in another way. Given what you know for affiliate fee growth, over the next couple of years, or even just this year, and your plans for opex, if the cable network advertising doesn’t change from where it’s pacing now at ESPN and Family Center, can net net’s EBITDA be flat for the full year ? Thomas O. Staggs: As you might expect, I’m not going to speculate on what might happen in a certain set of circumstance because there are a lot of moving parts to all these equations. As you saw, there was some softness in the results of cable this last quarter. A big chunk of that was due to the High School Musical 2 DVD. Robert A. Iger: It was just a pass-back. That’s just from the studio to the Disney Channel. Thomas O. Staggs: That they had last year that they didn’t have this year. so that actually entered into the equation. But the end line point is that while there is softness in the ad markets, there is great resilience in our cable nets, both by virtue of their structure being more skewed toward affiliate fees than towards advertising, obviously. Disney Channel in the extreme. ESPN also but to a somewhat lesser extent. So we feel extremely good about how they’re positioned and extremely good about their ability to perform in a difficult environment. Both in terms of their response on cost, as Bob mentioned, but also just in terms of the basic business structure that they have. Now, ESPN, there are certain of its categories that are important and, automotive is an example, have gone through some difficult times and so that has had somewhat more of an impact than we would have liked. But going forward, I wouldn’t trade our portfolio of cable assets for any other. Mark Wienkes - Goldman Sachs: And you don’t have the HSM2 comp and the ratio, as you said, for advertising relative to affiliate fees actually improves Q2, Q3. Thomas O. Staggs: Right. Mark Wienkes - Goldman Sachs: Given the broader softness we saw at retail across the board, could you comment on the drivers of flat earn royalty revenue in consumer products in Q1 and how that has trended post the holiday? Thomas O. Staggs: We can try to illuminate a little bit. The earned royalties, which is the measure that we watch most closely in licensing, as we mentioned, were roughly flat in the first quarter. The key to that is that we have very strong properties that commanded a fair amount of shelf space by retailers and so that helped us on the royalty side there. Now, as we go forward, and the retail environment perhaps stays soft, that could impact the pace of reorders and while, again as I mentioned in the prepared remarks, we feel really good about the strength of the franchises underpinning our licensing business, and the pace of retail can have an impact. Over time we continue, and I think Bob mentioned a couple of the franchises that we continued, plus in the sequels that we have in the works, etc., over time our aim is to continue to build up and add to our stable of properties to continue to bolster this business. And so, that to me, in the medium to long term, looks very good. The other thing I would say is that one thing we saw in the quarter was there was some shift away from toys towards other categories of merchandise and so the franchises that we saw that were heavier in toys were somewhat softer than those that were heavier in apparel and those types of things. So those kinds of shifts may continue. But at the end of the day, we’re diversified across those categories in a way that we feel quite good about.

Your next question comes from Michael Morris- UBS. Michael Morris - UBS: At the ABC Network, can you talk a little bit about what you’re seeing right now in terms of year-over-year ad pacings? And also, what are you seeing with respect to options being taken right now on up-front sales for the coming quarter and what do you think that means in terms of how you approach the up-front this year? And also, over at the parks segment, the promotion looks like it’s successful in terms of driving traffic. Can you give a little more color on specifically what you’re giving up in the Seven For the Price of Four, with respect to the price of a ticket and what you are giving up in terms of hotel revenue. Thomas O. Staggs: On the ABC Network, as I mentioned, we can see the scatter pricing, which is still up from the up-front, but the pace continues to be down on an overall basis. and remember that in the second quarter the scatter pricing is only a piece and a smaller piece of the pie. So on an overall look you are still looking at pacings that have high-single digits off versus the prior year, so not that bad. Options. The option pickup for Q3, which is the one that is going on right now, or just finishing up right now, that’s coming in slightly lower than what you might otherwise have expected but not to the extent that we are alarmed about it. We are seeing a little more hold back in consumer goods and to a lesser extent pharmaceuticals, with some shrinks in some other categories. And so there is no question, it’s a soft ad market. The strongest properties are selling pretty well and I think that Mike Shaw and his team are doing a very good job of making the most of a difficult market. Robert A. Iger: And to give you some flavor on the Four Plus Three discount, basically the discount on the ticket is relatively modest because we put in place three years ago a pricing strategy that made it cheaper, from a ticket perspective, the more days you bought or the more days you stayed. So there was a real incentive if you were considering staying for four days to buy seven days and the cost of the extra tickets were that much lower because at that point what we got from you was we got a longer length of stay and higher hotel revenue. In this particular case the way to look at it is the discount on the ticket is modest, as I mentioned. The discount on the hotel obviously is significant because you’re getting three nights for free. And that was not part of the previous pricing strategy that we had in place. That said, when you look at our bookings in the current quarter and the bookings for next quarter, at Orlando for instance, where we have the lion’s share of our hotels and drive the most attendance, we are up nicely in this quarter and next on a bookings basis from the similar quarters last year, suggesting that this is a promotion or pricing strategy that is really working. And to the point I made earlier, our goal right now is to keep people coming to Walt Disney World and Disney Land. Clearly there is a benefit to that, as I mentioned, from a brand perspective, but when they stay longer they obviously spend more beyond just the ticket and the hotel room. And that is of value to us in this economy. Michael Morris - UBS: When we talk about being slightly ahead of last year, what is your comfort level with what you can see now versus where we will actually come in? do you feel comfortable that you will actually come in ahead at this point? Robert A. Iger: Are you asking about park bookings? Michael Morris - UBS: Yes, exactly. Thomas O. Staggs: We can only tell you what the pace of bookings is at this point. We are loathe to predict what that means ultimately. I think we are encouraged by the strength of those bookings. I mentioned that we are extending the promotion so that the travel window will extend to August 15. But it remains to be seen. Robert A. Iger: Let’s also not lose sight of the fact that fiscal 2008 was a tremendous year for our parks, particularly Orlando. I think it was the second biggest year we have ever had. It was the biggest year in attendance that we’ve ever had. By a nice margin. And the comparisons that we are making are all to the biggest year Orlando ever had. The other thing that we have to be mindful of is that not only our results but our attendance and our bookings through October 1 were really significant. We held up, that business held up very well with little, if any, discounting. And eventually this economy, as we have seen in a number of businesses, has to catch up with you and that’s exactly what we’re experiencing. And again, we are actually pleased with what we are seeing at our parks because it confirms that we’ve got a great product and the demand remains unbelievably strong. There’s not much we can do about the economy except address the expense side. We would have a huge problem if we didn’t have the demand, if there was something wrong with the product. It would take us a lot longer to fix that.

Your next question comes from Richard Greenfield - Pali Research. Richard Greenfield - Pali Research: Getting back to this ESPN issue, if you were to back out, or the cable network issue in general, when you look at the 2% increase in revenues and the 12% decrease in operating income, can you give us a sense of what that would look like for each of those if it weren’t for the comp issue related to High School Musical 2? Would you have been up mid-single digits or a couple percent more? And how much would that have cut down, I assume the margin impact was far greater than the revenue impact on the year-over-year basis. Two housekeeping issues, one, on something like ABC.com, those shows that are streamed on that, are the revenues now booked within the television division, or broadcasting, and the cost is now with Interactive? How does that all work given the various activities of all your businesses online and offline? And attendance, you didn’t mention, what is attendance up or down through February 2, 2009, on a quarter-to-date basis? Robert A. Iger: First of all, on the attendance front, attendance for this quarter that we’re in at Walt Disney World is actually up mid-single digits versus the same quarter a year ago and Disney Land is up double digits this quarter versus a year ago. Now, we’re only a month into the quarter, but you wanted Q2. And that’s what I’m giving you. Clearly, at Walt Disney World the attendance increase should be the result of the Four Plus Three discount that we have in the marketplace. So we are actually seeing some nice attendance trends. Interestingly enough, if you look at attendance at Walt Disney World since October 1, it’s only down 2% and Disney Land is flat year-to-year since October 1. So we have a relatively nice attendance story to tell. Thomas O. Staggs: On cable, if it weren’t for the High School Musical 2 DVD comparison, the cable networks would have still been down, but very modestly in the quarter. Robert A. Iger: We also had a very strong first quarter for ESPN in sales a year ago. Thomas O. Staggs: They were up double-digit percentages a year ago in advertising. Robert A. Iger: To help you on the Interactive revenue and costs, the revenue that comes in for ABC shows streamed on the Internet or ABC shows purchased on iTunes, that goes directly to ABC or the Media Networks. Any cost involved in what I will call delivering the show, you know, there are residuals, etc. and so on, that is obviously borne by ESPN. The Internet group provides some backbone, mostly on the technology front to all of our businesses, to ESPN, to the Disney businesses, to ABC, but most of that is allocated back to the business unit. It is allocated back to the business unit. And there is marketing expense as well and that is borne by the business unit directly. But the revenue largely goes directly to the business unit. Richard Greenfield - Pali Research: On this attendance issue, when you look at international, given what’s happened to the pound and all the foreign currency, especially in Europe, what are you seeing in terms of forward bookings from overseas? Robert A. Iger: I won’t break down foreign bookings, I will break down attendance today. As Tom mentioned in his remarks, if I recall, international attendance is still up versus last year. the numbers are actually international attendance Walt Disney World is up versus last year. Disney Land is down modestly. But Disney World international attendance is up. We won’t break down the bookings by region yet, although Tom mentioned from an attendance perspective what we’re seeing is that what I will call local, or resident, is the one that is the softest. Thomas O. Staggs: It remains to be seen where the dollar goes from here and what the strength of the dollar means as the difficult environment ripples through other economies so we want to be careful not to make predictions on that. I will give you one footnote on the trends in attendance in the second quarter. It’s important to remember that the second quarter, when it’s all said and done, won’t have the benefit of Easter and so the attendance comparisons will suffer as a result.

Your next question comes from Alan Gould - Natixis Bleichroeder. Alan Gould - Natixis Bleichroeder: On ESPN, if I think of long-term margins in that business, are affiliate fees increasing at the same rate, quicker, or slower than programming costs at ESPN. Thomas O. Staggs: What we have said in the past and it remains true, is that we believe that the pace we have locked in for affiliate fee increases is one that we can leverage to grow profits over time, given the business as a whole, even considering the expected pace of increase in programming costs. So we think that continues to be a leveragable business model. Obviously the advertising revenues being down this quarter impacted it for this Q1, although bear in mind, Q1 is the lowest profit quarter for ESPN because of the NFL and the deferral of affiliate fees. Alan Gould - Natixis Bleichroeder: And what were the ESPN receivable reserves that you talked about? Is it charter or can you say? How much were they? Thomas O. Staggs: You guessed right. And in cable it came to about $25.0 million, over and above that particular instance. Alan Gould - Natixis Bleichroeder: You had $25.0 million in cable and you had the $60.0 million in broadcasting. Thomas O. Staggs: Yes, different cuts [inaudible-overtalk] . Alan Gould - Natixis Bleichroeder: And lastly, on the video side, can you tell us how many video units you sold in the first fiscal quarter this year versus the first fiscal quarter of last year? Thomas O. Staggs: We haven’t given out exact numbers of video units, in part because the titles that are in the market in any given quarter make those comparison very difficult to interpret. But I mentioned in the comments, the units were down. That was easily the biggest driver of the lower result of the studio for the quarter. So you can surmise, they are double-digit percentages. The biggest drive, of course, the comparison Pirates of the Caribbean 3 versus the most comparable this quarter being Prince Caspian. So that alone had a very big impact on the units we sold.

Your final question comes from David Miller - Caris & Company. David Miller - Caris & Company: Tom, you had said three months ago on your Q4 call that you had suspended all stock repurchasing activity. It looks like from the share count here that you have resumed that. Can you just shed a little color on that? It looks like the liquidity situation obviously improved, as witnessed by your debt deal that you did on December 17, and if you can touch on that it would be great. And also, as you know, here in California, Governor Schwarzenegger is talking about proposing roughly a 10% tax on all sports/entertainment items which would include theme parks. I assume that would include Disney Land. And if that piece of legislation passes are you more prone to pay that out of your own pocket or to pass on some short of cost increase to consumers? Thomas O. Staggs: Bob is looking at me wondering whether I started buying shares back without telling him again. No, we have not resumed repurchasing shares. The share count, remember, is on fully diluted shares. That’s probably what you are looking at and the extent that you have a decrease in the stock price, the number of in-the-money options would go down and therefore you could see a decrease in your fully diluted share count. Robert A. Iger: On the ticket tax, we provided the state with what we think is a pretty comprehensive, incredible analysis that suggests strongly that a tax on tickets, particularly theme parks but also on sporting events, would actually cost the state money, that it could have a negative effect on ticket purchases if the cost is passed back to the consumer and that would result in less spending in the state overall and less taxes paid in aggregate. With that answer I am suggesting that if there is such a tax, it is likely that we would have to pass that tax on to our consumers but we have made no decisions about that at all. We are going to remain hopefully optimistic that such a tax is not going to be levied. At least on the theme park business.

Thanks again, everyone, for joining us today. I want to note that a reconciliation of non-GAAP measures that were referred to on this call to equivalent GAAP measures can be found on our Investor Relations website. Let me remind you that certain statements on this call may constitute forward-looking statements under the Securities laws. We make these statements on the basis of our views and assumptions regarding future events and business performance at the time we make them and we do not undertake any obligation to update these statements. Forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from the results expressed or implied in light of a variety of factors, including factors contained in our annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. This concludes today’s first quarter conference call. Thanks, everyone for joining us.

This concludes today’s conference call.