Lowell Singer - SVP, IR Bob Iger - CEO Jay Rasulo - SEVP and CFO

Jessica Reif Cohen - Bank of America Michael Nathanson - MoffettNathanson Alexia Quadrani - JPMorgan Todd Juenger - Sanford Bernstein David Bank - RBC Capital Markets Benjamin Swinburne - Morgan Stanley Anthony DiClemente - Nomura Jason Bazinet - Citi Michael Morris - Guggenheim Securities Alan Gould - Evercore David Miller - Topeka Capital Markets Vasily Karasyov - Sterne Agee Marci Ryvicker - Wells Fargo

Welcome to the Third Quarter 2014 Walt Disney Company Earnings Conference Call. My name is Ellen, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Lowell Singer, Senior Vice President of Investor Relations. Mr. Singer, you may begin.

Thanks, and good afternoon everybody. Welcome to the Walt Disney Company's third quarter 2014 earnings call. Our press release was issued about 45 minutes ago and is available on our Web site at www.disney.com/investors. Today's call is also being webcast and a recording and a transcript of the webcast will also be available on our Web site. Joining me for today's call are Bob Iger, Disney's Chairman and Chief Executive Officer; and Jay Rasulo, Senior Executive Vice President and Chief Financial Officer. Bob is going to lead off followed by Jay, and then of course we will be happy to take some of your questions. So with that, let me turn the call over to Bob, and we will begin.

Thanks Lowell and good afternoon everyone. We delivered the highest quarter in the history of the Walt Disney Company with adjusted EPS of $1.28 and we’ve generated greater EPS in the first three quarters of fiscal 2014 than we have in any previous full fiscal year. As evidenced by these results, we remain committed to building strong brands and growing franchises, a strategy that is creating value across the Company. On top of this earnings report this week, we’re especially excited about the fantastic debut of Marvel’s Guardians of the Galaxy with $181 million in global box office so far. Domestically Guardians delivered the biggest August opening weekend ever and with Monday added in, it did over $106 million. This result reinforces what we’ve known for a while and that is that we have incredibly talented people making films for and with Marvel. Combined with a very strong brand and a rich array of characters and stories, the future for Marvel is incredibly exciting. We’re looking forward to Avengers 2 next May. The footage we shared at Comic-Con was a huge hit with fans. We’ll follow Avengers with Ant-Man in July, then Captain America 3 in May of ’16, and last week we announced we are going to make a sequel to Guardians. We see great promise in Guardians as another fantastic Marvel franchise. We also have strong franchises from Pixar and Walt Disney Studios, Disney Animation and Lucasfilm, truly an unprecedented collection and we’re seeing the impact across the Company. For example Disney Consumer Products just delivered its fourth consecutive quarter of double-digit growth in both revenue and operating income and we have multiple franchises that have already generated more than $1 billion each in retail sales so far this year and we’re very excited about our new line Frozen merchandise coming this holiday season. This quarter also marked Disney Interactive’s fourth straight quarter of profitability. Disney Infinity continues to be a key driver and will add Marvel characters including Guardians of the Galaxy to the Infinity Universe when Disney Infinity 2 launches next month. Turning to theme parks, progress continues on Shanghai Disney Resort. This our most ambitious project ever and we’re thrilled with the way this spectacular destination is coming along. We hope to set an official date for our grand opening sometime within the next six months or so. At Walt Disney World, this was the first full quarter in MyMagic+ was available to all guests. About half of the guests now use MagicBands and 90% of them rate the experience as excellent or very good. We’re very pleased with the growing popularity of MyMagic+ and expect it to contribute to parks earnings growth starting in the fourth quarter. We’re also developing ideas and designs for a far greater Star Wars presence in our parks. We expect to provide details about this sometime next year. Production on Star Wars Episode 7 is on track and the footage we have seen so far is spectacular, certainly worthy for the fan frenzy and excitement this movie is generating around the world. Episode 7 will open on December 18, 2015. So Star Wars fans who have been waiting a decade for a new movie only have about another 500 days to go. Until then they can enjoy Star Wars Rebels, a new series launching on Disney XD this fall. Turning to ESPN, this spectacular 2014 World Cup once again demonstrated the value of having the number one sports brand covering the world’s biggest sporting events. With its unprecedented reach across all platforms, ESPN delivered the most watched World Cup ever on English language TV here in the U.S. and with almost 44 million hours of live viewing on WatchESPN, this year’s World Cup was the most streamed sporting event in history. In the month of June alone, an astounding 80 million people connected to ESPN via computers and mobile devices to keep up with the World Cup and other sporting events such as the NBA Finals, the NBA Drafts, the US Open, Wimbledon and major league baseball games. ESPN’s new SEC network will debut in almost 60 million homes nationwide on August 14th making it one of the most successful launches in cable TV history, making a lot of sports fans extremely happy. We’re obviously very proud of our performance this quarter. It's satisfying to see the growing impact of our strategic focus on building strong sustainable franchises across all of our brands and businesses, as also long term growth opportunity that is unique to Disney and one that we'll continue leveraging to deliver results and create greater value for our company and our shareholders. Now I am going to turn the call over to Jay to talk about the details of our Q3 performance. Jay?

Thanks Bob and good afternoon everyone. We delivered yet another strong quarter of financial performance with record third quarter earnings per share of $1.28. The strong performance in the quarter was broad based with operating income growth and margin expansion at studio entertainment, parks and resorts, broadcasting, consumer products and interactive media. As expected, our cable business was adversely impacted by higher programming costs at ESPN. Let’s start with studio entertainment. Our operating income doubled in the third quarter compared to last year. For the second quarter in a row, Frozen was the biggest contributor to growth in segment operating income at the studio due to its performance at the international box office and at worldwide home entertainment, where it drove higher profits per unit as well as an increase in unit sales. Operating income at media networks was comparable to the prior year as an increase in broadcasting was offset by a decrease of cable. Operating income at broadcasting was up nicely due to higher affiliate revenue and increased operating income and program sales due to lower amortization expense and higher revenue from Marvel's Agents of S.H.I.E.L.D. Ad revenue at the network was up in the third quarter. So far this quarter scatter pricing at the network is running mid-single digits above upfront levels. Turning to cable, operating income was lower in the quarter as a result of higher programming and production cost at ESPN, lower recognition of previously deferred affiliate revenue and the absence of contribution from ESPN UK which as you know we sold in the fourth quarter last year. The impact of these factors was partially offset by higher affiliate rates and advertising revenue. Higher programming and production costs were driven by increases from Major League Baseball due to first year of our new contract and the World Cup. These higher costs were partially offset by the absence of both ESPN UK rights and production cost for the global X Games. Domestic cable affiliate revenue in the third quarter was comparable to the prior year due primarily to the adverse impact of the timing of program covenants. At the time of our Q2 earnings call, we expected ESPN to recognize $190 million less in previously deferred affiliate revenue for the third quarter. As it turned out, ESPN recognized only $98 million less, as ESPN met certain program commitments during Q3. As a result of this shift, ESPN has now recognized all previously deferred affiliate revenue for the year. So like last year, ESPN will not recognize any deferred affiliate revenue in the fourth quarter. Adjusted for the timing of deferred revenue at ESPN, domestic cable affiliate revenue was up mid-single digits in Q3. We expect domestic cable affiliate revenue to return to high-single digit growth in the fourth quarter and expect high-single digit growth for the full fiscal year. We also remain confident in our ability to drive high-single digit growth in domestic cable affiliate revenue through 2016 as we discussed at our recent ESPN Investor Day. Ad revenue at ESPN was up 10% in the quarter due to the strength of the World Cup, partially offset by lower ad revenue for the NBA finals as the series went five games this year compared to seven games last year. Adjusting for the World Cup and the absence of games six and seven of the NBA finals, ESPN ad revenue was up an estimated 5%. So far this quarter ESPN ad sales are pacing up. At parks and resorts, total revenue was up 8% and operating income was up 23% due to continued strength at our domestic operations partially offset by lower performance at our international resorts. The results this quarter include the benefit of one week of the Easter holiday compared to third quarter last year. Adjusted for the timing of the Easter holiday, operating income would have been up an estimated 17%. Growth in operating income at our domestic operations was driven by increased guest spending, higher attendance at our parks and higher ticket prices at Disney Cruise Line, partially offset by higher cost primarily related to the continued rollout of My Magic+. Operating income at our international operations was lower in the quarter as a result of lower performance at Disneyland Paris. Total segment margins were up 260 basis points in the third quarter and were adversely impacted by about 60 basis points due to new initiatives. We continue to see positive trends in the business with third quarter for capital spending in our domestic parks up 8% on higher ticket prices, food and beverage and merchandise spending. Attendance at our domestic parks was up 3%. Per room spending at our domestic hotels was up 7% and occupancy was up 3 percentage points to 82%. So far this quarter domestic resorts reservations are pacing up 5% compared to prior year levels, while book rates are up 3%. At consumer products, growth in operating income in the quarter was led by our retail business and merchandize licensing. Disney stores continue to be a positive story with double digit growth in comp store sales in North America, Europe and Japan. Growth in licensing was driven by the performance of Frozen, Disney Channel, Spider Man and Planes properties, partially offset by lower revenues from Monsters. On a comparable basis earned licensing revenue in the third quarter was up an impressive 13% versus last year and that’s following 8% growth in earned revenues in Q2. We are very happy with the performance of this business as it continues to consistently deliver strong results quarter-after-quarter. Results at Interactive Media continue to improve. We had yet another profitable quarter swinging from an operating loss of almost $60 million in the third quarter last year to almost $30 million in operating income in the third quarter. We saw improvement in our core games business, due primarily to the success of Disney Infinity, which was released in the fourth quarter last year and in addition this quarter we also saw a nice uplift from our mobile games business. During Q3, we repurchased 22.8 million shares for about $1.8 billion. Fiscal year-to-date we have repurchased 74.3 million shares for $5.6 billion. And with that we are now ready to take your questions.

Thank you. (Operator Instructions) The first question is from Jessica Reif Cohen with Bank of America. Jessica Reif Cohen - Bank of America: I have two questions. You have always been able to drive your franchises throughout the organization and I was just wondering when you see something like Harry Potter becoming a game changer for Universal, is there a franchise for you that can do -- not that you need to have a game changer, but is there something that can drive that kind of a lift? Maybe that's what you were referring to, Bob. And then, I have a second question.

I think we have a lot of them. Cars Land is a great example of it, or Cars. Clearly, Disney Princesses is a franchise that are all over our parks globally. Star Wars is going to be just that. We have global licensing rights to Avatar. I could go on, Pixar -- there is plenty of Monsters presence. There’s a Toy Story attraction in every one of our parks around the work. I think there are literally dozens of them. We have more than anyone and unlike competitors in the marketplace, except where a couple -- Avatar been probably now the only example, we don’t have to license from third parties, we own them all. Jessica Reif Cohen - Bank of America: Right. I meant -- maybe that's why you mentioned Star Wars. There was something with Star Wars. But -- and then the other question is also park related. With MyMagic+, can you talk about any -- you have anniversaried the costs. Is there a longer-term benefit in terms of a revenue component?

There is and we’ve said that it’s going to contribute to our growth in the next quarter. This is actually -- it's a quarter that we just announced as the first full quarter was basically fully operational and we were available to all guests, both those that come as basically walk-up guests to our parks but also or single day ticket holders and those that reserve in advance. And the plan all along was that for it to enable us to grow revenue, clearly that happens in a variety of ways. It's increasing guest satisfaction. So that should have an impact on essentially length of stay, repeat visitation word of mouth. There are other opportunities from a direct revenue generating perspective that I won’t get into in great detail but we’d be glad detail at a later day. But PhotoPass is one specific example of that, but there are many more and this going to start delivering basically a positive impact to the bottom-line in the quarter that we’re just in, that we’re now in.

Michael Nathanson with MoffettNathanson. Please go ahead. Michael Nathanson - MoffettNathanson: I have two, one for Jay and one for Bob. Jay, firstly, when you look at your domestic parks, it looks like over the past couple quarters or years, you have been getting low single-digit attendance growth and good mid-single-digit per cap spending growth. And I wonder when you look out the next couple years and given your history in parks, do you think that's kind of the right way to think about the drivers to the revenue model there?

Well, Michael we’ve seen, if you look at the last five years, we’ve really seen incredibly strong results from the addition of attractions, lands and experiences based on franchises that have been incredibly powerful. A few minutes ago Bob just mentioned Cars and before that Toy Story and we know that these are the kinds of attractions that pull people from, gee, I’m going to go to a Disney Park someday do I want to go this year. If you look forward, whether it’s Avatar and we've spoken with the opportunity for Star Wars in our parks, these are the kinds of things that have been absolutely of the basis of our growth here in the U.S. and if you look overseas, like in Hong Kong for instance you’ll see Iron Man being introduced into that park soon. So, I think that from a volume perspective, we remain keenly focused on enhancing the experience, having guests who come to Central Florida or Southern California, extend their stay with us and that has served us for 30-40 years as a strategy and I don’t see any reason why we won’t continue that. In terms of the other side you mentioned, on per cast, Bob just mentioned that we expect MyMagic+ to have some revenue impact as it continues to be fully utilized by guests. We also have been able to continue to price behind the value of our offering. So I also see that as a continuing trend. So we don’t like to get out and predict what’s going to happen tomorrow but the fundamental strategies that have delivered those results you mentioned are still in place and are still serving us well. Michael Nathanson - MoffettNathanson: Okay, and thanks Jay. And then to Bob, over the years you’ve been pretty straight forward about challenges you see at different businesses that you guys are in. I wondered given the past upfront, when volumes were pretty weak for broadcasting cable, whether or not you see that as a sign of change in the TV end model, or is it just something else? I wanted to get your opinion on what happened in the past upfront.

Well, I think that you are definitely seeing more compelling growth in advertising spending on new media platforms, digital platforms than you are on the traditional. I don’t think though that it’s matched dollar for dollar in the sense that I don’t think all the money that’s flowed away from broadcasting in the upfront necessarily flowed directly into new digital platforms, even though I believe that these platforms have siphoned off some money from the traditional broadcasters. I think some of the money just wasn’t expressed because advertisers are choosing to essentially commit the spending much closer to the time that the spots actually run. So I think you’re going to see some of the money that wasn’t in the upfront expressed in scatter and some of it clearly move to new platforms. That said ESPN had an extremely good upfront. It happened late so it basically just ended but there the numbers were very compelling in that you had absolute increased volume of spending over last year. So not just increased rates or increased units sold but increased dollars committed to ESPN in the upfront. Now that may speak volumes about live programming and about the nature of the live programming that ESPN has, but I think you are definitely seeing a shift. We’ve made a conscious decision as a Company to essentially not be as reliant on advertising as we were in the past. So it represents probably somewhere in the neighborhood of the low-20% range of our total revenue. That’s pretty purposeful because we see a much more competitive environment out there for advertising. We intend to participate in that environment in the sense that by moving product into new digital platforms, we fully expect to gain revenue on the digital advertising front, but I think you’re going to see basically continued pressure on traditional advertising platforms. We’re certainly seeing it a lot, not we as a company but you’re seeing it in the business in print and in radio and probably in outdoor, and I think that’s pretty telling. Television, a little less susceptible to that because there as an advertiser we can say it’s still a very, very effective way of advertising a product. But definitely the world is changing.

Alexia Quadrani with JPMorgan. Please go ahead. Alexia Quadrani - JPMorgan: You’ve done such a great job improving profitability at the parks. I guess can that continue? How should we think about profitability longer term, at least domestically?

We have been steadily adding to our margins in our domestic operations, you are absolutely right about that Alexia. And we have said that the ramp up of all the new initiatives that we’ve launched over the last three to five years have been a drag on those margins. Those, as they continue to become fully operational and now start contributing as we always thought they would to the profitability of the parks, you are seeing quarter-on-quarter and year-on-year growth in our margins and I think that you will continue to see that. Now remember, as I answer to Michael’s question the introduction of new product, the new initiatives is part of our fundamental strategy. It does have short-term impacts on margins, but positive long term impacts on value. So you may see -- it’s not straight line upward as we introduced major new products but the fundamental operation of that business has been strong and of course volume and pricing increases help that and support it. The other thing I will add is and this goes back to the question that Jessica asked is as we spend money at the parks and new attractions that are based on known intellectual property and brands, the likelihood of their success is greater. So when we put -- when we increase Toy Story’s presence or other Pixar presence, when we put Frozen in the parks, when we grow Star Wars’ presence, which we will do significantly and we do it with Princess for instance, you are going to see I think basically better bets being made that pay off and that are more likely to pay off for us than some of the bets that were made in the past. Again it’s just a question of essentially leveraging the great collection of franchises in IP that the company has in ways of a better returns on capital expenditures at the parks than we saw in the past. Alexia Quadrani - JPMorgan: And just a follow-up, if I may. Just given your success with Marvel and you have very high optimism for Lucasfilms, I guess combined with a growing value for content these days, have your priorities shifted at all when you are thinking about use of cash? I mean, are you more focused, I guess now than before on M&A?

No. We made those three big bets in Pixar, Marvel, and Lucas two of them clearly are paid off handsomely and one we are pretty certain will, Lucas. We’ve had a blend as you know in terms of how we’re allocating capital or cash, between acquisition organic growth. Disney Juniors is a good example of that for instance. The Disney Channel worldwide another example and of course our continued increase in dividend and our buyback program which Jay addressed. I don’t necessarily see that shifting that much. We’ve said that we’re not targeting any acquisitions that we over the size of the three that we brought and I don’t want to speculate or whether that could change or not, but we feel right now that we’ve got a great hand as a Company and we’re spending a fair amount of time and capital investing in the assets that we currently have.

We have Todd Juenger with Sanford Bernstein. Please go ahead. Todd Juenger - Sanford Bernstein: Two, I will keep them quick. Jay, bunch of releases recently on the SEC Network. Can you just update us on where you hope that will stand in terms of distribution at launch? Were there other rights or services often attached to those new agreements as they were signed, and any indication on sort of the financial impact that we should be thinking about? Thanks.

We are incredibly happy the SEC Network launch best channel launch in history I think. We are now reaching as of the deals we’ve done about 80 million American households and we suspect that that will and translate into about 60 million subscribers that will on August 14 start watching great programming on the SEC. I don’t want to get into and I won’t get into the details of the financial arrangements and results, but we are very bullish on this. Todd Juenger - Sanford Bernstein: All right, fair enough. And the one quick follow-up. Bob, wanted to just hear your thoughts on how big an opportunity you think international pay television is for Disney, and if you have any ambitions to get bigger there, either through organic or even M&A efforts? Thanks.

Well, I think growth in international paid television is for good for us because of the great content that we have and the content that we have is fairly universal in appeal. So as entities grow their presence in pay television worldwide, our content is sought after more and we’re monetizing that well. The Marvell TV product that we recently announced is a great example of that. For instance everything that's Disney branded. In terms of us getting involved directly, we have said for a while that we are going to launch product in marketplaces around the world that's going to enable us to sell some of our product direct to consumer. I don’t want to get too specific about that but those opportunities to sell directly to consumer and that would be Movies, TV and probably other Disney products will be international and domestic in terms of opportunity. Todd Juenger - Sanford Bernstein: We have David Bank with RBC Capital Markets. Please go ahead. David Bank - RBC Capital Markets: .I feel like I asked this question the every other quarter when you have just a blowout studio performance here, but I will take another crack at it. If you kind of look back four or five years ago, the expectation for the studio was kind of a run rate of like $600 million, $700 million of EBIT and beginning with the first Avengers movie and that just rollout of this staggering pipeline of intellectual property related to Marvel on top of Pixar, and now Lucas, it sort of looks like you are in a -- unless something goes just incredibly wrong, there's just been a massive step function up in the earnings power of the studio that looks to me like a run rate at kind of, 11, 12 in EBIT. Can you talk about what your expectations are, given the incredible visibility in the pipeline for just, kind of, like profit generation for the studio for the next couple years?

Well, I can agree with most of what you said but I will not give you specifics in terms of a predicted run rate because we just don’t do that. But given the pipeline, that includes basically the brands and the franchises you mentioned, the slates not just for '15 but beyond are incredibly rich with tentpole movies that are branded, known that should work worldwide. And obviously releasing a Star Wars film every year starting in '15, what we said about Marvel with Avengers and Iron Man and Captain America 3 and a sequel to Guardians and plenty others, the obvious Disney animation success, which is now three pictures in a now and growing because I think that the one we’ve got this Christmas Big Hero 6, will also be strong and then a very rich Pixar slate coming up, you’re going to see some great results from the studio on top of the fact that we feel very well positioned, both in terms of our slate and our talent on the Disney live action front. Maleficent has done well over $700 million worldwide. If you look at the slate coming up from Tomorrowland and Cinderella and a number of other films, we think that group is operating at a top level and we're very bullish about their prospects too. So we think we are well positioned for this studio to be a significant driver of bottom line results for the Company certainly through the next five years. And I'm not sure I know what’s out there that could disrupt us except for wide scale creative failure, and I certainly don’t expect that.

We have Benjamin Swinburne with Morgan Stanley. Please go ahead. Benjamin Swinburne - Morgan Stanley: Bob in light of the Fox Time Warner news which is obviously dynamic as we speak, presumably one of the ideas there is that having significant scale in the domestic PayTV business and having size and affiliate fees has value. And I'm wondering give Disney’s position with ESPN and ABC and Disney Channel, where you already have scale, do you view adding even more scale as helpful and creating value for the Company, adding more cable networks to portfolio or maybe conversely there starts to be some dis-synergy from size that you become sort of -- there's too many analysis so to speak so. I'd love to get your color on that since it’s obviously pretty topical?

Well we like the hand that we have and we believe that we can continue to mine growth from the channel properties that we own, in Disney, in ESPN obviously and ABC and our 50% ownership of A&E Lifetime Networks, which is also very significant for us. We like that hand but we don’t necessarily believe that we have to grow those businesses in order to prosper. We think we're positioned to continue to prosper in that business. I will say that in the multi-channel business, there is a lot of out there. There are a lot of channels and channels that have questionable brand propositions, channels whose ratings are not necessarily consistent, I'm not sure are going to be served as well over time. I don’t think that marketplace continues to grow for all. I think the marketplace will continue to grow for those channels that are best branded, most in demand, best programmed, and I think we’ve got those channels. Benjamin Swinburne - Morgan Stanley: And if I could just ask a follow up to Jay on a different topic, on cable affiliate revenue growth, I guess same topic but on the quarter. Jay you mentioned that domestic affiliate revenue growth I think was up mid-singles in the quarter. I think it was high-singles last quarter. So any color on the deceleration and then acceleration into Q4? Is that basically the SEC network kicking in or is there anything additional you’d want to add? Jay Rasulo : Thanks, Ben. I’d be happy to try to shed some light on that. There are number of factors have led to this quarter affiliate revenue growth to be in mid rather than high single digits as it has been. First as you probably know, we haven’t completed all of our deals with the multi-channel operators. Some are still operating under the old rate card and that is something that obviously we expect to change going forward. Secondly, we’ve experienced some modest ESPN sub losses that we believe are mostly economically driven. We’ve talked about this in the past. And finally the growth rate was impacted by some contractual adjustments during the quarter. But what’s important to know as you said in your question is that we do expect to be back to delivering the high single digit domestic cable affiliate growth in Q4 that we’ve been speaking of and also that the full fiscal year will be high single digits for fiscal ’14. And as I said at the ESPN Investor Day, we still expect that, that will be high-single digit compounded annual growth in domestic cable affiliate revenue through 2016. We don’t really breakout individual products like the SEC network. So I am not going to specifically speak about it.

Anthony DiClemente with Nomura. Please go ahead. Anthony DiClemente - Nomura: Just a question on your ongoing relationship with Netflix. It seems that Disney has been more aggressive than your peers in terms of deals with Netflix on the SVOD side, not only the PayOne deal that you have in U.S. but I think in the quarter you struck a similar deal with Netflix in Canada. Why have you guys been more aggressive than other media content companies? Do you think it’s your genre -- the kids genre is more value add from SVOD as compared to sort of traditional premium PayTV or is it just that you are getting kind of pretty material pioneer tax from Netflix?

Netflix, we’re growing our business with Netflix, first of all because we believe in their platform and its future. And we have from the beginning, when we did the output deal with the studio and we also believe that our brands can be well monetized on their platform, which is evidenced what they are paying for our brands and our content. So as long as that continues, which I think it will, not just domestically but internationally our business is expected to be robust with them or even grow. So it’s a good combination. We’ve got brands and content that they want and they have a platform that we like and that we want and they are willing to pay the right price for our content, good prices for our content. I think it’s mutually beneficial. Anthony DiClemente - Nomura: Okay. And then just maybe a follow-up, maybe I guess for Jay more specifically. As Netflix expands into new territories internationally, France and Germany coming up, you guys being natural partners with Netflix, should we expect that you will see a bump in digital revenue as Netflix turns on new countries? And should we expect to see that flow through the P&L? Jay Rasulo : I’m not going to put shadow what revenue we’ll come off with Netflix in the future but everything that Bob says I believe applies to every market that Netflix would enter in the future.

Jason Bazinet with Citi. Please go ahead. Jason Bazinet - Citi: Maybe this is a little bit of a strange question, but I think it was probably about a decade ago, Disney invested in MovieBeam. And I was just wondering, is there still an appetite on the part of Disney to have something that is more direct-to-consumer or was that just an experiment and strategically, sort of moved on?

Well, definitely moved from MovieBeam itself. I barely remember it. I think it actually was a noble experiment, might have been slightly ahead of its time and little bit off pace in terms of the technology because it required an extra device in the home. I think actually this Company is very well positioned to offer product directly to the consumer. Right now, we do that primarily at parks and resorts. I think that we would in all likelihood grow our direct to consumer business in our media space and the movie space et cetera and so on, overtime and I think that will be an important strategy for the company in the future for all kinds of reasons, one being that I think that access to the consumer and it has all kinds of value. Secondly I think we can better serve the consumer with our, certainly our Disney branded product by going direct. That said we have good relationships with distributors, whether they are big-box retailers or theater operators or MVPDs for pay television or pay media platforms like Netflix. So I think you’ll see overtime growth in Disney’s direct to consumer business, but that doesn’t necessarily mean we’ll get out of the third party distributor business. That would be impossibility. Jason Bazinet - Citi: Understood. And can I just ask one unrelated question? Do think that there is any chance at all over the next few years to sort of clean up the A&E, ESPN sort of ownership structure?

Well, you say cleaning up suggesting that there is something wrong with it. We have a great relationship for with Hearst, a great partnership with them that dates back decades and works extremely well for both companies. We like being partnered with them. They've been great, both in terms of investing for future growth and also sustaining and supporting the current business.

Michael Morris with Guggenheim Securities. Please go ahead. Michael Morris - Guggenheim Securities: Two questions on ESPN. First, there is some growth in sports advertising inventory, whether it is launched at SEC Network, another night of NFL on broadcast this fall. I’m curious what you are seeing in terms of growth on the demand side for the inventory. Is it -- are you seeing growth from your existing or traditional sports-focused advertising partners, or are you able to draw new partners into buying into sports programming? And then, second of all, I'm curious about the relationship between ESPN and the parks and they are both, obviously, huge businesses for you. The relationship between the two does seem relatively limited. Why is that? Is there an opportunity for expanding that relationship or are there some structural limitations to a partnership there? Thanks.

The first question, we definitely have seen growth in terms of number of advertisers coming into the sports space. We’ve also seen a lot of growth with advertisers who want to buy the sports space on a multi-platform basis. And in fact I think virtually a 100% of all ESPN sales were close to it. Certainly well, north of three quarters of their total sales are bought cross platform. So they are buying digital platform, the magazine, radio, the television channels et cetera. I think sports is definitely a growth area for advertisers. Obviously live means a lot, but there just seems to be growing interest in sports in general. I think that’s one of the reasons why we’ve seen more competition for sports rights in the last probably five years, because it’s just more appealing to advertisers. The second part of the question, there is limited presence of ESPN in the parks. We have the big branded sports space in Orlando. We've tried our hand at some ESPN zone in a few locations. There's one at Downtown Disney in Anaheim. We're kicking around some other ideas possibly for some other locations. But in general the experience people want when they enter our parks is more of, I call it a story telling experience, not necessarily a sports experience, even though there are lot of stories created and told in sports. The blend just doesn’t seem to be that obvious, or the presence doesn’t seem to be that obvious. So there is not much in development in terms of increasing ESPN’s presence in parks and resorts. Michael Morris - Guggenheim Securities : And on the first question, are there any categories that seem to be coming in more on the sports side or is it pretty broad based, the incremental demand that you mentioned?

I don’t know any categories off the top of my head. I do know though that advertisers that traditionally look for a varied audience, not just men are coming in, which is interesting. So in other words advertisers that typically look for audiences that include women’s components or young people components are buying more sports time. Maybe because the audience is more diverse.

We have Alan Gould with Evercore. Please go ahead. Alan Gould - Evercore : Bob, I want to go back to David's question a second. My question is, can the film business get any better than this? I recognize that you have an adventure sequel next year and Star Wars a year after, but you are on track to have the highest profits any studio has ever had in a year. And it seems like -- every single film, it seems to be working?

Well I can pretty much guarantee over time that every single film will not work. I’ve been in the business long enough to know that. I can’t tell you which one wont right now. But that’s the business. I will say that we’ve got a great team across the board from Marvel to Pixar, Disney Animation, Lucasfilm folks and Disney Live Action. It kind of starts with that team which all rose up under Alan Horn’s leadership; really pleased with the team that we’ve got in place. And when you combine that team with the quality of intellectual properties that the Company owns, you have a much greater likelihood of sustainable success, which is something that has been -- has alluded us in the past and I think in some respects has alluded many studios. We just have a -- we have a great hand of people and a great hand of intellectual property. Alan Gould - Evercore : But you even think there will be growth off of this level?

I'm not predicting that there will be but I think given the slate, particularly when you consider the cadence of Star Wars films and the growth in Marvel and the addition of some Pixar films; look you’re talking about a potential record year in 2014 that doesn’t include a Pixar film, which is something that we pushed purposefully because the film that we were slated to release, we didn’t feel was ready and we thought we were much better off seeking quality than rushing a product to marketplace which we'll continue to do. And so just the fact that we are doing as well as we're doing without a Pixar film probably says a lot of about what’s up in the future, but we don’t want to make specific predictions.

David Miller with Topeka Capital Markets. Please go ahead. David Miller - Topeka Capital Markets : Congratulations on the stellar results. Bob, what, if anything; can you tell us about the accident to Harrison Ford on the Star Wars set? There's just a lot of rumors flying around, or I guess there were maybe two or three weeks ago. Is it going to affect your release date? Are you still targeting the -- I believe its December 18, 2015, release date. And then related to that, and David Bank's question aside, it just seems like overall, over the last maybe two or three years that the studio is just a lot leaner? You guys have used technology in many wonderful and kind of creative ways to kind of lift operating income, it’s not just about film performance, it's about use of technology. Do you agree with that and is there other stuff there left to do? As you go to bed at night, do you think about other things that you can do technologically to uplift that margin within the studio? Thanks a lot.

Second part of your question, the studio is definitely running more efficiently for a variety of reasons, one being something that has nothing to do with technology. They’ve reduced their development costs significantly. Meaning basically the overall deals they have with certain talent, which I think over time, didn’t prove to be as valuable as they would have liked. And so if you look at the commitments long-term, we have these commitments to great intellectual property but we’ve reduced our development costs. In addition to that, the studio has found all kinds of efficiencies, some the result of technology, some the result of just better or strong leadership. And I believe the question about as I go to bed at night, the one area that I think that there's still potential for efficiency, which is somewhat technology driven is in the marketing area and now there has been some things written recently about studio marketing costs. I think in today’s world the opportunities that studios have to reach people with marketing messages on new technology platforms, obviously have grown significantly and I think with that should come some more efficiency and I know where our studio was looking at accomplishing that. In terms of the first question, we’re not going to get into any details about Harrison Ford’s accident and except to say that we are on track to premier the film on December 18, 2015.

. : Vasily Karasyov - Sterne Agee : I have a couple. You mentioned that you now have three $1 billion franchise properties in consumer products revenue. I think I know two of them, Princess and Star Wars. Do you mind telling me what the third one is?

The third one is followed by five others and we have eight. Pooh, Mickey Mouse, Monsters, Star Wars, Spider Man, Cars, Disney Junior and Princess. Vasily Karasyov - Sterne Agee : And then, Jay I have a…

And all over $1 billion in global retail sales in fiscal 2014. Vasily Karasyov - Sterne Agee : And Jay, I have a question about the income and the income and equity advantage deals for cable networks. It seems like it’s getting a little bit more volatile in terms of year-on-year change recently and I think you are highlighting elevated spending at A&E. Can you please tell us what the -- is $230 million to $250 million a quarter a good run rate to think about it? What are the puts and takes going forward there?

Well, I think we’ve shared with you that, it was our expectation that with some of the product investment that we were doing, that we were in the back half of the year that we expected A&E’s results which is by far and away the largest driver of that number, would have a back half of the year that would be flat or lower than it had been before. So it really does have to do with the constant building and rebuilding that’s going on at the A&E Network. We’ve got channels there and the leadership has done extremely well with them but want to continue with that success and of course and that involves investing in new programming as it does with any successful cable or network channel and that’s really what you're seeing in those numbers, nothing beyond that. Vasily Karasyov - Sterne Agee : So if I understand it correctly, we should see a slight decline in Q4 too year-on-year. Is that correct?

Q4 is looking flattish and I think we said we are looking for flat numbers for the second half of the year.

We have Marci Ryvicker with Wells Fargo. Please go ahead. Marci Ryvicker - Wells Fargo : You were asked a little bit about increasing your scale domestically, and then global pay TV penetration, but do you feel any need to gain global scale in cable networks through M&A? That's the first question. And then, we have been hearing some of the weakness in national advertising pretty much across the board might have been some sort of displacement due to the World Cup, and since you had the World Cup, I'm just curious if you saw some advertisers really move money out of the traditional marketplace into the World Cup?

We don’t really believe that we need to gain any additional scale in terms of global channels. Our primary basic channel play worldwide is the Disney Channel or the Disney branded channels that includes Junior and XD. We continue to invest in growing that portfolio of channels, now well over a 100. We'll continue to do that. We’re not necessarily looking to acquire more from more scale. With these brands and the content opportunities that we have to mine them, there are plenty of places for us to bring our product beyond just an owned channel, as we’ve talked about on this call with the various growth in pay television for instance across the globe. The second question was World Cup advertising. I honestly -- now one has cited to us internally the fact that the World Cup may have taken advertising away from the more traditional broadcast channels. I think what you saw is one, some money migrating to new digital platforms and two, money not being expressed and the upfront being held back for scatter and essentially beginning to express near term to when the spots would run.

. : 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. Thanks everyone for joining us today. Have a good afternoon.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.