Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 Walt Disney Company Earnings Conference Call. My name is Ann and I'll be your coordinator for today’s call. As a reminder this conference is being recorded for replay purposes. At this time, all participants are in a listen-only mode. (Operator Instructions) We will be facilitating a question-and-answer session following the presentation. I’d now like to turn the presentation over to your host for today’s call Mr. Lowell Singer, Senior Vice President, Investor Relations. Please proceed sir.

Thanks, and good afternoon, everyone. Welcome to the Walt Disney Company’s third quarter 2012 earnings call. Our press release was issued about 45 minutes ago; it's now available on our website at www.disney.com/investors. A webcast and a transcript of today’s call will also be available on our website later today. Joining me in Burbank 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 will lead off, followed by Jay, and then of course we will be happy to take your questions. So with that, I will turn it over to Bob.

Thank you, Lowell, and good afternoon. We had a phenomenal third quarter delivering the largest quarterly earnings in the history of our company. Earnings per share were up 31% over the last year driven by growth in every one of our businesses. We also delivered record earnings per share for the first nine months of our fiscal year and we believe that our results clearly demonstrate Disney’s unique value proposition and great potential to deliver long-term growth. Before Jay gets into the specifics about our quarter, I’d like to spend a few minutes talking about the status of our capital spending in our parks and resorts as well as some of the acquisitions we made in the last few years especially Marvel. These things are relevant to our Q3 results and we will factor into our future performance as well. As you know, we’ve made significant investments in our parks and resorts over the past several years to create an even greater Disney experience for our guests and to drive long-term goals. These include completely transforming Disney California Adventure, expanding Disney’s fleet of cruise ships and enhancing and increasing the size of Fantasyland at Walt Disney World. California Adventure is now an exceptional park in its own right and the perfect neighbor to Disneyland. Since the June opening of the phenomenal Cars Land and the brand new Main Street, attended has been up along with guest satisfaction. In fact, Disneyland Resort had new Q3 attendance record and on most days since our reopening California Adventure has been drawing nearly 50% of the total attendance to the overall Disneyland Resort and that’s up from roughly 25% in the past. The successful launch of the Disney Fantasy in March and the Disney Dream the year before more than doubled the guest capacity…

Thanks, Bob, and good afternoon everyone. We delivered an exceptional quarter with segment operating income up 18% and earnings per share of $1.01 up 31% over prior year. There is a great momentum at our company as evidenced by these results which I’m now going to spend a few minutes discussing in more detail then I’ll highlight some factors that may influence our upcoming performance. In the third quarter, the Studio segment was the largest contributor to growth in operating income driven primarily by the tremendous worldwide box-office results of Marvel’s The Avengers. Television distribution results were also higher, but this was offset by a decrease in worldwide Home Entertainment. The success of Marvel’s The Avengers speaks for itself. It's a phenomenal film that dominated the box-office in every market in which it opened so we look forward to the opening of the film next week in Japan. As we look to the balance of the year and fiscal 2013, we are excited about how robust release slate. On the animation side, Pixar will release two of its animated classics in 3D for the first time, Finding Nemo in September and Monsters Incorporated in December which sets the stage for Pixar’s next big film Monsters University, which will be released next June. We will also release Tim Burton’s Frankenweenie in October and Disney Animation’s Wreck-It Ralph in November. On the live-action front, we will release a number of highly anticipated films in 2013 including Oz The Great and Powerful in March, Iron Man 3 in May and The Lone Ranger in July. Results from television distribution were driven by higher sales of our films in international markets compared to the prior year. The decline in home entertainment results was due to lower unit sales in the third quarter including lower…

Thanks, Jay. Operator, we are ready to take the first question.

(Operator Instructions) And our first question comes from the line of Michael Nathanson with Nomura. Please proceed.

I have two for Jay just on Parks. Jay, when you started the year, I remember you guys set rough numbers they will be about $500 million of incremental revenues and expenses related to the new ships. I wonder, now you are three quarters in the way down through the year, can you just update on where you up to those 500 million and is there any differences on the timing of revenues and expenses?

We said last year that we would have 300 million of incremental revenue matched with cost and then an incremental 500 million this year. And we are still very much on pace for that and it seems like it will be, as we thought, pretty much match up with costs of launching, training, preopening and all of the things that go into launching these new initiatives. If you look at this quarter in particular, Michael, we think about 50 basis points of our Parks margin, the change that you saw in the Parks margin number that I gave you, is the impact of these new initiatives on the margins for the quarter. That’s the Disney Cruise Line, California Adventure expansion and our Ahwahnee really represent the bulk of that 50 basis point impact.

I’ll ask one follow-up on park trends, we’re all excited about the new California park, give a sense of what the attendance trends look like through the quarter, maybe next quarter in California versus Florida, is there anything you are seeing differently than previous years?

No, not really a big difference between those two parks as we sort of get into the summer and look at what the rest of the summer is probably going to look like and into the fall, not a huge difference.

And our next question comes from the line of Ben Swinburne with Morgan Stanley. Please proceed.

I have a question for Bob on Avengers and then a follow-up for Jay. Bob, last quarter you talked about being a little short on inventory at the Avengers and on the CP front, and wanting to sort of the get the company focused on fully monetizing that property. Looking at Q3, how would you sort of judge the performance of the company overall across the segments particularly at CP and at film, and how do you think about looking at this property from a licensing perspective relative to some of your other big hits like the Cars where you really didn't see much of a fall off on the licensing front as you moved out over the years beyond initial release of the film?

We think Avengers is a strong property. It's not as strong as Cars from the CP front, but that's the strongest that we’ve ever had. I think it's important to note that you can't look at one of these properties in terms of it franchise quality or strength in one quarter. The Avengers is probably a good example of that, because we have to look at it through the release of DVD which is late this September and obviously that takes as well in to Christmas and because the Avengers incorporates Iron Man, Thor, Captain America and the Hulk, we basically are selling products against all those characters and we’ll be selling it when those are the movies, certainly Iron Man, Thor and Captain America come out. So, this is kind of a long-term proposition; Avengers not as strong as Cars but until when the DVD comes out and we get into the Christmas season, it's way too early to assess this and we have high hopes for not only the films from the individual characters that appear in the movie but that in for the sequel which will come out at a time we haven’t announced yet.

Jay, on ESPN, would you be willing to give us the affiliate revenue growth in the quarter if you exclude the deferral timing or if not [ESPN] for cable which I think will be in the queue. And the 100 million costs you called out for Q4, is that a change in the year-over-year expense growth at ESPN what we saw in Q3, because I know you obviously have recorded. You have increases in Europe in your licensee?

Sure. Let me take the first half of your question, and then I’ll talk about the 100 million. So Ben relative to our affiliate growth rate, it was pretty much flat versus prior year on a reported basis due to the impact of that Comcast deferral and we also had some unfavorable FX stuff in there but the majority of it was the deferral. If you adjust for that deferral and adjust to the FX rate as well, the Q3 cable affiliate rate growth was very similar to the first half of the year which was high single-digits. I think I gave that out in the last call. So, those two factors pretty much account for what looks like a slowdown in the reported number. On your second question about the 100 million, basically that it really matches the kind of pace of cost growth that we’ve seen which is the sort of low to mid single-digits in cost growth quarter-to-quarter at ESPN nothing really special there. And that’s Q4 versus prior year, Ben.

I want to just provide some perspective on affiliate rate increases, because I know this has gotten some attention this last few weeks, not just for us but across the media sector. When we give a figure of high single-digits, which Jay just gave, you are looking at a blended rate of all of our networks, obviously including ESPN. Because of the size of ESPN sub fees, as you know, we’ve been cautious about how we increase those rates in these new deals that we make given the fact that the fees for ESPN are as high they are, we’re increasing rates on such a high base. The pricing that we get is probably the strongest in terms of a percentage increase is from the other networks led by the Disney Channel. So, we’re getting tremendous price growth in some of the other channels and decent growth in ESPN, but albeit on a very, very high base.

And our next question comes from the line of Alexia Quadrani with JPMorgan. Please proceed.

My question is on the Parks margin. Should we assume when we look into the September quarter that we could see I guess more than the 50 basis points expansion from the newer investments given that a lot more of the cost is probably rolling off in this quarter?

Alexia, I don't feel comfortable sort of giving guidance on a specific quarter's margin, but obviously as these projects roll off the revenue they produce which is pretty much been what we expected when we pro forma these projects. All of those startup costs will drop off and we’ll start producing (inaudible) against those and they won't be the margin drag that they have been. But I really don't want to talk specifically to timing, just gets too close to guidance from my taste.

And then just a follow-up question on the really impressive ratings momentum you have seen at the Disney Channel, I guess given that you don't sell advertising there, is there I guess ways you can really translate that into more meaningful step ups, but it's just higher affiliate rate when context come up or is there otherwise you can monetize that impressive success you had there?

Well first of all the Disney Channel programming appears on over 100 channels worldwide and many of those channels are advertised supported, so the strength of these shows while they only show up primarily in the U.S. against the sub fees, they do drive advertising in other markets around the world. The other thing that's important is, we manage these properties across businesses and we leverage their success across businesses. So, if you look at Phineas and Ferb which is a mammoth success on the Disney Channel in the U.S., that has being leveraged as a franchise across a variety of different company businesses. I’ll note the tremendous success of a recent mobile game for instance is one example, Consumer Products being another one and publishing, the fact that it will show up in the products in fact that we have a movie in development against Phineas and Ferb. So, we’re monetizing because of the Disney branded nature of these properties. We’re managing these successful properties, the way we manage successful properties out of the studio as franchises.

Next one comes from Jessica Reif Cohen with Bank of America/Merrill Lynch. Please proceed.

Could you address the retrans and affiliate comp where you are, roughly where you are in fiscal ‘12 and how will that ramp up over the next couple of years.

We’re going to stick with a total number that we gave. I really don't want to talk to how that's going to blend in overtime because we don't want to get into all the details of when deals come up for renegotiation, when we start, whether we start early and so on and so forth. So, we’re going to stick with that total 450 to 500 million numbers that we gave in fiscal ‘15 sort of live with that.

And then just on the buyback, I mean, you had mentioned Jay that it was quite a slowdown in the quarter. Could you give us your current views on capital allocation? If CapEx peeks into your free cash flow growth should be at least for the domestic product should be fairly significant. Why was there a slowdown and how should we think about capital allocation in coming years?

Let me take the bits of your statement in order. Certainly, the equity method basis and even on a consolidated basis for the next couple of years, our CapEx will drop. In fact, 2012 at least into the foreseeable future on an equity basis because a lot of the big capital bumps you will see in the future will be in Shanghai, only 43% of which is our money. You will see the reported number start to look higher as we get into the pre-opening of that part, but on the equity basis, the actual cash outflow will not reach the 2012 numbers. So, you are right about that we will be more cash flow at least netting will be less. If you look at buyback in particular, I’d say this, we haven't changed our point of view at all about buying back our stock. We still believe that we trade below our intrinsic value that it is a very useful and a strategic way for us to return capital to shareholders. So, I just wouldn't read too much into what happened this quarter versus the same quarter last year, not important. We haven't changed our focus on the amount of capital or how we think about allocating capital to buybacks in the future.

And it comes from the line of Spencer Wang with Credit Suisse. Please proceed.

It's a two-part question on ESPN. First for Jay, I think you mentioned that ESPN is pacing slightly down in the September quarter and you mentioned the Olympics. Is it all just a shift to the Olympics or is there any sort of change in tone in the scatter market? And secondly for Bob, I know international growth has been a focus for you. So for ESPN now that the English Premier League rights will go to British Telecom in the Fall 2013 and you have unwound the Star JV, can you just update us on your thoughts on the international strategy for ESPN?

I really wouldn't read too much into the ESPN ratings other than on and of course the enormous focus that takes place around the summer games and the disruption or this equilibrium that creates in the market. We believe we have incredibly strong programming. Our upfront, which is you probably know for EPSN one of a couple or few upfronts that we do was incredibly strong, demand for our programming and our product is incredibly strong. We’re not looking too much further into it than that.

And by the way as it relates to the Olympics and ESPN, it made a decision at the upfront to sell deeply into this current quarter at the upfront so that they would leave themselves less vulnerable to the competitive forces of the Olympics from an advertising perspective. So, even though the Olympics are siphoning some money out of the marketplace particularly with strong ratings, ESPN was fully prepared for a quarter that would be impacted negatively by the Olympics by selling deeper into the upfront. I should also say that their sales for their Fall premier product notable college football and pro football are very, very strong and very, very encouraging. On the international front, ESPN’s track record internationally has not really delivered the kind of bottom-line results that we would have liked or expected and as we look forward, we did not see the kind of growth engine from ESPN internationally and so we have approached it somewhat more conservatively. The bid that we made for instance for Premier League was we considered to be a rational bid to try to turn ESPN's business in the U.K. into a profitable business and we are outbid by very, very powerful local distributor adding really not only impossible to compete with them, but it made no sense for us to do so because it simply would not have benefited our bottom line. Asia a different story, well those we look long-term at that JV. We didn't think we would drive great growth for the company. It was also a partnership with News Corp. and every once in a while the partnerships even though we had a good one with News Corp., you have a different point of view about the future or the direction of the business and both entities felt that it would be better to go off individually and so we decided basically with News Corp. being very interested to sell our interest back to them and to pursue other markets for ESPN and internationally notably Latin America. Well we do think that we have a path well we are profitable today and we have a path to growth long-term.

And our next question comes from Anthony DiClemente with Barclays. Please proceed.

Two questions for Bob, just to follow-up on your recent comments there, I appreciate your comments about ESPN and the pre-sales for (inaudible) but wondering on just broader core advertising market trends with a multiyear whether you think that there is a good amount visibility in the marketplace as we look to the end of the year. Whether or not you are seeing any sort of change of tone in ad demand?

I would express nothing but bullishness about ESPN’s ad prospect certainly number of months maybe for the next year, live sports is still very much in demand. I think the Olympics proved that a high quality live sports events still attract large audiences and are of great interest to a variety of different advertisers. So, you have sort of multiple sectors. They had a strong upfront. By the way, as at ABC selling roughly 80% of its inventory in the upfront at increased rates. So, I think we feel generally speaking good about the market and not huge visibility, but this is what we are seeing I think we’re positive particularly on the ESPN front.

And then second question, Bob, on the performance of Brave, which it was impressive in its own right, maybe not as impressive as some of your existing franchises like thinking back towards the Toy Story 3. I’m wondering if the performance of Brave does anything to inform your strategy at Pixar for introducing brand new brand of franchises from here particularly looking at how The Avengers did and whether or not the Marvel characters and franchises become more prominent in your overall strategy?

To the point you made, we feel good about Brave, it's just under 225 million domestically and we put a character in the marketplace that is clearly very, very popular and has long legs, no pun intended, in terms of franchise ability. We’ve instructed Pixar to make great movies. That's their primary priority, tell great stories and if we get good franchises out of them that's great for the company. But we're not taking a check boxes approach to how we develop. That said they do have properties in the marketplace that we really believe in. The sequel to Monsters, which comes out in 2013 would be one very good example of that. It's also kind of tough to compare things to Toy Story since that was the number one grossing animated film box office ever. What we have instructed Pixar to do is to continuing doing what they’ve been doing all along and doing quite well, which is find great characters, tell great stories and when we have got one that can me mine the way Toy Story was or Cars was or some of the other properties and certainly Nemo was onto that category. Monster then we should make the film then we should leverage it, but by and large we want to make good movies tell great stories first.

The next is from Todd Juenger with Sanford Bernstein. Please proceed.

A quick one on the TV Everywhere apps, I guess especially the new kids channel app you are talking about with Comcast, and my question will be how do you see that expanding out to other distributors who I’m sure would love to offer that to their subscribers and I'm sure there is various barriers to that. If you could comment on the timing or the barriers that are standing in the way of maybe getting more deals done like that and then anything you can say on the way that you could economically participate or benefit from deals like that?

Sure. We’re very encouraged by the apps that we launched through Comcast and the app, the ESPN app that was launched by Time Warner about a year earlier. The take up rate in terms of downloading the app and ultimately authenticating has been impressive and what's really impressive particularly from the Disney Channel side is the number of shows that have been viewed on that app. This proves a number of things to us. One, the power of mobile media, clearly the device mostly, the tablet to some extent the smartphone is a device that people are willing to watch a long-form video on particularly kids and that's very encouraging. What we've got here is a model that benefits the consumer, because it gives the consumer more ways to access the programs conveniently. It benefits the distributor, because we are protecting the business model because of the need to be a multichannel subscriber and it certainly benefits us. So, I think we will do more deals like the one that we did with Comcast. There is a veritable queue of distributors that would like to launch these apps, but we are willing to launch them as part of overall extensions of omnibus deals that we’ve done with them, with the deals that we’ve done for the channel and not just allow distributors to launch them basically outside of the format of an extension of our deal. On the monetization front, we are working on technology that we expect to implement probably this fall for ESPN and for the Disney branded apps to embed advertising that is discrete to these apps both on the VOD front so that when they watch an episode, but also in terms of streaming of the channel and so we have an opportunity we believe not just to use these apps to increase the value of the multichannel ecosystem, but ultimately to drive greater revenue through advertising.

If I could ask one quick follow-up. I know that took a lot of time, so I'll try and make this real quick. Your comments on the ESPN Upfront were very helpful. I wonder if you might share some similar comments on the Kids Upfront, especially some of this might draw a conclusion that there are lot of GRPs are going out of the market. The demand seems fairly strong, so one might suspect that pricing might be way up and your share is way up, so any comments on your price or volume, you got out of the Kids Upfront would be greatly appreciated?

Todd, you are right. We had a very strong Kids Upfront driven by Disney XD primarily because we’ve got real growth in ratings and the strength of the programming in that channel as well as Disney Junior is enabling us to monetize at a faster pace, robust pace and to take market share. That said our position in the marketplace is relatively small, but as we said earlier in this call, we don't sell advertising on the Disney Channel. So we're driving advertising in relatively smaller channels, but we've definitely seeing strength there and real growth and we look forward to continuing to grow these channels both in terms of subscription fees from increased distribution, but also from increased advertising which is due to the popularity of the programs and the channels themselves.

And our next is from David Bank with RBC Capital Markets. Please proceed.

First, Bob, given your opening comments, the quality and the visibility on the studio slate is really actually pretty staggering. I guess in that context, if you look over the past decade the studio kind of hit peak EBIT north of $1 billion, margins in the mid-teens. Do you think you are on a trajectory over the next couple years to get back to those kinds of earnings power numbers at the studio given the slate you outlined? And second completely unrelated question, could you remind us of when the Castle syndication money is going to head and is it comping up against any other major syndication or the timing of any other digital syndication dollars?

David, no real guidance on the studio side we feel good about the slate too. With anchors from Pixar, Disney and Marvel we like our positioning and we are confident in the slate coming up. We do believe we’re going to continue to improve returns on that business led by the franchises and the big brand power of our films, but no guidance in terms of what level of profitability we achieve or what we return to in terms of total profitability. Jay, you want to take the Castle question?

On the Castle revenue recognition, David, we did recognize some in Q3 and we’ll recognize even more in Q4 as there is both, we’re monetizing both seasons three and four in Q4, but there's also a bump due to the fact that we will hit the magic ‘88 episodes in which there's a lift to the entire pricing of what we sold prior and we will recognize that in Q4 as well.

And that's at the Studio or Media Net? I sorry for asking.

That's at the Media Net.

And our next is from Doug Mitchelson with Deutsche Bank. Please proceed.

Two questions if I could. So, Bob mentioned that both cruise ships are possible in the June quarter were those cruise ship margin still held back by a marketing launch cost and if so how long does it take to reach steady state margin for those cruise ships? That's the first one.

Yes, and they are behind us. So we should start to see normalized margins from this point forward.

Second question, because of some of the currency shifts, I think it will be more expensive for international visitors to come into the U.S., I think in the past, really sort of the past year or so, it seems like international attendance growth has helped drive increases in attendance at the park, so should we have any concerns regarding currency swings impacting the parks?

Interestingly, the Q3 percent international where it really matters most is that which is at Walt Disney World was identical to the prior Q3 year ago Doug. And I will tell you there has been a bit of mix shift up where Europe which for us is primarily U.K. and Canada were down a little bit, but that slack was completely picked up by Brazil and Argentina. So, yes, there is always a possibility for currency swings to affect our business. We actually haven't seen that much of it over the last couple of years. Of course, the euro and the pound have been relatively strong for most of that period.

Well you have got a lot of experience for this, is there any kind of lag given that people plan their trips in advance? You know what point would you expect to see if we're going to see anything? Would you have seen it already?

Generally not, I think that for the most part, particularly starting with Europe, flights from the U.K. and a long holiday in Orlando tend to be a lot more economical decision for people from the U.K. than going elsewhere in Europe, and the growth of interest in Latin America for the Disney franchise and particularly visitation to Walt Disney World is probably going to mask any relative currency swings there. The only thing we are held back by from South America is actually believe it or not our visa policy and the ability of people to get access to the market not the desire or the demand to come up to Walt Disney World.

Our next is from Marci Ryvicker with Wells Fargo. Please proceed.

Two questions, the first, DreamWorks has recently announced plans to build a theme park in Shanghai and potentially start a kids network, any thoughts on these announcements, particularly given that this would be new competition for Disney?

To my knowledge, they are not building a theme park in Shanghai. They are building some form an entertainment center and it was described in the release more of a theater district. That get to suppose to include practical theater as well as movie theater and some other forms of tourist attractions, but it is not being characterized at the theme park and is not being capitalized; mainly investment is nothing close to what it would take to build the theme park. This is more I think theater venues and retail that is entertainment based than theme park.

And then A&E, you said in your last filings that you most likely will not be consolidating that, so just want to confirm. And then also related to this, any thoughts about doing a swap with Hearst in terms of your interest in A&E for their interest in ESPN?

You are right on your first assertion which we do not have plans to consolidate it and I don't really want to comment on anything regarding our relationship with our partners with Hearst.

And it comes from the line of Jason Bazinet with Citi. Please proceed.

Just a question for Mr. Iger. The street seems to have soured a bit on social gaming and the prospects of social gaming; I was just wondering does it alter your view at all in terms of the importance of that division to Disney?

We do. Our strategy in the games front is to diversify modest investments in console, investment in mobile and investment in social. We’ve actually grown share a bit on the social front lately. Our exposure is less than some of the big competitors in that space namely one big competitor in the space and we’ve actually seen some interesting growth, thanks to the new Facebook App Center that was launched recently where we’re getting access to customers, Facebook users of Facebook for marketing purposes that we didn't have before. If you check the apps that are around, if you play social games, you will note that you will be marketed to by friends or through friends who are playing social games and you will be marketed from companies that create games because of the games you may have already played. And so we’re getting access to a marketing platform that we actually believe is encouraging. The other thing to note is there is still growth in Facebook in terms of number of users and the numbers in terms of how much time Facebook users spend playing games are staggering. And so we still believe in that business, but our investment is relatively modest in the space. I think we launch about 10 games this year, a lot of them are based on Disney-owned IP which we believe gives us, not necessarily [advantage], but an interesting way in to that space. So we feel relatively good about it. It's not a huge business for us, but it's one that we’re going to continue to be in.

And the next one comes from Tuna Amobi with S&P Capital IQ. Please proceed.

I have got two as well, so first for Jay, in the context of capital return and specifically share buyback, so I'm wondering given the average price that you bought back your shares so far and the current trading price of your shares by my calculation is more like 38, 39% above your share buyback average repurchase price. So, I’m wondering, (inaudible) on your parameters for kind of these open market purchase season, at what point do you kind of feel that some of this capital maybe better put to use somewhere else potentially M&A opportunities and stuff like that. So, I’m just trying to understand where do you kind of draw the line and say that it doesn't seem like the best use of capital.

We obviously we want to be cognizant of our intrinsic value and be sure that we believe that far in excess of the market price and we think we’ve got a lot of room. We are not worried about bumping up against that. If you look at the history of this, it's probably wise for a company to leave a little gap between their intrinsic value and the price at which they are willing to purchase because of inefficiencies in the market. But we’re not up against that, we’re not bumping against it. We are very happy with the concept and allocation of capital to this activity and we don't think it eclipses other fantastic growth opportunities for the company. If you look over the last five years, we have allocated 60 to 65% of the cash generated by the company to the incredible products that you see coming forth, and you know whether it's Avengers, whether it's theme park product, cruise ships, these are the kinds of things that we know we can get higher returns on and we will continue to seek those out. History of our company has been growth through acquisition. If you look at the acquisitions we’ve made from Marvel and back, Playdom and the others, we feel very, very strong about the returns in that. We allocate we think the right amount of money to invest in our television networks. The Disney Channel is proof of that. Some of the great series you see coming out of ABC last year and I hope again this year. We’ll show that this is first and foremost what we want to do, but it does leave us the opportunity to return capital to shareholders and we are determined to allocate a sizable portion of the cash we generate through that. If you look over the last the last few years it's been 20 to 25%. No reason to think differently about that.

Separately, it seems like DCA has been off to a great start given the stats that Bob had given early, I'm just going to trying to reconcile that to the forward pacing that Jay provided? I know it's kind of not the main driver but I was expecting that maybe that could have started to have to have a little bit more impact overall on the attendance and the bookings and whatnot. So, if you can maybe break that out a little further for us in terms of how much of those forward pacing is actually been driven by DCA which I’d expect would be above average in terms of the numbers you gave.

Jay gave forward pacing on our bookings, hotel bookings. As you know, we have three hotels at Disney Land Resort, I'll compare with many, many rooms in Orlando. So, it's relatively small in the scheme of things, but pacing of bookies for the California resorts substantial ahead of the pacing for the Florida resort that they would be substantially more volume and it's being driven we believe completely by the investment we made a California Adventure not that Disneyland isn't still driving attendance, still very, very high quality experience. The numbers that we see at California Adventure are extremely impressive. I mentioned one which is about 50% of the attendance of total resort is now going to California Adventure up from 25%. The guest satisfaction level is huge particularly on the major attraction, where I think the people who are riding the primary attraction they were 100% intent on riding it again. We have huge satisfaction and higher spending on merchandise and food and beverage as well and we raised our ticket prices. So, it all is very, very good news and bodes well for the future.

And our last question comes from the line of John Janedis with UBS. Please proceed.

Bob, you've been little more aggressive on YouTube relative to some of your peers. How do you view that platform over the longer term, is it more of a branding opportunity for you or do you see that as having the EBITDA potential to be a meaningful contributor to revenue and so how big is that investments over time?

We definitely see it is more than a branding opportunity. The agreement that we have with them for basically the Disney brand at our kids-oriented channel is the following. We put basically YouTube curated by Disney on Disney.com. That will be even more evident when we relaunch Disney.com later this year and we sell that advertising and then we curate the channel on the YouTube platform and we share that revenue with YouTube. So we think that given some of the number that we’ve seen through the basically the beta that we have launched already that is an opportunity to increase consumption, increase revenue from that and also use it to drive more users to Disney.com and to increase the value as a marketing platform. So it has multiple effects and we’ve not been specific about the nature of the investment but it is modest.

Maybe one for Jay quickly, Jay you talked about South America and Europe. Has there been any change in length of stay from your international guest?

Not appreciable, no.

Thanks again everyone for joining us today. Please 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 also remind you that certain statements on this conference 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 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 call. Thanks everyone for joining us.

Ladies and gentlemen, we thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a good day.