Welcome to the Walt Disney Company’s Fourth Quarter Fiscal Year 2014 Earnings Conference Call. My name is Hilda 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 like to turn the call over to Mr. Lowell Singer, Senior Vice President of Investor Relations. Mr. Singer, you may begin.

Good afternoon and welcome to the Walt Disney Company’s fourth quarter 2014 earnings call. Our press release was issued almost 45 minutes ago and is available on our website at www.disney.com/investors. Today’s call is also being webcast and the webcast will also be available on our website. 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 will lead off followed by Jay and then we will of course be happy to take your questions. So with that, let me turn it over to Bob and we will get started.

Thanks, Lowell and good afternoon, everyone. I am happy to announce that fiscal 2014 was the biggest year in the history of the Walt Disney Company with operating income up 21% to over $13 billion and adjusted EPS up 27% to $4.32. We are obviously very pleased with this historic performance and believe it reflects the extraordinary quality of our creative content. It also demonstrates our unique ability to leverage our content across the company and to adapt to emerging consumer trends and technology. Today, I want to focus on our unrivaled content pipeline and its tremendous value in an evolving distribution environment. The accelerated advances in technology have created a new Golden age for content, with more opportunities than ever before to reach people around the world. Our extensive pipeline of branded content from Disney, Pixar, Marvel, Star Wars, ABC and ESPN puts us in a unique position to create significant value in this dynamic era as evidenced by our four consecutive years of record performance. Our studio business has been a tremendous content engine driving opportunity across the company. In fiscal ‘14, the studio achieved record operating income and also released four of the year’s biggest movies, Frozen, Guardians of the Galaxy, Maleficent and Captain America 2. Most are franchise drivers and this focus on creating and growing franchises is even more pronounced in our slate of future releases. The most obvious example of this strategy is Marvel, which has become a strong brand since our 2009 acquisition. The five Marvel movies we have distributed to-date have averaged almost $1 billion in global box office and established two new franchises, The Avengers and Guardians of the Galaxy. Marvel has a brilliant team of storytellers with incredible slate of upcoming movies that create unbelievable potential for our entire company.…

Thanks, Bob and good afternoon, everyone. Fourth quarter earnings per share, excluding items affecting comparability, were $0.89, an increase of 16% over last year and for the fiscal year, earnings per share excluding items affecting comparability, were a record of $4.32 or 27% higher than last year. The financial results we reported in the fourth quarter and the record revenue, net income and earnings per share we posted in fiscal 2014 demonstrate how our strategy of investing in high-quality content can generate attractive financial returns across all of our businesses, while further strengthening our brands and their position in the marketplace. I am going to spend a few minutes discussing our fourth quarter results in more detail and then I will go through some key factors to consider as we look to fiscal 2015. Let’s start with the studio, which had its best year ever with over $1.5 billion in operating income in fiscal 2014. Frozen was the biggest contributor to studio results in the year. However, the record studio performance in 2014 was due to broad-based success across the entire slate. And by the way, the studio’s record financial performance this year was without the release of a Pixar film. Studio operating income more than doubled in the fourth quarter compared to the fourth quarter last year due to strong performance in worldwide theatrical and home entertainment markets. Higher worldwide theatrical results reflected the performance of Guardians of the Galaxy and Maleficent in the fourth quarter compared to the performance of prior year releases. Home entertainment results reflected the strong performance of Frozen. Q4 operating income at media networks was comparable to the fourth quarter last year. Results at cable are comparable to prior year as lower operating income at ESPN was partially offset by higher operating income at…

Alright. Thanks Jay. Operator, we are ready for the first question.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) The first question comes from Todd Juenger from Sanford Bernstein. Please go ahead.

Hi, thanks. Two questions if you don’t mind, both on the same theme, which is around affiliate fees of the cable networks. So Bob you gave a rather impassioned defense and advocation for the value of the bundle as it exists. I know in recent quarters at least in most recent quarter you had a comment around how some trading down to lower bundles or skinnier packages did have – did make the list of things that had hurt affiliate fees at ESPN and I think in the past quarter. I didn’t see that on the list today. So, I just wonder if there is any update on sort of the trends or any more evidence of the growth of people seeking those lower bundles. And then the very quick follow-up if you don’t mind, Jay, I don’t know if you are willing to comment anything specifically on affiliate fees in Q4, just how they paced and any puts and takes on that? Thanks.

We saw, Todd, some modest erosion of the expanded basic bundle, but it wasn’t a driver of earnings the quarter that we just announced. And I did have some bullish comments to make, because if you look at the numbers and you see that 101 million households have some form of multi-channel bundle, it’s still clearly the dominant entertainment or television package in the home. And we think that’s going to continue to this foreseeable future. And while clearly the economy has had some impact over the last few years and we do see the millennials seem to be becoming subscribers a little bit later than perhaps they used to, we just feel that when you look at the quality of what’s offered meaning the number of channels and the programming across those channels and you consider the price that, that is likely to remain dominant for a long time. Jay, you want to…

Yes. And on the cable affiliate revenue growth, Todd, as I said last quarter, we expected to see high single-digit growth in the fourth quarter and in fact domestically we did see that on a high single-digit growth mostly due to contractual rates increases.

Okay, thank you for that color. Thanks.

Todd, you are welcome. Operator, next question please.

Thank you. The next question comes from Michael Nathanson from MoffettNathanson. Please go ahead.

Thanks. I have one for Bob and one for Jay. Bob, last month, the news came out that you are extending your contract for 2 more years. And in the past, when we have asked you about your priorities, you have said that you wanted sort of Shanghai and Star Wars would be successfully opened. So, now that you are staying for a few more years, what other priorities are you going to add to that list of things that you are focused on?

Well, thank you for the question. When I got this job almost 10 years ago, there were three priorities. One was to make great content, high-quality branded content and to put most of our capital in that. Second was to use technology to distribute more broadly to make our company more efficient to get closer to the customer and to innovate, meaning to make our products better through innovation and to create new products. And the third was to grow internationally. And it’s interesting that here I am essentially almost 10 years after becoming CEO and those are still the priorities. We look at the movie slate and you look at Star Wars and you look at Marvel and you look at what we are doing with Disney Animation and Pixar, there is no better example probably in terms of the first priority than that. And of course, Star Wars is something particularly for the first film since we have purchased Lucasfilm. That is the priority. But I talked on an earlier interview about our movie slate. We have great visibility at the studio to our movie slate between now and 2020. I mentioned that over the next 3 years we have got 21 tentpoles versus 13 in the last 3 years. But if you look at the lineup that is not only they have been talked about, but we have actually put into production. We got writers and directors and titles in development, it’s unbelievably strong. And that ability, because you know to – well, the ability of the company has to leverage that across our businesses should drive great growth. So, there is nothing probably greater from a priority perspective than that. Shanghai Disneyland represents our best international growth initiative in a long time and it’s rising from…

Thanks Bob. Let me ask Jay, following on the Shanghai comments, Jay when you look in this fiscal year coming up, what is the impact on Shanghai on the operating expenses on the park side. I know you have been building expenses as you have not opened, but it had operating expenses, so how do you think about that in ’15?

Well, Michael you know at the outset, when we announced the building of this park. We said there would be $300 million to $400 million of expenses that were part of that overall spend and that tends to be very back loaded because a lot of those expenses are the hiring, training and pre-opening rehearsals if you will before we start taking in revenue for the park. So they are very back-loaded and we also believe that when we announced the opening date, we will have a better fix on exactly how those numbers will affect fiscal ’15. But you should assume that they will be pretty significant. But the good news is, is that as MyMagic+ ramps up in terms of overall new initiatives, we hope that the benefits from that project will actually offset if you are looking at the segment as a whole, the incremental costs that we are going to take on for Shanghai Disneyland. So, I don’t think on balance, they are going to be a huge driver in your model for park returns for the year.

Okay. Thanks Jay.

Yes. Thank you, Michael. Operator, next question please.

Thank you. Our next question comes from Alexia Quadrani from JPMorgan.

Thank you. With so many great brands gaining momentum here that we are seeing, like how should we think about the consumer products business long-term and specifically how much of a positive influence might the opening of Shanghai Disney have on the growth opportunities in consumer products in China?

Well, I don’t think that the opening of Shanghai Disney will have an appreciable impact on consumer products in China. What’s having the best impact and what will continue to have strong impact on consumer products in China is the movie business, as you know China has become among the largest movie markets in the world. I think it’s second. It probably will be for sometime in the next five years. They continue to open screens at an unbelievable pace. Our films have done extremely well in China. Particularly the films that drive success to consumer products are retail – Disney and Pixar, Marvel. We believe Star Wars will do the same thing that. So we are quite excited about that. If you look at consumer products overall their growth in the last three years has been stunning, it’s actually been over 20% over the last three years, which I think has gone largely unappreciated and unrecognized. The movies that we have been talking about the more successful ones this past year of course led by Frozen, with the Marvel Films Captain America, Guardians of the Galaxy, Maleficent are all drivers of the consumer products business. The Marvel slate that we just announced, what we talked about was Star Wars they will be as well. But then we have other creative content engines of the company that are also helping consumer products Disney Junior is another example of that, when you look at Doc McStuffins and a variety of other products coming out of the Disney channel organization. So, consumer products right now, has a wealth of properties or intellectual property to mine across the board meaning in so many categories. And I just asked the other day our head of consumer products what the outlook is for Christmas season. And he said that our stores in the United States and Japan and Europe – I emphasize Europe, because everybody has been talking about the woes of the European economy. But even our European stores are comping up significantly over a year ago. And buying at mass retail across the globe for our consumer products is also extremely strong going to the holiday season. And I think they have done a great job of mining our IP and creating some of their own. And we are going to look to continued growth from that unit over the next 3 to 5 years.

Thank you. And just a quick follow-up for Jay if I can I think this time last year Jay you gave us some range for buyback going into the year I guess is there anyway you can sort of give us some sense of how we could expect the buyback to be in fiscal ’15?

Well, I am not going to – I am not going to make you happy with my answer, because I am really not going to give you any guidance into what the level of buyback would be. But I will remind you of this, we have said that over the long run we look towards about 20% of the cash generated by the company being a return to shareholders in the form of dividends and buybacks. We have been very much on track with that. You know what the numbers have looked like over the last 3 years that have been in that range between $3 billion and this year’s $6.5 billion on an annual basis. You saw that we opportunistically given what happened in the marketplace, we opportunistically took a big buyback in so far this fiscal quarter, I would not look to that number for guidance on what the whole year would look like in terms of the pace. But obviously we will – we meet the board on this subject. That meeting is coming up and we haven’t – we have neither made a decision as to what the level will be yet nor am I inclined to announce that, but as I said part of our fundamental philosophy has been to use that vehicle on an opportunistic basis to return capital to the shareholders.

Thank you.

Thanks, Alexia. Operator, next question please.

Thank you. The next question comes from David Bank from RBC Capital Markets.

Hey, thanks very much. Two questions. I guess the first one for Jay. Jay, can you talk about the progress or the – I guess the progress on Maker. Now, it’s been part of the portfolio for 6 months or sooner or a little more than that, how are you tracking kind of the earn-out progress and how are you using the Maker audience? Are you directing it to other audiences within the Disney portfolio? How are you monetizing it beyond just the impressions on Maker? And then second question, I know you can’t give us guidance on the studio earnings run-rate that I always ask for, but when you think about – you have such great visibility into the film slate for the next 5 years. When you think about what those films cost, from the past couple of years and what the P&A spend has been both negative cost of P&A, do the expense profiles of the upcoming slate look pretty similar to the ones that we have just had. So, would the profitability per film tend to be about the same on average? Thanks very much.

Okay, thanks David. Let me start with Maker. So, as you know, we don’t report Maker’s financials and I am going to get into details there, but I can tell you from a progress report perspective, it is notable how well integrated Maker’s efforts have been across all of the segments of the company. They have engaged with every segment of the company and are beginning to mind the opportunities that each of those seconds have whether it’s IP, whether it’s better distribution, whether it’s taking content and envisioning short form applications of that content. They have also really put their shoulders to the wheel on the marketing front. And I think that Guardians of the Galaxy and the fact that they are way out ahead of it in their space was a perfect example of the kind of marketing that you can have on distribution vehicles like maker.tv and YouTube, which are ubiquitous and really target the audience for a lot of our films. So, I think that so far we are extremely pleased with how integrated they have become into all of the thinking around the use of the platform that they are so predominant in and how their skill base both on the analytics side and as well as the content side in terms of short form, is showing real promise moving forward. So, stay tuned there and I think you will see a lot more. On the studio side, in terms of I guess the ultimately what was your question, do we envision that the kinds of films that we announced from an expense perspective and ultimately I guess I would like to lean towards the P&L and return perspective, will they look like the incredible successes we have had with these franchise films in the past? And I think the answer is yes, that we do see a similar cost profile in terms of both the negative cost and the likely range of P&A, but more importantly, when these films hit their ultimates, with every part company whether it is spin-off of work in other divisions, whether it’s consumer products, the rates of returns on these films are staggering as you can imagine. And that’s why we are in the much more limited slate dedicated to franchise and branded films business that we are in, because we like the way the economic profile looks and we like the kinds of returns they deliver.

That’s exactly what I was looking for. Thank you.

David, thank you for the question. Operator, next question please.

Thank you. The next question comes from Jessica Reif Cohen from Bank of America/Merrill Lynch. Jessica Reif Cohen - Bank of America/Merrill Lynch: Thanks. I have two questions. I was hoping you could comment on some of the impact of some of the bigger global issues like the strong dollar, lower gas prices on your parks and if you could on your other businesses? And then secondly, you haven’t gotten the advertising question yet. So, clearly, if you have listened to any of the other video company calls, there is tons of concern about what’s going on, how much is cyclical, how much is secular? But you probably actually are enjoying a very solid advertising. So, I’d love to get your views of not only the current marketplace, but how you see share shifts in different evolving models?

I will take the advertising question. Jay can answer the other part of your question, Jessica. And I will break it down between the ESPN and ABC, although I think they both are experiencing a marketplace that has similar characteristics. First of all, from the secular cyclical question or angle, I’d say there is no question that some money has siphoned out of traditional media and on to digital platforms. We know that, because we have taken advantage of it with our digital presence. We also know it, because we are an advertiser and a substantial component of our advertising buys, particularly the studio and our theme parks is digital. Even though by the way, there is still a little less data than we would like to back that up, but digital has become a large component of most advertising campaigns or a component. And that came from somewhere. That said there is still huge value in the 30-second spot, which we are seeing particularly when the spot runs in high-quality programming. The other thing that I think is the dynamic that I have heard both from our sales people, but also from the advertising community in general is that many advertisers are now resorting to far more surgical approaches to developing their media campaigns in their buys than ever before and there are sophisticated procurement procedures in place behind that. So, I have heard complaints from an advertising executive fairly recently that all of his clients are using procurement officers. We have seen that too in terms of selling ads and that’s changed the buying patterns a little bit. The other thing I will add on the secular side is the marketplace right now is I will call it out mildly off or soft. On the ESPN front, we are not really declaring that a trend. We have a very, very strong upfront at ESPN and we have properties on ESPN that are selling extremely well, notably the NBA, College Football leading into the college playoffs, which is a really hot property. So, our outlook for the advertising marketplace from ESPN’s perspective for the year is actually not bad. On the ABC front, similar story and that the marketplace today has scattered not great, but when you have Scandal and other returning shows on ABC and you have hot new shows in Blackish and How to Get Away with Murder, you have got really high-quality shows, including by the way, Good Morning America, which has done extremely well in the ratings, now World News Tonight, which is doing quite well. Our sales team has a lot of good product to sell. And so when you ask them their outlook, it’s actually not that bad. Jessica Reif Cohen - Bank of America/Merrill Lynch: Right.

Jay, you want to?

Yes. On – let me take your question, Jessica in two parts. First, oil prices, we have over the years been asked a lot of questions about oil prices. And I can tell you that it other than an indicator of overall economic activity, oil prices per se have never been a real driver for our business either on the upside or the downside. So, I don’t expect there to be big movement, particularly in our parks and resorts business, where that people tend to believe that, that would be very relevant. I don’t expect that to be a driver as it’s never been before on much more dire situations. In terms of the strength of the dollar, obviously I mentioned in my prepared remarks that we have an FX impact coming up. We have also had one this year, it was part of the reason for instance that parks – international parks was down due to the weakness of the yen. Obviously we took the Venezuela devaluation this past year below line. And we expect to see a not gigantic but an impact from basically the conversion of our business – our foreign businesses into dollars. If you look on the other hand relative to the impact of the stronger dollar on our parks business this year – this quarter we happened to be kind of at the high end of the range that I usually talk about in terms of percent of international attendance at our parks, which tends to be between 18% and 22%. We are at the very high end of that. So I would say that that has not yet affected individual consumption. There are lots of other things that drive that that are more economically driven, I think than exchange rates. So we will stay tuned, but I – we don’t see any fundamental impacts on our business yet. Jessica Reif Cohen - Bank of America/Merrill Lynch: Thank you.

Thanks Jessica. Operator, next question please.

Your next question comes from Jason Bazinet from Citi.

Thanks. Just a question for Mr. Iger, at the press event that you had when you rolled out your Marvel slate, I had a chance to speak to some of your most avid Marvel fans. And one of the young gentlemen framed three studio acquisitions you have done in the last eight years in an interesting way. It went like this; that Marvel was actually the least risky, because you bought intellectual property and talent; Pixar, you really weren’t buying IP, you were just buying moviemaking talent; but Lucas in a way was actually the most risky because you were just buying intellectual property, but no talent. And so I know that’s somewhat simplistic formulation, but can you just remind us or walk us through the steps that you are taking today to ensure that the Star Wars films are successful in terms of the talent you are putting there?

Well, interesting assessment because I think about Pixar and Marvel that’s largely correct. There was IP too at Pixar in the sense that there were great movies that have been made Nemo and Toy Story and Monsters and Incredibles that had the potential for sequels and today we announced Toy Story 4 as one example of that. And when we bought Pixar we weren’t guaranteeing we are going to make those sequels. We thought with the companies combined there was a better shot of making them and making them well. And I think we have proven certainly that that was true. Marvel came with a brain trust, which is I guess another way to put it to steal a Pixar term of moviemaking talent that was extremely impressive, something that I learned very early on in the exploration process. And so as you said it was a combination of the brand and the storytelling and the affinity for those stories that people had with this great moviemaking talent and a real discipline. We don’t think it was necessarily a no-brainer because there is still a lot of work that goes into it. But we certainly believe that if you are looking at a business that is inherently a risky business because of creativity, we are actually reducing the risk. In Star Wars, there is no stronger IP in terms of the passion that people have for storytelling characters and a brand I think than Star Wars. And we are seeing that already. It’s actually exceeded the expectations that we had when we made the acquisition. We knew with that we couldn’t just essentially say we are making a movie and end up with a great one that there was a lot of care that went into it and we are fortunate to have Kathy Kennedy to manage that process. But we also knew that that IP would attract great moviemaking talent. And J.J. Abrams is a good example of that. Now, there wasn’t a long list of people that wanted to direct Star Wars films because that’s a tall order. There is a lot of pressure on those folks to do so. We are fairly certain they would be long enough and that the talent interested in doing it would be strong enough that we will be in good shape. And we are really pleased that a combination of the writing team J.J., Kathy and everyone else that’s been involved in the creative on the Star Wars film is really delivering which we can’t wait to prove to everybody next December.

Thank you very much.

Jason, thanks for the question. Operator next question please.

Our next question comes from Ben Swinburne from Morgan Stanley.

Thanks. I have two related to ESPN, Bob there were some comments from Time Warner yesterday about the potential for an over-the-top service from ESPN including the NBA and how that product might look, but obviously we would love to hear from you what you and the folks at ESPN are thinking about in trying to attack the broadband-only sub base which maybe growing in the U.S. as you put rights together and think about packaging and pricing ESPN over-the-top? And related maybe for Jay, you have guidance of high single-digit OI growth for cable ‘14 through ‘16 and you just did I think 7% reported this year. You said that programming costs would be up teens, so that’s an acceleration. So, I am wondering is that CAGR sort of are we going to see a step down in ‘15 and then a reacceleration in ‘16 to hit that high single-digit number? It would seem that might make sense mathematically given the programming cost comments you made.

Ben, the whole issue of the sustainability of the bundle over-the-top, the impact of new technology is a really interesting one and a tricky one. ESPN has got a few priorities. First of all, buy great product and buy a broad array of rights that gives them the flexibility to essentially exhibit those rights in multiple forms of media, so that they have the ability to essentially adjust or adapt to the changing media universe, thanks to technology. The second thing they want to do is they want to engage more with their consumers. That essentially means be present on new platforms in a robust way and get closer to the consumer. And I said this in an interview earlier too no traditional media company has done a better job at going digital in ESPN. We see that on the bottom line with huge growth in advertising revenue. We see it in numbers – ESPN’s uniques basically off channel are just staggering in terms of their numbers. That said, we also have a priority and that is to do whatever we can to make sure that, that multi-channel bundle is sustainable and valuable and continues to add value to consumers, because it is a more competitive marketplace today than it has ever been. So, we don’t feel a compelling need to take a product to market right now. That is a direct challenge to that multi-channel bundle in part because if the bundle were to break up, which we don’t foresee happening anytime soon, we are very well-positioned to move very quickly to take advantage of, I will call it a broadband-only universe or an a la carte universe because of the strength of the brand, the programming, the rights that we have bought. There is no need to do…

Thank you, Bob.

And Ben, relative to the perspective on the OI at ESPN, I guess I will say this, I am not going to change the guidance that we gave on the Investor Day relative to the compound annual growth rate out through ’16. But as a way of perspective I think it’s worth noting as you think about this but obviously over the next two years, the first year of those we have talked about the step up in costs that we are facing we kind of articulated those in the prepared remarks, but whether it’s NFL or Major League Baseball the costs of the College Playoffs – College Football Playoffs, the SEC those were all step ups in costs that we will see this year which when we look a year from now at fiscal ’16, obviously comping against those you won’t see that as an increase in the relative cost base. So I think maybe that can give you some perspective on how to think about sort of the path to that overall compounded growth guidance.

Thank you, both.

Ben, thank you. Operator, next question please.

Thank you. Our next question comes from John Janedis from Jefferies.

Hi. Thank you. Maybe a related question on advertising and sports it seems like the number of hours of live sports has increased probably appreciably across TV this year and so I am wondering are you sensing any kind of sports fatigue or pricing flexibility in the market from either an advertiser or a ratings perspective?

No we are not – not really ESPN’s line up of sports is fantastic. Actually, I am talking to their sales group about the current marketplace. One of the things they emphasized is the strength of their hand from a programming perspective in a marketplace that I said is at least at the moment not all that great. We do know that live programming has a lot of value to advertisers. And in the ESPN’s case, it’s got a great demo with men. So that’s also quite attractive. So we are not seeing what you described.

Okay. Thanks Bob. Maybe a related question, I think there is something like 33 games in – at the SEC Network, so I know it’s early but can you talk about how you view the network’s performance and to what extent you are seeing some of your traditional ESPN advertisers may be spending on the SEC Network as well?

So far what we have seen and we are not prepared to be public with any numbers, it’s been very, very encouraging both their football game performance and adjunct programming around it. They actually have a great SEC nation show, I think it’s called SEC Nation, which is tremendous and they are doing quite well. I don’t have any facts to address the second part of your question about whether we have cannibalized ourselves from an advertising perspective. I do know that we have moved some games from what would have been on ESPN or ESPN2 on to the SEC Network but that had always been the plan. It’s also nice that this network is launched in the year that the SEC has been even stronger than it is traditional – it has traditionally been and that’s actually – if ever there was a great time to launch this network it’s now.

Alright. Thank you.

Thank you. Operator, next question please.

Thank you. Our next question comes from Anthony DiClemente from Nomura.

Thanks. One for Jay and one for Bob, here you guys on the really constructive commentary on the ad sales outlook for ESPN I was just wondering Jay if maybe you give us given ad pacing, specifically for the December quarter if you have it that would be great. And then I mean there have been a lot of great questions on this call in terms of changing media ecosystem, I thought maybe I would ask about the soft ratings in cable and Bob maybe you guys mentioned that the ratings at ESPN in the quarter that you just reported but more broadly in terms of cable ratings I mean you sit at the top you have a very robust internal research team at Disney, what’s your best explanation for the accelerating, declining ratings over the summer. And if you will which are in your opinion the digital platforms that are taking the biggest share of those eyeballs be it ad supported, subscription video formats or EST formats online? Thanks.

Yes. Hi, Anthony, first let me talk about your question on advertising. So I am going to reiterate a little bit about what Bob said because I want to put it in context. First ESPN had a very strong upfront in terms of both volume and pricing. And we are seeing – he talked about NBA advertising were up like 21% year-on-year in NBA advertising. And the excitement about College Football Playoff series is palpable. I will say though that we are looking at a very late moving market in advertising. I think you have talked to the different media companies. You have heard this over and over that people are committing cash late, which makes it very hard to read what the numbers really are going to wind up for the quarter, but suffice to say that, there is a little bit of softness in the pacings. They are slightly down to the tune, I would call it, low to mid single-digits for ESPN, but I think that we are optimistic that as the quarter comes to its end and those events that I just mentioned take hold that we may feel better about it at the end of the quarter, but right now we are down slightly.

Okay.

On the ratings front, we have seen some ratings erosion. I actually don’t want to jump to too many conclusions, because I don’t think it’s fair to compare a season to a season meaning this year versus last year and all of a sudden declare it a trend. I do know at the Disney Channel, where we have seen some ratings fall off. We have had less original programming, that’s more a timing issue than anything else and we are not concerned about it. In terms of where competition is coming from and where we see, I guess, the competition the greatest. You have to conclude that it’s from all over the place, just it’s a very, very competitive fragmented marketplace that has people consuming media from multiple sources on multiple devices and multiple platforms across the board. And if I were to conclude anything there, it would be that the haves or the better brands with the stronger programming will endure even if they see some erosion. The product that is in danger are the products that is marginal in nature, that is either unbranded or does not have the kind of audience affinity or built-in audience affinity than many of the other channel type. I actually think when you think about the health of the bundle as well, while if the bundle were to fray or break up, everyone would suffer. The ones that will suffer the most are those smaller, less branded, less popular channels. By the way, they are not going to suffer, they are going to disappear. In an a la carte world, they completely disappear. So, interestingly enough what happens in a la carte is much lower choice from traditional platforms or traditional programmers and just even more fragmentation, but everybody talks about diversity and everybody talks about variety and that goes away. It’s that simple. We like our position, because of ABC and Disney and Pixar and Marvel and obviously Lucasfilm and Star Wars, because they are branded and in the world where there is substantially greater choice whether you are looking at movies, whether you are looking at television, whether you are looking at apps, whether you are looking at Internet sites, we think we are fairly well-positioned there, because of the value of those brands.

Thank you very much.

And with that, we will conclude our broadcast day.

Operator, we will take one more question.

Thank you. The next question comes from Tim Nollen from Macquarie.

Hi, thank you very much. I wanted to ask also about advertising and I am particularly interested in your position with ESPN, which is very much obviously about live sports, and then ABC which faces some of the same broadcast issues as its peers. My question is how are you thinking about alternative measurement for these two networks? ESPN being very much about out of home and mobile, ABC being perhaps more about time shifted. I guess, what will it take to fully adapt and commercialize new ratings methodology so that we can start to really finally close the gap between what I think real viewership is, which is not declining that much versus your ability to actually monetize these networks? Thanks.

That’s a very good question. And it describes a very frustrating situation in a way, because we know there is more consumption, but the measurement isn’t there to back it up. And there is some data available, but it doesn’t cum the audience with what’s on the network. And so it’s harder to use, in other words, we were to try to figure out who is watching Scandal on the WATCH app and who is watching Scandal on the network. We get numbers from both, but it wouldn’t necessarily be cum numbers and it could be some all kinds of duplication. So, right now, it is not a particularly positive situation. I don’t know what it’s going to take, except probably significant investment to come up with numbers that really reflect where consumption is today, which I think would be quite important and quite interesting for those that sell advertising time and those that buy advertising time. And I can’t predict when or even if that’s going to happen, but I am assuming at some point the marketplace is going to demand it and it will develop, but it doesn’t seem to be anywhere and it’s not inside at the moment.

Are you saying we need different types of measurement to capture that or is it just simply not being used effectively enough by the industry as a whole?

What I would say, I am not a tremendous expert on this, but my sense is we need a different type of measurement that doesn’t exist today which will take investment.

Okay, thank you.

Thank you, Tim.

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