Welcome to the Quarter Three 2016 Walt Disney Company Earnings Conference Call. My name is Katy, 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. And I will now turn the call over to Lowell Singer, Senior Vice President of Investor Relations. Please go ahead, sir.

Good afternoon, and welcome to The Walt Disney Co.'s Third Quarter 2016 Earnings Call. We issued two press releases about 45 minutes ago and they are both available on our website at www.disney.com/investors. Today's call is also being webcast and a recording and a transcript will be available on our website as well. Joining me for today's call are Bob Iger, Disney's Chairman and Chief Executive Officer; and Christine McCarthy, Senior Executive Vice President and Chief Financial Officer. Bob will lead off, followed by Christine, and then, of course, we'll be happy to take your questions. So with that, I'll turn the call over to Bob and we can get started. Robert A. Iger - Chairman & Chief Executive Officer: Thanks, Lowell, and good afternoon, everyone. I'm happy to report that Disney had another strong quarter, with adjusted earnings per share of 12% in Q3 to $1.62. This is our 12th consecutive quarter of double-digit adjusted EPS growth. This quarter's results are continued evidence that The Walt Disney Co.'s asset mix, especially our brands and franchises, is strong, as is our ability to execute in brand-enhancing and value-creating ways. We're thrilled with our performance and energized by the great hand of intellectual property and talent that we currently have. But we are also very focused on challenges and opportunities as the media world continues to evolve and change. As we look at our businesses and the marketplace, two things are clear. The multichannel bundle delivers the most value to us and remains a great value proposition to consumers. Therefore, our top priority is to support it and to do what we can to maintain or enhance its value to customers. We also know that new platforms and new entrance in the digital video space are offering consumers more flexibility in…

Okay. Thanks, Christine. Katy, we are ready for the first question.

Thank you. And our first question comes from Doug Mitchelson from UBS. Please go ahead.

Oh, thanks so much. If I could just ask two. Bob, on BAM Tech you said that you love the business model, at least on CNBC you did. Will you be willing to discuss that in more detail? What about it do you love? Any comments about accretion or dilution from the deal would be helpful as well. And Christine, I just wanted to make sure I didn't miss it. I believe you said that cable network affiliate revenue growth was 3.5% in the quarter. Was that a worldwide number? And if that was a global result, that compares to 1.3% growth in fiscal 2Q. So if you could desegregate the acceleration, that would be helpful. Thank you. Robert A. Iger - Chairman & Chief Executive Officer: Doug, I love the business model because I love the quality of what they've created, largely from a technology perspective. You're looking at an industry-leading platform. And we did a fair amount of due diligence on this, speaking with people who have been clients of their service. And also, we did our own due diligence in the sense that we've been clients of competing services. And we concluded that what they've got is really robust. As we consider that and we look at the marketplace and we look at general growth in Internet-delivered video, particularly live, we think this is a really smart investment for the company. And we really think it's smart strategically because we obviously need this capability to take product like ESPN, Disney and other Disney IP onto similar platforms. So we feel great about that. There is some very slight dilution from this 33% acquisition, however. But we feel really good about the trajectory of this business. Obviously by adding IP from the company, starting with ESPN, we think that it will give it the ability to grow faster than it would have grown on its own. Christine M. McCarthy - Chief Financial Officer & Senior Executive Vice President: Okay. Doug, on cable affiliate revenue growth, you're right that in this quarter it was up 3.5%. And also that would have been up one percentage point higher if it were not for the negative FX impact. You're correct that in the second quarter, it was 1.2%. And I wouldn't read too much into the quarter-by-quarter shifts in it. But the 3.5% is the right number for this quarter.

All right. Thank you both.

Thank you Doug. Katy, next question, please.

And our next question comes from Alexia Quadrani from JPMorgan. Please go ahead.

Thank you. Just two questions if I can. First, with two of the bigger kind of streaming platforms launching over the next sort of six or so months with DTV and Hulu, and Disney's presence in both those packages, Bob, do you think this could become the delta that investors maybe are looking toward or are worried about in terms of creating a more notable shift away from linear TV or the traditional bundle? And if so, sort of how does it impact Disney's strategy or business at all? And then I just have a follow-up on the Parks business, which is continuing to be so strong and so impressive. I guess any commentary or feedback on how the dynamic pricing that you rolled out earlier this year may be favorably impacting those results. Robert A. Iger - Chairman & Chief Executive Officer: Alexia, we know from what we've seen particularly in the last year, that the inclusion of Disney product, particularly ESPN, on these OTT services is quite meaningful. Sony certainly had that experience when it launched Sony Vue without ESPN. And then it included it later after the launch. And it saw its subs go up substantially. So clearly, we believe that by putting our product on these platforms, the platforms stand a chance of growing faster than they would have without it. Whether it will result, I guess, in a huge shift, I don't know. I think the consumer is largely going to dictate that, but I think it's important to point out that by us being on these platforms at prices that make sense to us, we're really quite neutral in terms of shifting from a traditional MVPD consumer to an over-the-top consumer. Meaning, the pricing of our networks is similar on the over-the-top networks than…

Thank you.

Alexia, thanks a lot for the questions. Operator, next question, please?

Our next question comes from Michael Nathanson from MoffettNathanson. Please go ahead.

Thanks. I have two. One for Bob, one for Christine. Bob, on the announcement of Major League Baseball, you've said in the press release that the content will not be the same as a linear feed in ESPN. So can you give me an example of what type of content we're talking about? And will you launch the service globally at some point? Robert A. Iger - Chairman & Chief Executive Officer: The goal is to launch the ESPN-branded service probably by the end of the year, but we're not saying specifically what date it will launch. It will include content that BAM Tech has already licensed for Major League Baseball and the National Hockey League, and we will add content that ESPN has licensed like college sports, football and basketball, tennis, rugby, cricket, et cetera. The goal is not to take product off ESPN's current channels but to use sports and product that ESPN has already licensed that's not appearing on the channels. And so we view this as a complementary service to what ESPN is already providing as part of their multichannel package. Obviously in an over-the-top, direct-to-consumer fashion. In terms of the international rollout, I don't think we've gotten that specific nor have we gotten specific about pricing. But I think what you can – you'll see over time is that we're going to create a form of dynamic pricing or pricing that is determined in part by the consumer which – where the consumer actually has a voice in the nature of the package that they buy. There'll be so much product on that you can buy the whole thing or you can buy parts of the whole, and that obviously will have an impact on pricing. And we feel really good about this as a complementary product to what ESPN has, and we feel great about the fact that it will be ESPN-branded.

Okay. Thanks. And then for Christine, as you mentioned you signed a new deal with DirecTV for an over-the-top offering. Do those deals and the deals you do with Dish together somehow open up negotiations on the linear side? So is there potentially a change in the step-function of the linear relationship once you see the OTT launch announced? Robert A. Iger - Chairman & Chief Executive Officer: I think it probably will have an impact on the linear negotiations over time. One thing we should add is that a component of this deal is to provide AT&T Direct with in-season stacking of all episodes of our network shows, which I guess is in the form of change or amendment to the existing deal. We've actually done a similar deal recently with Comcast that I think has been maybe reported on but we haven't been specific or announced. So that basically means that two of the largest MVPDs, AT&T Direct and Comcast, will now have access to in-season stacking of all episodes of our shows. And that's obviously designed to strengthen the traditional MVPD package, and on the DirecTV AT&T side was a result of essentially a new negotiation for this OTT service.

Okay. Thanks, Bob.

Thanks, Michael. Operator, next question, please.

Our next question comes from Omar Sheikh from Credit Suisse. Please go ahead. Omar Sheikh - Credit Suisse Securities (USA) LLC (Broker): Good evening, everyone. Just a couple of questions. First of all, Bob, you've now got a few options on the over-the-top front. You've got the new investment in BAM Tech. You've got Hulu. Obviously, last year, you announced DisneyLife. You've got these new third-party arrangements. I wonder if you could just maybe help us understand how you prioritize where you put content, whether it's from ESPN or from the cable nets or from ABC. It would be helpful to get your thoughts on that. And then secondly, I wonder if you have any details on the succession, whether there's anything you'd like to share with us on timing or on thoughts on that front. Thanks. Robert A. Iger - Chairman & Chief Executive Officer: The prioritization on where we put content is all driven by monetization. And where we monetize, where we can monetize the most is where the content will go. And right now, the reason the MVPD, multichannel MVPD product, is the priority is that's where we're monetizing the most. And by the way, the same thing is true with other types of products, like our movie output deal with Netflix, for instance, and some of the other sales that we've made, the Netflix, with Hulu, Amazon, other distributors. What will be interesting is long-term, to what extent do we hold back product to put on services that are ours that we're selling direct to consumer versus third-party distributors, but it's really premature to get into all of that because right now, we've got kind of a best of all worlds in the sense that we're monetizing really well on multiple platforms from multiple parties. And we're starting to move some product in the direct-to-consumer fashion, like what we're doing in the U.K. with DisneyLife, which again is a complimentary service to other subscriptions. In U.K.'s case, the Sky would be the best example of that, where the product that is on DisneyLife is complimentary, in a way, to what is on Sky and does not really rob or deprive Sky of product because we're monetizing so much better from Sky. I have nothing really new to add on the succession front except that we have a really strong Disney board. They are very focused on the subject of succession and committed to it. They have an ongoing process and we're all confident that it will result in a good decision for the Walt Disney Co. and its shareholders long-term. Omar Sheikh - Credit Suisse Securities (USA) LLC (Broker): Okay. Thank you very much.

Omar, thank you. Katy, next question, please.

Our next question comes from Jessica Reif Cohen from Bank of America Merrill Lynch. Please go ahead.

Thanks. On these OTT platforms, could you talk about the advertising opportunity? And also, will it be the same ad loads, the same sales force? And I guess on the affiliate fee side, when Bob used a similar pricing, are the whole suite of channels included so that your total affiliate fee is similar? Robert A. Iger - Chairman & Chief Executive Officer: On the advertising front, we use the same sales force. We've been doing that for a while. So particularly in ESPN's case, all of its digital advertising is sold by the same team. In fact, a lot of the advertising buys are across platforms, if not all of them, at ESPN. There are opportunities that will be new to us on the OTT platforms because some of the technology platforms will offer dynamic ad insertion. And we think that that's got some real potential for the company. And that is a component of the DirecTV Now relationship. And in terms of the ad load, I think there probably will be some – it will be variability. But in live sports, the ad load will basically be the same. Was there another part of that question that I missed?

It was about the affiliate fee. And then just one other question on advertising. Christine said that scatter is 30% above the upfront. I'm just wondering, is it the 2015 upfront or you're referring to a 2016? Robert A. Iger - Chairman & Chief Executive Officer: On the affiliate fee, the per-channel fees – which we're not getting too specific about – are commensurate with what the fees are on the existing services. So it's essentially neutral to us in terms of migration. And the new service will take 100% of our core channels. Not 100% of our channels but of our core channels. And we won't get much more specific than that at this point. But the key channels, particularly at ESPN, will be distributed by DirecTV Now, as well as Disney Channel and Freeform and ABC, et cetera. Christine M. McCarthy - Chief Financial Officer & Senior Executive Vice President: And, Jessica, that scatter pricing of over 30% is above the upfront of last year.

Okay. Thank you.

Jessica, thank you. Operator, next question, please.

Our next question comes from Anthony DiClemente from Nomura. Please go ahead.

Thank you very much for taking my questions. So on the BAM Tech investment, I think the question that most people have would be, does the new investment here require incremental investments in sports rights? So it sounds like the answer is no, because it's leveraging existing rights that BAM has and that ESPN has. But I just want to make sure that I'm as clear as possible on that. Maybe by way of one example, the ACC deal that you talked about in the prepared remarks, the deal that ESPN just signed – will ESPN be able to make available any of that ACC content? For example, in the over-the-top direct-to-consumer BAM Tech ESPN platform? Or are those rights at least partially or entirely tied to the linear ESPN, where you would need go back and ask the ACC for the digital rights, therefore needing to incrementally invest in the rights to put it on the new platform? I hope that's clear. And... Robert A. Iger - Chairman & Chief Executive Officer: Well – go ahead.

Well, so – go ahead. And then I hopefully have a follow-up. But that's the crux of the question here is, will Disney ESPN need to incrementally invest in digital sports rights from here? Robert A. Iger - Chairman & Chief Executive Officer: Anthony, it's a really good question. The answer is no, that we have purchased a lot of rights. We won't get specific about exactly what they are. But we have a lot of rights that are already purchased to put product on this platform. And BAM has licensed a significant amount of rights as well. So we'll be able to launch this service without adding any additional costs to purchase new rights. What specific rights will be on – you mentioned ACC – we're not going to get into details. Obviously we're going to be launching an ACC channel and a platform. And we're going to be mindful of the product that we put on that as we go to the distribution world and seek distribution for that. I will say that long-term, there may be an opportunity to purchase additional rights to put onto this service. Because the technology is so robust that we actually believe that it does enable us to potentially expand our sports offering, which is something long-term down the road we will consider. But from a near-term – on a near-term basis, don't expect there's any incremental costs associated with rights acquisition.

Okay. Robert A. Iger - Chairman & Chief Executive Officer: In order to service this platform.

Okay, Bob. Thanks. And one follow-up, please. In terms of your response to Michael Nathanson's earlier question, you referred to amendments to the AT&T DirecTV affiliate agreement and the Comcast agreement in terms of new stacking rights or VOD rights that Disney's provided to those MVPDs. The question is, do those or do those amendments have any impact on the trajectory of the cable networks' affiliate fee growth? So the 3.5% or adjusted 4.5% growth that Christine mentioned. So from here, do those amendments change the shape or the trajectory of cable networks affiliate fee growth? Thank you. Robert A. Iger - Chairman & Chief Executive Officer: No, I wouldn't say that they will, except there was consideration for the rights that we're bestowing. But I won't get into details about what that consideration was. But don't expect it's going to have a meaningful impact on cable fee increases. Where it could have an impact is if it enables the MVPDs to retain subs more effectively. Then I think that's to be considered a real positive. But the rights weren't just given away, but there are other considerations.

Okay. Thanks, Bob. Robert A. Iger - Chairman & Chief Executive Officer: Make sense?

Yep. Thanks.

Okay. Anthony, thank you. Operator, next question, please.

Our next question comes from Todd Juenger from Sanford Bernstein. Please go ahead. Todd Juenger - Sanford C. Bernstein & Co. LLC: Oh, hi. Thanks for taken mine. Quick one for Christine. I hope it's quick, and then maybe a more broad one for Bob. Christine I'm hoping you might just be willing to help us with a little more of the ins and outs on the cable network revenue. I've got the affiliate fee. I won't press you on that any further. I don't think I heard a cable advertising number from you. Forgive me if you said it and I missed it. And then I know there's an offset it looks like from programming sales on the Kids and Freeform side. So any comment on those two items and how they all come together would be helpful. Bob, I'll just give you my other one while I've got you and then I'll shut up. Thinking about all of the what's going on in your sports universe. Would love to hear how you think about the tradeoff between launching more and more – like you said, there's so much product out there, so much good content out there, various people have interest in. How do you think about the tradeoff of launching and proliferating more and more specific type services? The ACC, the SEC, this over-the-top one? Versus keeping the power of the flagship mainstay network? And basically the tradeoff between making everybody want everything and the risk that you finally give people the specific things they want and maybe in overall you end up with less, if you know what I mean. Would love to hear your just thoughts how you do that balance. Thank you both. Christine M. McCarthy - Chief Financial Officer & Senior Executive Vice…

All right. Operator, next question, please.

Our next question comes from Ben Swinburne from Morgan Stanley. Please go ahead. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Thank you. One for Bob and one for Christine, as well. Bob, just taking the other side of the sports rights analysis that you guys did, you've walked away from deals in the past. I'm thinking about NASCAR and others. And there's some press reports that maybe you're downsizing your Big Ten deal. How are you thinking about balancing rights and sort of the benefits of fragmentation you just talked about with the escalating costs and competition for those rights? Well, I don't know if you'll comment on Big Ten specifically or not. But maybe just at a high level as we think about rights fees growth over time. And then just shifting to the parks, Christine, I think the release suggests that the domestic OpEx was down year-on-year in the quarter, or at least labor and marketings, some common site infrastructure? Can you just help us put that into context, sort of what's driving that? How sustainable it is. Any one-time events in there we should be thinking about? Thank you. Robert A. Iger - Chairman & Chief Executive Officer: You want to take the second part first? Christine M. McCarthy - Chief Financial Officer & Senior Executive Vice President: Sure. In the parks this quarter, as I mentioned also in the comments, that they did have some cost-control measures, some cost initiatives. And that flowed through in their operating line. Robert A. Iger - Chairman & Chief Executive Officer: And to cover your question, Ben, about sports rights in general and things that we passed on in the Big Ten, we won't get too specific about the Big Ten except to say we're hopeful that we will continue a relationship with them. We look at ESPN as a whole and their menu of sports product, and we've tried hard to extend relationships with sports that are delivering great value to ESPN and that will continue to, and in some cases, we really believe have growth potential. The new NBA deal that kicks in, we feel great about, even though there's a substantial increase in rights from the last year of the old deal to the first year of the new. We're expanding our rights package with the NBA and we believe that it's still a sport that's on the rise in terms of popularity. Because live sports is very attractive to distributors, to advertisers, to consumers, we don't really see the costs abating. There's just a lot of competition for it. There's a lot of demand for the quality that sports represents. And we know that we can't buy everything, so we've made some tough decisions, but we can't look you in the eye and say that costs are going to go down because still among the most valuable product that's out there. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Thank you.

Operator, next question, please?

And our next question comes from Jason Bazinet from Citigroup. Please go ahead.

Thanks. Just a question for Mr. Iger. Regarding BAM Tech, in the release it talks about your option to increase your stake over time in the coming years. And I was just wondering if you could comment qualitatively about what are the factors that you'll be looking for in terms of whether you decide to scale up your position? Is it the technical capability of the platform? Is it the financial metrics this entity will generate? Is it the evolution of the OTT marketplace or at large? Just any color. Robert A. Iger - Chairman & Chief Executive Officer: I think – probably be a number of factors, maybe all of them that you mentioned. We feel great about where they are technically, by the way. We think – we feel great about the potential, and I don't want to say that our purchase of a controlling stake is inevitable, but we wanted to maintain the option to do that, sort of a bit of a walk before we run. Although admittedly, we're walking very fast initially with the size of this investment and the collaboration that we're going – that will result in between us and the BAM Tech team. But we just wanted to get a sense for where the business is going and what the scope or scale of this is. It also gives BAM a chance to monetize the remaining stake that we might buy at a level that's commensurate with the value at the time that we make the purchase.

Understood. Thank you.

Jason, thank you. Katy, next question, please?

Our next question comes from Bryan Kraft from Deutsche Bank. Please go ahead.

Hi. I wanted to ask about foreign currency and also consumer products. Christine, how should we think about the impact of foreign currency going forward given where spot rates are and the hedges that you have in place? And then – excuse me – on the Consumer Product side, I guess I was a little surprised to see it down two quarters in a row. Should we expect Frozen to continue to drive tough comps for several more quarters, or is this something that has worked its way through the system now? And – excuse me – you've created and refreshed so much IP over the past year. Is any of that going to, do you think, become a new emerging growth driver as we go forward? Thank you. Christine M. McCarthy - Chief Financial Officer & Senior Executive Vice President: Okay. So on foreign exchange, Bryan, we had the estimated year-over-year impact for fiscal 2016 at $500 million and that is still a good number. So, looking – and you're probably referring to the impact of Brexit and did that have any significant impact either on 2016 or looking forward – on 2016 it did not, because we were 100% hedged for the year. So changes during this year did not impact our foreign currency exposure. And when Brexit occurred, we were already 85% hedged for fiscal 2017. So the impact from those currency shifts post-Brexit were very muted for us. On DCP, I think it's fair to assume that the difficult Frozen comps will continue. As you know, that was a tremendous piece of IP for us and it was very, very successful in our consumer products division. So those comps will continue to be difficult on a quarterly basis. Robert A. Iger - Chairman & Chief Executive…

Okay. Great. Thank you.

Okay, Bryan. Thanks. Operator, next question, please.

Our next question comes from Tim Nollen from Macquarie. Please go ahead. Tim Nollen - Macquarie Capital (USA), Inc.: Thank you. Couple of things, please. I wanted to ask another question on BAM Tech, which is actually if you could give us a little bit of color on how that business does on its own. Bob, you mentioned it might be slightly dilutive. I wonder if that's given its relatively low margin or borrowing costs to finance the deal, what that might be. But anything you can tell us on how BAM Tech's business on its own is going. And then actually another question on Shanghai, which I guess excluding BAM Tech might have been the story of the quarter. Curious if you could tell us a bit more about your visitation there. Is it mostly local Chinese visitors, as you had said it would be? Or if there's any – can you talk about the mix in terms of other visitors from the region? And then also about anything might give us help on per-cap spending there versus your other parks would be interesting to hear. Thanks. Robert A. Iger - Chairman & Chief Executive Officer: Okay. We're not going to get specific about BAM Tech. We said it's going to be dilutive but very – in a very modest way. And it's obviously not been a public company, but we're just not going to get specific about that. I can tell you a fair amount about Shanghai, although not going to give you too many numbers. We expected in opening that a large part of the visitation would come from Shanghai, and actually we've been surprised that the visitation from the rest of China has been as strong as it has been, because our concentration from a marketing…

All right. Thanks for the question. Operator, we have time for one more question, please.

Our next question comes from Dan Salmon from BMO Capital Markets. Please go ahead.

Hey. Good afternoon, everyone. Two questions, maybe one for Bob, one for Christine. Bob, just to take a step back from the OTT world for a moment, Dish last week unveiled a new service offering that they're calling a skinny bundle that did not include ESPN in the core package. I'd be interested just to hear your thoughts on that. And then second for Christine, Parks and Resorts CapEx eased off really nicely this quarter. Obviously we're getting past Shanghai. Just curious to hear are we starting to get to the point where we're coming down? Or do we see some upticks from some of the other domestic projects that are starting to get underway? Robert A. Iger - Chairman & Chief Executive Officer: That new Sling product is pretty skinny. I was going to say so skinny you can't even see it. But I mentioned earlier on the call that a few new products have entered the marketplace without us, namely without ESPN. Sony was one. And had real troubles getting off the ground. And in Sony's case, when ESPN was added they had a significant uptick in their subs. So I don't want to suggest that Sling has to have ESPN. They'll determine that. But as we look at the product that they're offering, we really don't believe that it's going to have – it has a great future, because it's lacking some of the most attractive channels that are out there. You can slice and dice some of these channels, but – to create packages, but if you don't have some of the best ones, it's pretty hard to see significant adoption of the service that's being offered. Christine M. McCarthy - Chief Financial Officer & Senior Executive Vice President: Okay. On Parks CapEx, you're right in…

Okay, Bob. Thanks. I guess I now get to read the Safe Harbor. So thanks again, everyone, for joining us today. Note that a reconciliation of non-GAAP measures that were discussed 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 call may constitute forward-looking statements under the Securities laws. We make these statements on the basis of our views and assumptions regarding future events and business performance at the time we make them and we do not undertake any obligation to update these statements. Forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from the results expressed or implied in light of a variety of factors, including factors contained in our Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission. Everyone, thanks for joining us, and have a good rest of the day.

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