Disney’s Q4 and fiscal ’05 Earnings Call
NOVEMBER 17, 2005
Disney Speakers:
Bob Iger President and Chief Operating Officer and CEO-Elect, The Walt Disney Company
Tom Staggs Chief Financial Officer, The Walt Disney Company
Moderated by,
Wendy Webb Sr. Vice President, Investor Relations and Shareholder Services, The Walt Disney Company
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Q4 and Fiscal ’05 Earnings Call November 17, 2005
Operator
Good day ladies and gentlemen. Thank you for standing by, and welcome to the Walt Disney Company's fourth quarter 2005 earnings conference call. My name is Carlo, and I will be your coordinator for today's presentation. At this time, all participants are in a listen- only mode. We will be facilitating a question and answer session towards the end of today's prepared remarks. [OPERATOR INSTRUCTIONS]
It is now my pleasure to turn the presentation over to your host for today's conference, Wendy Webb, Senior Vice President of Investor Relations and Shareholder Services. Please proceed.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. Good afternoon and thanks for joining us. On the call with us today are Bob Iger, President and Chief Executive Officer, and Chief Financial Officer, Tom Staggs. Bob will lead off followed by Tom. Then we will open up the call to you for Q&A. We’ll try our best to conclude the call before 5:30 p.m., Eastern Time. So let's get started. Bob?
Bob Iger - Walt Disney - President, CEO
Thanks, Wendy. I'm pleased to report that we achieved our goal of delivering double-digit EPS growth for the year, despite the challenges we faced in the studio in the fourth quarter. Our continued strong performance this year reflects how well-positioned the Company is for the future.
I've been in my new role at Disney for just under two months, and during this time have been listening with great interest to the debate among various constituencies, about old media versus new media. What this debate highlights, is the simple fact that the world is changing, due in large part to advances in digital technology that have led to an explosion in media, resulting in increases in content, distribution, and communication. This is a global phenomenon, as we are seeing the growth of mass media infrastructure in both developed and emerging markets.
Competition for the consumer remains fierce, as consumers with a limited amount of leisure time have significantly greater choice. Distribution methods and new more sophisticated consumer electronics devices are multiplying, offering consumers far more flexibility, customization, and control over how, when, and where they consume content.
With this dynamic in mind, we established three strategic priorities to meet the challenges of this era, to best position Disney to reach our goal of delivering long-term growth, and increased shareholder value. And they are once again, driving creativity and innovation, applying technology, and global expansion. I would like to reinforce them, as they tie closely to our current performance, and will continue to serve as our roadmap for the future.
Nothing is more important to us than creativity. It's central to our growth over the long-term. Great creative content, whether a TV series, movie or theme park attraction is powering us today, and will continue to drive us into the future. It is essential that our creative efforts remain vibrant, relevant, and to a large extent branded, most notably Disney and ESPN, as we believe demand for branded content will grow in a universe of choice. To that end, all of us are extremely pleased with the early results of feature animation's first all CGI film, 'Chicken Little.'
However, we recognize that this early success is only a first step. Animation is, and will remain, at the heart and soul of Disney. It provides the basis for cultivating enduring characters and franchises that extend across our businesses. As such, developing high quality Disney animated films is our number one creative pursuit, and thus investing in this business is essential.
Our focus on creativity also includes attracting great talent, partnering with great talent, and creating differentiated content designed specifically for new media platforms. Delivering high quality content will enable us to occupy new technological space, and allow to us cross geographical borders. Our growing publishing business at Starwave Mobile, our recent acquisition of Living Mobile, and ESPN’s 360 broadband product are just a few strong examples of our creative efforts in this direction.
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The application of technology is another priority. As new distribution platforms and consumer electronics devices penetrate our markets, we expect a voracious appetite for content, and in particular high quality branded content. No new platform, whether it is a consumer electronics device or a multi-channel system, can penetrate a market and retain customers without offering great content. This creates enormous opportunities for The Walt Disney Company.
We firmly believe in a platform agnostic approach to distribution, as well as capturing a first mover position under the right circumstances. We believe that the strength of our brands and content drives our first mover opportunities and in turn affords our brands and content premiere positioning, pricing, instrumental marketing support, and platforms that promote strong brands to drive interest in their service.
Our recent deal with Apple for both ABC and Disney Channel programming, is a great example of our approach. We have a long line of potential distribution partners interested in our content. While we undoubtedly will strike new deals, deals have to offer the right economics, acceptable consumer proposition, strong protection for our IP, and an otherwise favorable environment for our content, which is what Apple provided. We will not make deals for purposes of making headlines. Instead we are focused on getting our product into the marketplace on a well timed, well protected, and well priced basis.
Apple recently announced it sold 1 million video downloads in less than 20 days since the launch of its video service, noting that 'Desperate Housewives' and 'Lost' were among the top downloads, which is fitting proof that demand exists, and that consumers are willing to use new, legitimate distribution methods and devices to access content in new ways. Technology also powers creativity and innovation. Across our Company, we are using technology to improve our product, and remain on the leading edge of entertainment offerings.
Our relationship with consumers is all-important, and we are committed to delivering the best consumer experience possible. 'Chicken Little' in digital 3D, ABC, and ESPN's wide array of programming in high-def, and our attraction 'Expedition Everest' that opens in Walt Disney World this spring, are excellent examples. Based on the positive consumer reaction to 'Chicken Little' in 3D, we now plan to release 'Meet the Robinsons' in 3D format in fiscal '07.
Applying technology to enhance our content and extend its distribution enables us to get closer to our increasingly more sophisticated consumers worldwide. Based on consumer demand, it is essential that we continuously reevaluate traditional business models and adapt accordingly. Our investments in ESPN Mobile and Disney Mobile are key examples of how we are placing bets on branded content and wireless services, to drive both a stronger connection with our consumers, as well as long-term returns. This is one of the smartest things we can do as a Company, to be thoroughly in touch with our customers, in-tune with our markets, and on top of emerging trends.
Global expansion is the third prong of our strategic priorities. While globalization remains a challenge, we have tremendous opportunities to better penetrate international markets, both developed and emerging. In emerging markets where disposable income is rising and mass communications infrastructure is growing, we plan to aggressively expand our businesses. With the opening of Hong Kong Disneyland in September, we now have an important driver for all Disney businesses in the region.
During its first two months of operation, the resort has achieved among the highest guest satisfaction scores we have ever seen, which points to the quality of our product, its word of mouth marketing potential, and it's outlook over the long-term. It is imperative that we continue to make strides to better reach, address and represent the diverse global markets we serve. As we expand our businesses and brands into emerging markets, we are making strategic investments in local content.
For instance, we are currently developing original Disney-branded movies in China and plan to do the same in India. Financial performance will be the ultimate measure of our success as our strategic priorities are put into action. We intend to be disciplined in our approach to our current cost structure and our investments.
This investment approach extends not only to our internal development, but also to how we approach acquisitions. As we have stated in the past, we do not feel the need to acquire assets just to get bigger, or simply to wade into new space. We are prepared to move wisely and quickly in order to respond to rapid changes in the marketplace. In order to do so, we are placing greater authority while emphasizing accountability at the business unit level.
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I'm very realistic about the challenges that lie ahead for our Company, and I'm extremely enthusiastic about our creative capabilities, strategic direction, the strength of our senior management team, and our willingness to adapt or change our businesses or structure to best serve our consumers and marketplace conditions. Adapting to new business conditions within an established company is never easy, but here at Disney it is a real priority.
We are making creative excellence and consumer focus our primary focal points, and that orientation will help us adapt and innovate to the benefit of our shareholders. As we embark on the new fiscal year, we have considerable momentum across our businesses, thanks to continued success in Primetime at ABC, our tremendous portfolio of premiere sports programming across ESPN's now multi-media platforms, strong continued results for our worldwide 50th Anniversary celebration at our theme parks and resorts, and an exciting array of merchandise from Disney's Consumer Products division, ranging from our princess collection to video games.
At the studio we are encouraged by the early box office results of 'Chicken Little' and believe we have great films on the horizon this year, including the first installment of the 'Chronicles of Narnia: The Lion, the Witch, and the Wardrobe', Pixar's 'Cars' and 'Pirates of the Caribbean: Dead Man's Chest.' I want to ensure that Disney is admired for its performance, admired for the quality and integrity of its products and people, and admired because we are modern, innovative, willing to take risks, and not bound by old rules or outdated habits. We must be user friendly for those who work for us, those who partner with us, and those who buy our products and invest in our stock.
Now I am going to turn the call over to Tom Staggs, our CFO, to provide more details on the quarter and the year. Tom?
Tom Staggs - Walt Disney - CFO
Thank you, Bob. We continue to look at three key financial metrics in assessing our Company's overall performance and to gauge how well our strategic initiatives are translating to delivering value to our shareholders. These metrics are earnings per share, return on invested capital, and free cash flow. For 2005 we delivered double-digit growth in EPS for the third year in a row. We improved our return on invested capital, again, for the third year in a row, and we delivered over $2.4 billion in free cash flow, after consolidation of our less than wholly-owned international parks.
Media Networks has contributed greatly to our momentum quarter after quarter, and stands out as the biggest driver of our company's strong performance again this year. Perhaps the most gratifying aspect of Media Networks contribution has been ABC's resurgence, fueled by the success of shows like 'Desperate Housewives', 'Lost' and 'Gray's Anatomy.' As we projected, the network reached profitability this year, and we are on our way to delivering further substantial improvement as positive trends continue into Q1 of 2006.
ABC's Adults 18-49 ratings are up another 5% over last season, and we are seeing strength in the ad market with scatter pricing for ABC running high single-digit percentages above upfront levels. At our television stations, Q4 advertising sales were up by roughly 2%, and advertising at our radio operations was up about 1%. So far this quarter pacings for TV stations and radio continue at about those same levels.
In addition to improvement in our ad-based businesses, syndication sales of 'My Wife and Kids' boosted broadcasting operating profit by over $60 million in Q4. And, as Bob discussed, we continue to explore the potential for our shows on other platforms. This fall we have released last season's episodes of 'Desperate Housewives,' 'Alias' and 'Lost' on DVD, and I'm pleased to note that 'Lost' is on- track to sell 1.2 million units, making it the best-selling TV Drama on DVD for 2005.
We have a number of successful shows that we should be able to offer through syndication including 'According to Jim' and 'Scrubs' in 2006, 'Desperate Housewives' and 'Lost' in 2008, and 'Gray's Anatomy' in 2009. We'll also explore further opportunities for ancillary platforms for these titles as well. Based on current ratings and assuming consistent marketplace trends, these shows combined with the shows we've already sold, could add well over $1 billion in operating income to us over the next five years across both traditional and new media platforms. Disney's commitment to investing in high quality family entertainment is also generating gains in viewership at the Disney Channel, which is delivering strong primetime and total day ratings improvement across all its key demos.
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Similarly, we are continuing to bolster the programming at ABC Family with a wide variety of original reality shows, movies, and scripted series. Although this investment dampens near term results, we believe our new shows provide the kind of quality, family- oriented content that draws and holds the audiences that attract advertisers. This was evident in Q4, as ABC Family again delivered double-digit growth in both ad and affiliate revenue.
But the key driver of growth in cable once again was ESPN. ESPN recorded double-digit increases in revenue and operating profit for both the quarter and the year, even as we invested in new ventures like Mobile ESPN, ESPNU, and ESPN Deportes. Our fourth quarter was helped somewhat by the timing of revenue deferrals and recognition. We have entered into significant multi-platform programming deals for ESPN including Monday Night Football, Major League Baseball, and World Cup Soccer.
We expect that this compelling programming will further enhance ESPN's relationship with fans, not only in the context of traditional media, but also across new media platforms, including broadband and wireless. ESPN is positioning itself to deliver as sports fans look for enhanced and more convenient access to the best in live event coverage, sports news and information, fantasy updates, and more. While we are obviously investing in extending ESPN’s position as the leading sports media brand across all platforms, we are also confident in our ability to deliver strong growth well into the future.
We have the majority of our sports costs locked in through long-term rights deals. Similarly, we have subscriber rates locked in, or soon to be locked in, through long-term affiliate deals. As a result much of ESPN's economic model for the next several years is relatively predictable. Of course, ESPN's growth going forward could be impacted by the ad market and depends in part on the success of our new platforms and program initiatives.
However, given the health we are seeing in sports advertising and ESPN's proven ability to deliver against key demographics, we feel comfortable with our ability to deliver double-digit average annual profit growth through 2009.
At our theme parks, we have also invested to reinforce the significant competitive advantage we have in this business. The growth in our results provides evidence of our growing return on that investment.
At Disneyland Resorts, our 50th anniversary celebration is resonating strongly with our guests and is a good example of how we can get leverage out of our existing asset base, through innovative marketing campaigns and less capital-intensive entertainment experiences. Attendance at Disneyland for Q4 grew by 15% versus last year. With each guest segment up double digits. West Coast occupancies increased by roughly 7 percentage points to almost 97%.
At Walt Disney World we also saw positive trends. Total Walt Disney World attendance grew by more than 10% for the quarter, led by resident and international visitation. We experienced only a small number of cancellations as a result of this year's Hurricanes Katrina, Rita, and Wilma. Walt Disney World occupancies rose to 77%.
Per room spending and per capita spending for our domestic parks rose by 4% and 3% respectively, led by strength at Disneyland. Looking ahead, rooms on the books at our domestic parks for Q1, are trending above prior year by mid single-digit percentages.
Two years ago, we laid out our goal of returning to 20% margins for our parks operations by the end of 2008. Providing progress updates on this margin goal on an apples-to-apples basis, has become a bit complicated, given that we are now required to consolidate our partially owned parks internationally, and we have begun the expensing of employee stock options. Excluding the effect of consolidating our international parks and the impact of stock option expense, margins for theme parks for the year increased by 220 basis points to 17.3%.
As long as the travel and tourism market remains healthy, we continue to expect to meet our margin target through a combination of higher volumes, higher asset utilization, productivity gains, and tight cost control. In addition, our high margin "flanker" businesses, such as Disney Cruise Line and Disney Vacation Club, should help us meet our goal.
Our studio results were disappointing. During our last earnings call, I highlighted several potential performance issues that could affect our studio performance in Q4. These included the release of six more Miramax films this quarter than the prior year, when Miramax results were relatively strong. In addition to the marketing and amortization costs associated with the release, a number of these titles failed to deliver at the box office. The Touchstone title 'Dark Water' also performed poorly. We are seeing very strong results from 'Flight Plan,' but released this picture late in the quarter.
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We also experienced weaker than expected worldwide sales for our home video product this past quarter, especially on the direct to video side, where 'Tarzan II' and 'Lilo and Stitch II' performed below our expectations.
Our results have also been impacted by a challenging marketplace overall. So far this year box office for the U.S. is down 9%. In home video, more and more titles are competing for shelf space and consumer attention. The ratio of DVD sales to box office for theatrical titles has dropped by roughly 10% this year. TV series on DVD has become the fastest growing segment of the overall DVD business, up an estimated 30% compared to 2004. In fact of the nearly 10,000 new titles released so far this year, only 413 have been theatrical titles. By contrast there have been nearly 1500 new TV titles released on DVD so far this year, including 499 complete season boxed sets.
While we've had success with our TV product on DVD this year, our historic television library is modest relative to a number of other media companies, and thus our home video results have not been bolstered by TV DVD sales to any great extent. We are addressing studio performance issues by trimming costs, managing our production and marketing budgets even more closely, and allocating capital resources to those film projects that we believe will yield the greatest returns on investment, not just the highest box office result.
At Consumer Products, we registered nice gains in our merchandise licensing business where earned royalties increased by 8% for the year. However, our near term ramp up in development spending for video games, somewhat dampened operating profit for the quarter and the year.
Taken as a whole, this year's results give us reason to be very optimistic about continuing our growth in 2006 and beyond. We said last year that we are not inclined to give specific earnings projections for any given year or quarter. Since we're a content driven company, we will naturally tend to see quarter to quarter volatility, driven by the strength and timing of our releases. Our goal is to manage not for quarterly earnings, but for long-term growth and shareholder value.
In fact, our goal is to deliver average annual double-digit growth in earnings through at least 2008, off the strong base we set in 2004, barring any unforeseen downturn in the economic climate for our businesses and our 2006 results should be consistent with this target. Our further goal is to couple this growth with attractive returns on invested capital and strong cash flow.
For 2006, we expect our growth to be heavily weighted toward the latter half of the year, due in large measure to the timing of our theatrical and home video releases, and the deferral of affiliate revenue recognition at ESPN. For Q1 alone, we currently expect to defer recognition of more than $100 million of ESPN affiliate revenue into the latter half of the fiscal year. At the studio, the lower performance of our recent theatrical slates will have a carry over affect into 2006, as those films move through the home video and TV windows, particularly in the early part of the year.
There are also several swing factors that will influence our full year 2006 performance. Media networks should post solid growth again in fiscal 2006, as this year's successful upfront sales efforts for our various ad supported networks, growing affiliate fees in cable, and continued improvement in ratings performance at ABC should all contribute to our bottom line. Of course changes in the strength of the ad market, as well as ABC ratings for the balance of the year, including our mid season lineup, remain important swing factors.
At our parks, our success is linked to continued health in consumer spending in general and to travel and tourism in particular. We look for continued improvement in attendance and occupancy in 2006, driven by the ongoing Disneyland 50th Anniversary celebration, and the opening of 'Expedition Everest' at Walt Disney World this spring. We will also benefit from a full year of operations and the absence of pre-opening costs at Hong Kong Disneyland.
At the studio, our 2006 film slate is off to a solid start with 'Chicken Little.' We have three of the most anticipated films of the year, starting with the first installment of 'Chronicles of Narnia,' which we are releasing in three weeks with our partners at Walden Media. The next release from Pixar, 'Cars,' opens in June and 'Pirates of the Caribbean: Dead Man's Chest' follows in July.
Of these four films, we expect 'Chicken Little' and 'Narnia' to also be released in home video during our fiscal 2006. In addition we have several other films that despite somewhat lesser investment levels than the four films I just named, they could have a real impact on results. These include Casanova, Shaggy Dog, Guardian, and Invincible. Of course no one can predict box office performance with certainty but we look for improved results for 2006 as a whole, driven by a better performing theatrical slate, as well as lower spending at Miramax. In addition theatrical and home video market dynamics, especially pricing and sell through ratios, will be key determinants for our studio performance.
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At Consumer Products, we expect to see continued growth in our earned royalties. However our results will be dampened by roughly $100 million in investment in video games. That's more than double our spending in 2005. In 2006 a number of our video game titles are based on some of our bigger studio releases, like 'Chronicles of Narnia' and 'Pirates' and the performance of these key titles could meaningfully impact our results.
Earlier this year we announced our Mobile ESPN and Disney Mobile initiatives - the first wireless phone services specifically targeted to sports fans and families respectively. These initiatives will expand our mobile revenue streams to include all components from voice to creative content to data, and we believe that these initiatives could represent a substantial opportunity for the Company.
In 2006 we expect to fund more than $130 million in losses to launch these new services. Bear in mind however, that due to customer acquisition costs each new subscriber represents an initial deficit. Therefore in the early years, the more successful we are, the greater the start up loses we will incur. However, with our strong Disney and ESPN brands, we think we can build a strong profitable customer base over time that justifies and generates an attractive return on this initial investment.
We will continue to allocate capital towards areas like these that we think make strategic sense, and which offer the potential for long- term growth, and value creation for our shareholders. One of our primary considerations in evaluating investments is prospective market size. For example the market for PC, console and handheld games was over $17 billion last year, and continues to grow rapidly. The mobile voice and data market is obviously huge, and even modest market share for MVNO can translate into significant incremental revenue to our Company.
But potential market size isn't enough. We also consider whether or not we can possess and sustain a competitive advantage in that business and therefore ultimately deliver excess returns on our investment, and given the strength of our brands and content we feel we have the potential to deliver meaningful value with these initiatives.
Along with profitable reinvestment, returning cash to shareholders remains an important part of our capital plan. Disney has paid dividends to shareholders continuously for the last 49 years. Last year we increased the dividend to $0.24 per share, and we anticipate moderate sustained increases in the dividend going forward.
In addition, since August of 2004, we have invested over $3.7 billion to purchase nearly 150 million shares of Disney stock. Our purchase activity not only reflects our discipline in returning cash to shareholders, but also our confidence in our ability to grow shareholder value over time.
Given the ongoing changes in the media business, it's imperative that we continue to closely manage our existing businesses even as we innovate for the future. At the same time, our primary goals are straight forward, to deliver outstanding and differentiated content to consumers when they want it, where they want it, and how they want it, while also delivering increased value for our investors.
With that I will turn it back to Wendy for some Q&A.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you, Tom. We are ready to take the first question, operator.
Q&A
Operator
Thank you, ma'am. [OPERATOR INSTRUCTIONS] Our first question is from the line of Anthony Noto with Goldman Sachs.
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Anthony Noto - Goldman Sachs - Analyst
Thank you very much. Tom, I was wondering if you can comment on the outlook for home video at an industry level for growth in 2006. Clearly this year has been impacted by a number of different transitions, in terms of the mix, as well as the growth of DVD players. As you look into '06, not particularly focused on the performance of any one film, how do you see the industry sort of trending?
And then second question is, 'Chicken Little' looks like it could finish over $160 million in domestic box office. Considering that you own 100% of that film and its distribution could you earn a profit near what you've received from the typical collaboration with Pixar? Thanks.
Bob Iger - Walt Disney - President, CEO
This is Bob, Anthony, I will comment about the home video market. While I'm not certain I'm going to answer your question fully about the outlook for '06, I will just say a few things about what we are seeing in the market today, which we believe will continue into '06.
First of all it seems like what I will call the top titles, meaning the highest grossing movie box office movies, seem to be a little less vulnerable in the marketplace, meaning they are converting at a better rate, in terms of number of DVDs sold per U.S. box office. That positions us fairly well with movies like 'Chicken Little' and 'Narnia' and 'Cars' and 'Pirates,' even though the videos in 'Cars' and 'Pirates' won't hit until our fiscal '07. We believe that the continued glut of products in the marketplace, which I guess continue in '06, meaning there are just going to be more and more titles released. Although a lot of what you are seeing in television is titles that have never been released before, so we are seeing a little bit of a balloon that at some point will start to deflate.
But I think we are going to see continued increase in number of titles in the marketplace, which causes a tremendous amount of competition not just for shelf space, but for consumer spend. What we are doing, is taking a hard look at our marketing expense. We are also considering reducing the number of titles we put into the marketplace from a variety of directions, basically to better contend with the marketplace conditions.
The other thing that is a great unknown is what the ultimate impact of the new DVD format will be on the business, although you will see less of that in '06. With PlayStation 2, I'm sorry, PlayStation 3 coming on the market, and some other new hardware and some new software being released in the marketplace, certainly through the latter end of '06 it's possible you are going to see some changes in the marketplace dynamics, but again I think they will be limited in terms of their impact on '06. Tom, you want to add to that at all?
Tom Staggs - Walt Disney - CFO
No, I think that's right. I think the important thing is that big titles still seem to cut through and sell through quite well. And we hope to see that continue, especially given the lineup that we have got for the year.
Bob Iger - Walt Disney - President, CEO
Tom, you want to address the Chicken Little profitability question? We are not predicting what it's going to do in the end, in terms of box office, so it might be premature to answer your question.
Tom Staggs - Walt Disney - CFO
Right, I think it's early for to us to make any predictions about where it will be. We are obviously very pleased with the performance, and hope it continues the pace. To your point, obviously we own 100% of Chicken Little so 100% of the upside from a successful film comes to us, which is great. 'Chicken Little' has a ways to go before the total profits to our Company will match some of the most successful Pixar titles, but it's certainly a great first step in that direction, and certainly an affirmation of the Company's ability to create a CG film that is embraced by audiences, so we are very pleased.
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Bob Iger - Walt Disney - President, CEO
But let's also not forget that Chicken Little's average box office is somewhere in the $275 million range.
Tom Staggs - Walt Disney - CFO
Pixar.
Bob Iger - Walt Disney - President, CEO
Pixar's in U.S. box, so even though 'Chicken Little' is doing quite well, we are not predicting it's going to get anywhere close to that level.
Tom Staggs - Walt Disney - CFO
To that point, profits aren't necessarily linear with box office performance, so the higher the box office performance, sometimes you get a little bit of a multiplier effect, so we will continue to keep our fingers crossed, and we are pleased with where that's going.
Operator
Our next question is from the line of William Drewry with Credit Suisse First Boston. Sir, is your phone is muted?
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Maybe we can come back to Bill Drewry.
Operator
Next question is from the line of Jason Bazinet with Citigroup.
Jason Bazinet - Citigroup - Analyst
Hi, maybe just a longer term question for Mr. Iger. If you look out beyond even '07, how important of a strategic priority is it for you to accelerate the top line from some of the trends we've seen more recently?
Bob Iger - Walt Disney - President, CEO
Well, our priority is both to accelerate the top line and run the company more efficiently. I'm not sure that one necessarily takes priority over the other, and top line acceleration is going to vary with our businesses. We obviously have some businesses whose top line is thoroughly reliant on creative output. We have other businesses that are a little bit more mature in nature, like the broadcasting business, where it becomes even more vital to manage the bottom line, or the expense side.
One of the reasons why we are focused on investing in creativity, and then applying technology to not only strengthen the creative output, but to distribute more efficiently and then to globalize, is so that we can further diversify our revenue streams. The notion of applying technology to distribute our content in more ways is designed mostly to grow top line and to be closer or more in-touch with our consumers, which we believe in the end will also help us grow the top line. I'm not sure we put one necessarily ahead of the other. This is a Company that is very focused on strategic growth initiatives. Those obviously are designed to grow top line. It’s why we are investing in new platforms and growing businesses, like wireless and video games, and we are confident that ultimately they will pay off nicely for the Company. But it's going to take a few years for them to have a real impact on top line growth.
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Jason Bazinet - Citigroup - Analyst
Okay. Thank you very much.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. We will take another question, please.
Operator
Our next question is from the line of Doug Mitchelson with Deutsche Bank.
Doug Mitchelson - Deutsche Bank - Analyst
Thank you very much. Bob, you talked about investing heavily in animation. Does that include investing in or acquiring other animation studios, or were you talking more about just an ever greater focus on internal production?
Bob Iger - Walt Disney - President, CEO
Well, neither. I was saying simply that I believe, in terms of all the Company's creative endeavors or pursuits, nothing is more important than animation. If you look at the history of the Company, Walt built the Company on animation. The great strides the Company made, and successes in the late 80s through the mid 90s is another great example of how animation really powered significant growth of the Company, not just at the studio but across all of our businesses. Which is why we believe that allocating capital in that direction, and getting the creative process right, is vital to us.
We actually believe that our ability to cross technological platforms or geographical borders will also be enhanced if we get animation right. And then lastly the impact overall on the perception of the Disney company and the Disney brand, will grow or improve if our animation is right, because that is such a significant impact on people's impression of Disney.
I'm not specifying whether we will grow organically or through acquisition. I'm simply saying that it's a priority of ours to get animation right. And I don't believe I necessarily need to elaborate on how we do that, other than what I've already said.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. We will take another question, please.
Operator
Our next question is from the line of Lowell Singer with SG Cowen.
Lowell Singer - SG Cowen - Analyst
Thanks. Bob, have I two questions. First, can you talk more broadly about acquisition priorities? Clearly content is a focus. What sorts of businesses interest you on the acquisition side?
And second, you guys clearly led the way on this pay-per-download model. Some of the other networks and some of the cable networks have followed. Should we read into that at all, with regard to the networks concern about the impact of DVRs on the ad market, or do you think we are still not really close to that inflection point? Thanks.
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Bob Iger - Walt Disney - President, CEO
Well, the second question first. What you should read into, at least from our perspective as I cannot talk about really our competitors, that we are very much in-tune with what we believe the consumer is doing or the consumer wants. We believe given the power of technology today, the consumer has more authority or power than ever before and is using it, and is willing to pay a price to gain access to content that they want. In effect, pay for either quality or convenience, or both.
And so what we are really saying is that it's imperative for us to not force content onto, or to not relegate content to to its traditional boundaries, because the consumer doesn't really care about those boundaries, and to make sure that the content is available under the right circumstances, which means well priced, well timed to market, and also well protected from an IP perspective. I said in my comments we are not going to make just any deal, we are going to make the right deal for the Company, and what Apple provided us was the right deal on all of those levels.
By the way, when you think about intellectual property protection, one of the things that they are very good at is, if content or intellectual property is stolen from their system, they have the technological and the financial wherewithal and they resolve to basically fix the problem, which essentially means you can't put your product on just any platform, or be partnered with any entity.
A recent announcement was made about content being on some peer-to-peer sites, as a for instance, and I'm not necessarily negative on that, but you have to be really careful that you are in business with an entity that is going to be willing to go after the pirates, if their system has been hacked. Again, I'm not sure other than saying we are going to follow the consumer, and thus basically follow the consumer spending power, I'm not sure that there's any other message than the one that we've given.
So the first question about acquisition, our focus in acquisition is likely to be content. That's what we essentially do for a living as a Company. I think you can conclude that the content is in all likelihood got to be consistent with the values of the Company in a sense, and so we are not necessarily going to buy an on-line gambling company but I don't think we can be any more specific than that right now.
We believe that content is king in this world. Thanks to all the opportunities that technology is providing, both content creators and consumers. And so if we were to acquire it would likely to be in that direction.
Also just going back to your question about DVRs, I think it's really too early to tell. The penetration of DVRs is roughly what, 10% of U.S. households, and I know that there is a flurry of activity over that, because of a panel discussion in New York this week. Again, I just think it's too early to tell. I think it's a powerful tool for customers, but it also may end up being a powerful tool for content providers, because it's going to result in more consumption.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Okay, thank you. We will take the next question, please.
Operator
Our next question is from the line of Vijay Jayant with Lehman Brothers.
Vijay Jayant - Lehman Brothers - Analyst
I have two questions. First, Tom, you talked about margins in Theme Parks approaching 20% by '09, but net of your pension costs. Do you think you can see margin improvements in '06? And second is there any way we could X out the Miramax numbers and sort of show what the studio would have done on a going forward basis?
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Tom Staggs - Walt Disney - CFO
Well, with regard to margins at the parks, yes, I do expect to see margin improvement in 2006, and I think as you point out, we have to absorb some pension and post retirement medical increases in 2006, and for the Company as a whole, that's in the neighborhood of $150 million. And you should assume that 70% or so of that ends up at the theme parks, just given the size of the employee base there. Having said that, and even taking that into account, we are looking to expand margins further in '07, as we continue along our goal to reach the 20% that we talked about. I think the best thing that I can probably tell you, in terms of the Studio Entertainment business, I'm not sure that isolating Miramax gives you a normalization. It was the biggest driver of year-over-year change for the quarter, and in the neighborhood of a couple hundred million dollars of change quarter-over-quarter. And so that gives you a sense of how much that impact was.
When we think about Miramax going forward, remember that Miramax a number of years back had some good years and did contribute to the studio, less so in the more recent years. But we are looking to bring down our investments dramatically in Miramax, and really get back to where we were before, so we think that it can be a positive contributor to our profitability and our returns at the studio as we go forward.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. We will take the next question, please.
Operator
Our next question is from the line of William Drewry with Credit Suisse First Boston.
William Drewry - Credit Suisse First Boston - Analyst
Thanks very much. A couple of questions. One, Tom, you talked about Hong Kong Disneyland being a positive swing factor. I was wondering if you could quantify what that impact could be for fiscal 2006. Then also wondering on the video game business, you are doubling the investment, but is there any possibility that, if there's a hit or two that drives it that it could be profitable at all in fiscal 2006, or is that something that is further out?
And just a question for Bob, just wondering where you are on the Pixar negotiations and specifically on the sequels to the library that you've already green lighted, I'm wondering if you are full speed ahead on starting production on those? Thank you.
Tom Staggs - Walt Disney - CFO
Okay. So I think to be helpful on Hong Kong, we are not going to make any predictions about Hong Kong profitability for 2006 yet. It's very, very early after the opening of Hong Kong.
I think the most helpful thing I can mention is that the rough order of magnitude of impact from Hong Kong, in terms of 2005, because the pre-opening, etc. on the consolidated operating income line was about $100 million. So that gives you a sense of what that swing factor can be, just on the basis of going from pre-opening to the operations of the park.
As for video games we do have some important titles out there. I'm not ready to predict what those titles will do, but Narnia title looks very, very strong, and certainly if those blow out, they can have a real impact. Recall though that we expense all production costs for videogames as they are incurred. We don't capitalize those expenses. It's a more conservative approach to doing the accounting. And so because of that, the production work we are doing for releases this year, and for releases that will come later, are the expenses flowing through the income statement in 2006. That will make it quite difficult for the video game business to essentially overcome that, certainly not impossible, but I think that for this year, you should expect that the incremental investment in video games, will as we said, dampen the growth of Consumer Products somewhat.
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Bob Iger - Walt Disney - President, CEO
Regarding Pixar, Steve Jobs is his earnings comments last week, said that we were in deep discussions, and it was their goal to resolve things by the end of the year. I don't really think there's any need for me to add any flavor to that, except to say that I believe that in ‘Cars,’ which John Lassiter is directing, we have a great movie on our hands, and regardless of what happens in terms of the relationship we are going to have a fantastic summer with Pixar, because I really believe it's going to be a classic in the true sense of the word.
As it relates to sequels, we've said that we were in the process of making ‘Toy Story 3.’ It's actually in pretty early stage of production. There's been some development on some of the other sequels, but not what I will call full production. And if we were to do a deal with them, obviously the goal would be for them to make sequels to some of these films, and we would have to redirect some of our efforts if that were the case, but that wouldn't necessarily be a bad thing. But again I'm not going to add anything more, in terms of where things stand in the talks themselves.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. We will take the next question, please.
Operator
Our next question is from the line of David Miller with Sanders Morris Harris.
David Miller - Sanders Morris Harris - Analyst
Hi, Tom, a couple questions for you. On the $0.03 charge with regard to the write off of the Delta Airlines lease, are there any accelerated tax payments that are baked into that $0.03 charge, or is that just if you will, an organic charge just related to the lease?
And then also, I believe you guys are just surpassing the $40 million sublevel for SOAPnet, if I'm not mistaken Tom, you guys have doubled your advertising base on that cable network over the last year to 18 months. Can you quantify what the operating income contribution was for SOAPnet in the quarter? Thanks very much.
Tom Staggs - Walt Disney - CFO
Well, with regards to the Delta Airlines write down, that was just over $100 million. There are potential tax payments that are associated with that lease. The timing of those tax payments are dependent upon the disposition of the lease in bankruptcy. And so that will likely impact our cash flow in 2006. It could be 2007, but my best guess today is 2006.
Those tax payments are somewhat larger than the after tax charge, the book charge. As you know the book, accounting book, don't necessarily track exactly the tax booked for investments like this. And so I think you should think of the tax overhang on the Delta lease as being something in the neighborhood of $80 to $90 million that could hit in 2006, or shortly thereafter, depending on the disposition of that lease.
With regard to SOAPnet, you're right, SOAPnet is up to nearly 44 million households, and that obviously puts it in a better position vis-à-vis advertisers. SOAPnet did not have a meaningful impact on the quarter in terms of operating profit contribution, but it is reaching that inflection point where we are hopeful that it will start to contribute at a higher level going forward.
We are investing in some of the programming there and that's part of the reason that the impact wasn't as great as you might have expected, but we do think this channel can have an impact in the years ahead, and so we are very pleased with the fact that it continues to grow, and it continues to grow its revenues quite nicely.
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Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. We will take the next question, please.
Operator
The next question is from the line of Michael Nathanson with Sanford Bernstein.
Michael Nathanson - Sanford C. Bernstein & Co - Analyst
Thank you. I have two. First to Tom or Bob, if I was to see you buy more sports rights, say at ESPN, Baseball Playoffs, or NASCAR, would you be comfortable still with your double-digit guidance for operating income going forward?
Bob Iger - Walt Disney - President, CEO
First of all, we are not going make any assumptions, in terms of what's bought or not, but we are predicting double-digit increases for ESPN going forward. Tom, I don't know how far out we said --
Tom Staggs - Walt Disney - CFO
From '05 through '09 anyway….
Bob Iger - Walt Disney - President, CEO
And I think it's safe to assume that if ESPN makes any additional commitments on programming, without being specific as to which ones they might make, that guidance would continue.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Do you have a second question, Michael? Okay, we will take the next question, please.
Operator
Our next question is from the line of Kathy Styponias with Prudential.
Katherine Styponias - Prudential Equity Group - Analyst
Yes, hi, I had a couple of questions as well. Bob you said you were able to strike the right deal with Apple, with respect to video downloads. And I know you probably can't talk about the economics very much, but can you give us a sense of how you were thinking about the price point for the downloads, as it compares to, say, ad revenue per viewer? Is it something that leaves you just as well off, better, worse than, say, you lose that viewer on a regular basis, especially in light of recent announcement made by Magna Global, where they are saying basically they are only going to pay for live ratings not for DVR viewers.
And then the second question is you own 100% of 'Chicken Little.' Can you give us a sense of what the economics might look like on 'Chronicles of Narnia' since you have a partner there? Thanks.
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Bob Iger - Walt Disney - President, CEO
We actually spent a lot of time thinking about the pricing on the iPod platform, and we also considered what impact if any, it might have on primary viewing. And we concluded that while what iPod is offering is a wonderful experience, and I urge everybody to check it out, because the quality is sensational. We did not believe people would opt to watch programming on iPod, instead of, or in place of, watching it on what I will call a large screen experience via multi-channel distributors, or via an antenna.
So in other words, we actually believe that this is for the most part incremental consumption. These are people are buying these episodes are buying them because of convenience, because they were not able to watch some of their favorite programs for whatever reason, and would not have watched them. And so what we are doing is giving them an opportunity to catch up, or to watch more episodes than they would have. So we actually are viewing the revenue that we are getting as incremental revenue, and not in any way as revenue that cannibalizes primary consumption, which goes back to the point about pricing. As we looked at the Apple platform, we really view it as what I will call a high quality, very convenient, mobile small screen play. It's possible at some point, we will enter into similar arrangements on other platforms, but for what I will call a large screen experience, and I think there when you consider large screen experience, you have to consider the impact that has on primary viewing, because it's possible that could be less incremental than the smaller screen platform.
I also happen to believe that we should charge more for large screen experience than for small screen experience, and while we haven't entered into these deals, and so it would be premature to suggest what we would charge, I'm speaking just on behalf of the Walt Disney Company, I actually believe that we are going to offer the convenience of sort of that window, or convenience in terms of giving people an opportunity to watch programs they could not have watched before, on a large screen that we are delivering even more value under that circumstance than we are on the Apple platform, and thus we should charge accordingly.
Regarding Narnia, we are not getting specific at all about the economics. We've got a good partnership with Walden Media on this. They deserve a lot of credit for buying the rights to not only to this book, but to other C.S. Lewis books, as part of the Narnia Chronicles. They had some real vision in that regard, and we think the partnership is a good one. We also believe the movie is a great one and regardless of the fact that we've got a partnership, we think this will be a real success for the Company over the long-term, because we think it will spawn more movies of this series, and ultimately become a very, very valuable franchise for us.
Tom Staggs - Walt Disney - CFO
I think that's right. The right way to think of it is basically as a 50/50 partnership. It's obviously a film that we have a fair amount invested in, and the good news is we think the value really shows up on the screen, and can be one of those films that breaks through. So, we are quite hopeful. I think you should assume that there could be some nice positive impact but I would look for it in the latter part of the year in home video, not necessarily in the first quarter when we put it out, but actually it's one of the films we are most excited about.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. We will take the next question, please.
Operator
Our next question is from the line of Tuna Amobi with Standard & Poor's Equity.
Tuna Amobi - Standard & Poor's Equity - Analyst
Thank you, good afternoon. Bob, on the Internet strategy, I was wondering if you can articulate how you see your Internet strategy, in terms of advertising? Are you likely to focus more on branded display, and how do you see the opportunity for paid search? And in paid content, should we expect that you are going to focus more on direct to consumer, or working with the content aggregators?
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And related to that, Tom, on the Internet and wireless business, I understand that for fiscal '04, you had roughly $300 million in revenues, with approximately 40 million in operating margins. My question is, I was expecting actually high 20s growth for fiscal '05. So did you achieve that target, and how do you see the combined Internet and wireless business doing in fiscal '06 and beyond? I'm actually looking for perhaps $1 billion in revenues by 2010. I would like to confirm if that's realistic, and also to confirm that that business, those numbers exclude video games. Thank you very much.
Bob Iger - Walt Disney - President, CEO
Tuna, this is Bob, I don't mean to sound impertinent. I think you just asked us ten questions, and we should charge maybe for more than one. I will start with the first, which is our Internet strategy. For the most part our strategy has been to take our brands onto the Internet, and actually we are doing quite well in that regard, particularly with Disney and ESPN, where we are #1 in their categories, family and sports. We are working hard at not only expanding content in sort of a branded Internet environment, but we are also working to expand things like community and direct to consumer relationships, et cetera, and so on and we are going to continue to do that.
We are also obviously creating product not just for what I will call Internet consumption but for wireless consumption. Again branded content, so far, has been our priority. I don't rule out either adding more brands, either creating them organically, or potentially acquiring, but for now the direction of the Company is to take our, what I will call traditional media brands, and move them as successfully and as deeply as we possibly can into new media space.
Paid search was your second question. We had an opportunity at one point when we owned Infoseek which is a pretty good search engine, which was part of what we became our ‘Go’ portal. We got out of that business. I think we would be hard pressed to play catch up with the likes of Yahoo! and Google and paid search, and while it's possible that we will offer some maybe in the video search direction, I think it's unlikely for us to be what I will call a real competitor to them in that particular direction.
As it relates to paid content, through aggregators or direct to consumer, I think thanks to technology, you will see a real blend, because we will have an ability to do both. We actually like the relationship we have with aggregators or intermediaries because they invest a lot in capital to create the necessary infrastructure to reach consumers. In some cases they provide us with either up front guarantees, or an environment that is a healthy environment for us to sell our content within. But I think you will end up seeing both. Tom, I am going to let you answer the other five questions.
Tom Staggs - Walt Disney - CFO
Well, Tuna, tempted as I am to sign Steve Wadsworth up for a really big number, we haven't made a specific projection, and I think that we won't today, because the nature of our initiatives here are still somewhat organic. We do think there's a fair amount of upside. We've seen nice growth in our wireless business in particular. We continue to see nice growth in our Internet advertising, and we think there's a great deal of potential. We just did a small acquisition of a company called Living Mobile in Europe that we think can put us in the business in a bigger way in mobile applications and we are clearly looking to grow that business.
So, we tend to shy away from revenue driven growth rates because of course you can always buy revenue, and that's not what we intend to do. We think that our collection of branded properties provides a nucleus around which we can build a business that drives substantial revenues in mobile and wireless, in traditional Internet, and in things like multi-player games, et cetera, and we have initiatives working against each of those areas. We think it's going to be a substantial business, although I'm not looking to make a specific prediction or sign Steve up for a specific number at this point.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. We will the next question, please.
Operator
Our next question is from the line of Doug Shapiro with Banc of America Securities. Sir, is your phone is muted?
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Doug Shapiro - Banc of America Securities - Analyst
Sorry, can you hear me now?
Tom Staggs - Walt Disney - CFO
Yep.
Doug Shapiro - Banc of America Securities - Analyst
Okay. I have one that's kind of picayune, and one that's, maybe, more philosophical. The first one was, I was wondering if you could quantify the amount of the deferred revenue recognition at ESPN in the quarter, compared to last year. The other one, which might sounds a little bit out there, but Bob, just in light of the soft spot market and changes in the affiliate compensation in the last couple of years, and your continued efforts, or maybe accelerated efforts to be agnostic to distribution, I'm just wondering if it still makes sense to own TV stations?
Tom Staggs - Walt Disney - CFO
Sure, with regard to the change in deferred revenue recognition Q4 '04 to Q4 '05, that's a little bit under $50 million, in terms of the net year-over-year impact, if that's helpful.
Bob Iger - Walt Disney - President, CEO
On the TV station side, while I recognize that broadcast television stations are, in a way, distributors, we actually view them more as content creators. A local news brand, particularly on an ABC station, has real value in the marketplace, as does the syndicated programming that they carry. A number of our stations carry Oprah, as a for instance. And lastly the value they create for the television network, which we believe is a real engine to fund the creation of great product with application across multiple platforms and territories. So we believe in the local television station business, particularly the people who run our local television stations, and the results that they've been delivering for quite a long period of time, and we believe they will continue to deliver.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Thank you. We will take the next question, please.
Operator
Our next question is from the line of Alan Gould with Natexis Bleichroeder.
Alan Gould - Natexis Bleichroeder - Analyst
Thank you. Tom, in your remarks on ESPN you said most of the affiliate fees have been locked in, or you said they were about to be locked in. Can you update us on the potential deals with Comcast and Time-Warner?
Tom Staggs - Walt Disney - CFO
Sure, to some extent. The conversations are continuing. We have substantial agreements, and while we are not going to make a specific prediction on when they will be finalized, we feel quite good about our ability to finalize them, consistent with all the guidance we've been giving you.
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Alan Gould - Natexis Bleichroeder - Analyst
I'm assuming it's more than just an ESPN deal; it's probably a bigger deal between the two entities. Is there ‘must carry’ or anything else like that thrown into the deal?
Tom Staggs - Walt Disney - CFO
It does involve multiple outlets and ‘must carry’ to some extent and that's part of the reason that it's a long, complicated negotiation. But we think we are in good shape.
Bob Iger - Walt Disney - President, CEO
They are both what I call omnibus deals that also include a variety of digital media content and some new content. We've distributed, for instance ESPN 360, the broadband ESPN offering through some multi-channel systems, and that's also on the table in these deals.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
We have time for just one more question, operator.
Operator
Our final question is from the line of Richard Greenfield with Fulcrum Global Partners.
Richard Greenfield - Fulcrum Global Partners - Analyst
Hi, Bob, a question in terms of technology, and how you think about content. As you look at the greater number of distribution outlets for your content, it would seem like owning your content in all respects, or fully controlling your content is becoming increasingly important.
In that sense, does it make sense for you either to own Pixar outright, or to seek to walk away and actually just focus on your own production? Essentially what I'm getting at is how do you think about distributing someone else's content, given where technology is driving the number of distribution outlets?
And lastly if you could comment on, over the course of the past 12 months when you look at the DVD environment that you talked about, how is hand drawn animation fairing? Things like 'Bambi,' and some of your other hand drawn titles, how is that doing relative to the CGI titles that you've worked on? What are you seeing, in terms of the impact on your library? Thanks.
Bob Iger - Walt Disney - President, CEO
I will start with the second question. I'm a strong believer in the quality of movies, not necessarily the genre or the style in which they were made. A good movie is a good movie whether it's a romantic comedy or an action adventure, whether it’s a hand drawn animated film, or whether it's a 3D film.
As a for instance we put 'Chicken Little' out this past fall, a movie that's -- I'm sorry, not 'Chicken Little,' 'Cinderella', sorry. A movie that's 55 years old, and not only is it a beautiful film, but it's doing quite well in the marketplace, and I think that's a fitting example of how quality stories and characters and a good look, whether it's hand drawn or not, are going to breakthrough in a relatively competitive marketplace.
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As to your question about, essentially it was about Pixar, but it was really about owning content versus being a distributor. I'm not going to be specific about Pixar, except to say that you are going to see a blend of sorts at this Company, because even though our primary focus is on allocating capital to create content that we own, we obviously have to be somewhat judicious in nature in that regard. We don't necessarily need to own everything.
The television network is a good example of this. Just because we are doing extremely well with 'Desperate Housewives' and 'Lost' and 'Gray's Anatomy', et cetera, and so on, a goal to own 100% of our content might be nice but would result in a significant investment and a lot more risk. And we are not sure that being that aggressive is necessary, and I guess the same would be true in movies.
I think if a good movie comes along that's made by a third party, and we’ve got an opportunity to either partner with them like Walden, or as we've done with Pixar, or to become a distributor of what is again a very fine movie, I'm not sure there's anything wrong with that. I imagine you will see a balance or a blend.
Wendy Webb - Walt Disney - SVP, IR, Shareholder Services
Well, thanks again for joining us today. Note that a reconciliation of non-GAAP measures referred to in this call to equivalent GAAP measures, can be found on our Investor Relations Website. Let me also remind you that certain statements in today's press release and on this conference call may constitute forward-looking statements under the Securities laws.
These statements were made on the basis of management’s views and assumptions regarding future events and business performance, as of the time the statements were made, and management does not under take any obligation to update these statements.
These statements are subject to a number of risks and uncertainties and actual results may differ materially, from those expressed or implied in light of a variety of factors, including factors contained in our Annual Report on Form 10(K), and in our other filings with the Securities and Exchange Commission. This concludes Disney's fiscal year end 2005 conference call.
Operator
We thank you for your participation in today's conference. This does conclude the presentation, and you may now disconnect.
Please be reminded that certain statements in this presentation may constitute “forward-looking statements” under the securities laws. These statements are subject to a number of risks and uncertainties and actual results may differ materially from those expressed or implied in light of future decisions by the company and by market, economic, political, competitive, regulatory, technological and other developments beyond the company’s control. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. The company does not undertake any obligation to update forward-looking statements.
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