Walt Disney Co DIS
Q2 2010 Earnings Call Transcript

Operator: Jessica Reif Cohen, Bank of America.

Jessica Reif Cohen - Bank of America: Two questions. One, you haven’t said anything about the Shanghai park. I was wondering if you could – is there anything holding that up? Does that have anything to do with you starting up a Disney channel in China? And then, secondly, could you talk about the cost curve for ESPN over the next few years?

Robert A. Iger - President and CEO: There is no news on the Shanghai park, Jessica. Since we announced that we had reached a framework agreement with the government and received the necessary approval from Beijing, our next task was negotiate basically a detailed agreement with the Shanghai government. And that process is underway and we are not making predictions as to when it will conclude, except to say that it’s moving along on a timely basis. And there is no direct tie to a channel in China. As per the cost structure of EPSN, we don’t specify just how that will grow in part because there are contracts that expire over the next few years with certain sports organizations. And until those are negotiated or until it’s determined just whether we will negotiate extensions to those deals, we really can’t predict just what the cost structure will be. The big deals were the NFL, the NBA, Major League Baseball and NASCAR, all run through 2013 to 2016, and you can expect that there are increases in all of those contracts. But again, we really don’t specify just what those are and there are number of other agreements that we have that will expire during that period of time.

Operator: Spencer Wang, Credit Suisse.

Spencer Wang - Credit Suisse: Just a follow-up on the question about ESPN costs. Jay, could you perhaps quantify for us how large the costs were for the new channel in the U.K. within the quarter? And then secondly for Bob, with some of the recent chatter about CNN and CBS News perhaps doing something jointly, could you just share with us your thoughts on where you can take cost out in the news side or what you would do strategically there? Thanks.

Jay Rasulo - Senior EVP and CFO: Obviously, we’re very much in startup mode in the U.K. with English Premier League football and Rugby and FA League football. I am not going to specify the specific costs of that operation, but we’re in ramp up. The rights that we had were for about 46 Premier League games this year, about 23 next year, but FA adds a number of games and we’ll be at 48 the following year, and then we picked up rugby. So we’re building our brand there. Obviously we’re investing to do so, and feel that in the long run the number of subscribers and the revenue in the top line will more than compensate for that strategy.

Robert A. Iger - President and CEO: On the news front, ABC News has just gone through rather exhaustive analysis and an extensive process to address their cost issues as well as to focus more on the strategy of gathering and presenting news in the world that has changed a lot, both in terms of how people access that news, but also how the technology has enabled us to cover the world differently. And with that they have taken substantially costs out, Spencer, in a variety of different ways including a substantial reduction in people. The chatter that you referred to about CNN is interesting and that we explored with CNN a few years ago, a joint venture. We were unable to conclude an agreement with them. We are not in discussions with them now about something similar. To the question you asked about costs, we are not looking to outsource news at the ABC Television Network or to outsource news gathering, although we do rely on certain third parties throughout the world to provide certain, basically, up to the minute or late breaking news on our behalf.