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We must also return creativity to the center of the company, increase accountability, improve results and ensure the quality of our content and experiences. Now the details. Our company is fueled by storytelling and creativity. And virtually every dollar we earn, every transaction, every interaction with our consumers emanates from something creative. I have always believed that the best way to spur great creativity is to make sure that people who are managing the creative processes feel empowered. Therefore, our new structure is aimed at returning greater authority to our creative leaders and making them accountable for how their content performs financially. Our former structure severed that link and it must be restored. Moving forward, our creative teams will determine what content we are making, how it is distributed and monetized and how it gets marketed.

Managing costs, maximizing revenue and driving growth from the content being produced will be their responsibility. Under our strategic reorganization there will be three core business segments: Disney Entertainment, ESPN and Disney Parks, Experiences and Products. Alan Bergman and Dana Walden will be Co-Chairman of Disney Entertainment, which will include the company's full portfolio of entertainment media and content businesses globally, including streaming. Jimmy Pitaro will continue to serve as Chairman of ESPN, which will include ESPN Networks, ESPN+ and our international sports channels. And Josh D'Amaro will continue to be Chairman of Disney Parks, Experiences and Products, which will include our theme parks, resort destinations and cruise line as well as Disney's consumer products, games and publishing businesses.

These organizational changes will be implemented immediately and we will begin reporting under the new business structure by the end of the fiscal year. This reorganization will result in a more cost-effective, coordinated and streamlined approach to our operations and we are committed to running our businesses more efficiently, especially in a challenging economic environment. In that regard, we are targeting $5.5 billion of cost savings across the company. First, reductions to our non-content costs will total roughly $2.5 billion not adjusted for inflation. $1 billion in savings is already underway and Christine will provide more details. But in general, the savings will come from reductions in SG&A and other operating costs across the company.

To help achieve this, we will be reducing our workforce by approximately 7,000 jobs. While this is necessary to address the challenges we are facing today, I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide and I am mindful of the personal impact of these changes. On the content side, we expect to deliver approximately $3 billion in savings over the next few years, excluding sports. Christine will be providing more details during the call. Turning to our streaming businesses, I am proud of what we have been able to achieve since the launch of Disney+ just 3 years ago. We are delivering more content with greater quality in more ways, in more places and to larger audiences.

Like many of our peers, we will no longer be providing long-term subscriber guidance in order to move beyond an emphasis on short-term quarterly metrics, although we will provide color on relevant drivers. Instead, our priority is the enduring growth and profitability of our streaming business. Our current forecasts indicate Disney+ will hit profitability by the end of fiscal 2024 and achieving that remains our goal. Since my return, I have drilled down into every facet of the streaming business to determine how to achieve both profitability and growth. And so with that goal in mind, we will focus even more on our core brands and franchises, which have consistently delivered higher returns. We will aggressively curate our general entertainment content.

We will reassess all markets we have launched in and also determine the right balance between global and local content. We will adjust our pricing strategy, including a full examination of our promotional strategies. We will fine-tune our advertising initiatives on all streaming platforms. We will improve our marketing, better balancing platform and program marketing while also leveraging our legacy distribution platforms for marketing and programming. This may include greater use of legacy distribution opportunities to increase revenue and more effectively amortize content investment. And as I said before, our new organizational structure will reestablish the direct link between content decisions and financial performance. This is one of the most important steps we can take to improve the economics of our streaming business.

There is a lot to accomplish, but let me be clear. This is my number one priority. We are focused on the success of our streaming business and the return it generates for our shareholders long into the future. Before I turn this over to Christine, a few comments about the quarter. James Cameron's Avatar: The Way of Water, which was easily the most successful film of the quarter has become the fourth biggest film of all time globally with close to $2.2 billion earned at the box office to-date. The global popularity of this film will result in the creation of more opportunities for fans to engage with the franchise, which they have been doing at Walt Disney World's Pandora, the World of Avatar, as well as in theaters globally and on Disney+, where the first film has delivered very strong numbers.

And today, I am thrilled to announce that we will be bringing an exciting Avatar experience to Disneyland. We will be sharing more details on that very soon. Avatar represents yet another core franchise for the company. And as you have seen time and time again, we have a unique way of leveraging creative success across multiple businesses and territories and over long periods of time. Speaking of our parks, we had an outstanding quarter in Q1, while we continued our purposeful efforts to control capacity to preserve guest experience. Last month, we also announced some price adjustments at our parks. We are listening to guest feedback and we are continuously working to improve the quality and value of their experience. We are also proud of our creative success as we led all studios with the most Academy Award nominations, including two best picture nominations, 20th Century Studio's Avatar: The Way of Water and Searchlight Pictures' The Banshees of Inisherin.

Marvel's Black Panther: Wakanda Forever received five Oscar nominations. And in addition to an $840 million run at the box office, it launched on Disney+ last week and it has quickly become one of the most successful Marvel films on the platform. Looking ahead, we are excited about our fantastic lineup of new films coming to theaters this year, starting with next week's release of Marvel's Ant-Man and the Wasp: Quantumania; followed by other highly anticipated theatrical titles, including The Little Mermaid; Guardians of the Galaxy: Volume 3; Pixar's Elemental; Indiana Jones and the Dial of Destiny; and Disney's Haunted Mansion. Lucasfilms' The Mandalorian, the series that started it all for Disney+, will be back at the beginning of March for its highly anticipated third season.

And today, I am so pleased to announce that we have sequels in the works from our animation studios to some of our most popular franchises: Toy Story, Frozen and Zootopia. We will have more to share about these productions soon, but this is a great example of how we are leaning into our unrivaled brands and franchises. The Walt Disney Company also won more Golden Globes than any other entertainment company this year, a total of 9, including for Abbott Elementary, the first broadcast show to win a Golden Globe for Best Series in nearly a decade. Without question, we have a world class television business that fuels both our linear channels and direct-to-consumer services, especially with the assets acquired through the Fox transaction. It goes without saying that the best shows lead to the most lucrative library and have the power to endure because of their quality.

The Simpsons illustrates this perfectly. Disney+ launched back in 2019 with more than 30 seasons and it remains one of our top performers today. Across the board, our television business is second to none, and that includes ABC News, which remains America's number one news network. Power of ESPN brand also continues to deliver for us. In calendar €˜22, ESPN linear ratings were up 8% overall and 14% in primetime and we are also growing rapidly across our digital platforms. We are being selective in our rights renewals and continue to approach rights acquisition with discipline and a focus on supporting both sides of ESPN's business: traditional linear and digital. ESPN is more than just a network. And today, the team is harnessing innovative technology to deliver spectacular coverage and entertainment to audiences who have a deep connection to the brand and content.

Now when it comes to investing in growth and returning capital to shareholders, we will take a balanced and disciplined approach as we did throughout my previous tenure as CEO, when we invested in our core businesses and acquired new ones, bought back stock and paid a dividend to our shareholders. As a result of the impact of the COVID pandemic, we made the decision to suspend the dividend in the spring of 2020. Now that the pandemic impacts to our business are largely behind us, we intend to ask the Board to approve the reinstatement of a dividend by the end of the calendar year. Our cost-cutting initiatives will make this possible. And while initially, it will be a modest dividend, we hope to build upon it over time. Christine will provide more information on that.

Photo by Sandro Gonzalez on Unsplash

And finally, on the topic of succession, the Board recently established a dedicated Succession Planning Committee. The committee is chaired by Mark Parker, who will become Chairman of the Walt Disney Company's Board following our annual meeting. I am excited to work with him in his new capacity and I am grateful to our outgoing Board Chairman, Susan Arnold, for her 15 years of tremendous service. Obviously, there is a lot going on, but as I said before, I am truly excited to be back and to lead this great company through this necessary transformation. I am grateful for our incredible talent and my exceptional leadership team. And with that, I will turn things over to Christine.

Christine McCarthy: Thank you, Bob. It's great to have you back on these calls and good afternoon, everyone. Excluding certain items, our company's diluted earnings per share for the first fiscal quarter of 2023 was $0.99, a decrease of $0.07 versus the prior year as continued strength at our Parks, Experiences and Products business was more than offset by a year-over-year decline at our Media Entertainment and Distribution segment. You heard earlier that we are embarking on a significant company-wide cost reduction plan that we expect will reduce annualized non-content-related expenses by roughly $2.5 billion, not including inflation. In general, we anticipate these reductions will be comprised of approximately 50% marketing, 30% labor and 20% technology, procurement and other expenses.

Around $1 billion of this target was included in the guidance we gave last quarter. That fiscal 2023 segment operating income should grow in the high single-digit percentage range, which is still our current expectation. The bulk of the efficiencies we are realizing this year are related to reductions in marketing and headcount at DMED. The remaining portion of the target represents incremental SG&A and other operating expense savings, which will fully materialize by the end of fiscal 2024. Longer term, we also expect to realize additional efficiencies in our content spending with an annualized savings target of approximately $3 billion of future spending outside of sports. We will share additional details with you as we move forward on realizing these efficiencies.

Bob also gave you some details earlier on the company's reorganization. The new structure and leadership roles are effective immediately and we expect to transition to financial reporting under this structure by the end of the fiscal year, at which point we will provide recast financials under our new segments. Until then, I will be walking through our results under the existing segments. Turning to Parks, Experiences and Products, we are thrilled with the results we achieved this quarter with operating income increasing 25% versus the prior year to over $3 billion, reflecting increases at our domestic and international parks and experiences businesses. At domestic parks and experiences, significant revenue and operating income growth in the quarter was achieved despite purposefully reducing capacity during select peak holiday periods by approximately 20% versus pre-pandemic levels in order to prioritize the guest experience.

Per capita guest spend at our domestic parks also showed strong growth. Quarter-to-date, park attendance at both Walt Disney World and Disneyland Resort are pacing above prior year. And based on reservation bookings, we expect to see this trend continue. Disney Cruise Line was also a meaningful contributor to the year-over-year increase in domestic operating income, reflecting higher occupancy in the existing fleet as well as the Disney Wish, which generated positive operating income in its first full quarter of operations. Domestic parks and experiences operating margins improved versus the prior year despite increased cost from inflation, operation support and new guest offerings, pressures, which we expect will persist into Q2 and beyond.

At international parks and experiences, higher year-over-year results were due to growth at Disneyland Paris and higher royalty revenue from Tokyo Disney Resort, partially offset by a decrease at Shanghai Disney Resort. At Disneyland Paris, we remain pleased with the positive results we're seeing from the substantial investments we've made. And at Shanghai, results reflect the fact that the resort was closed for roughly a month during Q1 of fiscal 2023. Moving on to our Media and Entertainment Distribution segment, operating income in the first quarter decreased by over $800 million versus the prior year, driven by year-over-year declines across direct-to-consumer, linear networks and content sales, licensing and others. However, we delivered a significant improvement on a quarter-over-quarter basis at our direct-to-consumer business as we progress on our path towards profitability with Q1 operating losses improving sequentially by over $400 million from Q4.

The sequential improvement at DTC was driven by higher revenue and lower SG&A costs, partially offset by higher programming and production costs. Notably, in the first quarter, we meaningfully reduced DTC marketing expenses across all three categories: content, brand and performance. At both ESPN+ and Hulu, subscribers and ARPU grew sequentially with ARPU growth reflecting the impact of price increases that occurred in August and October, respectively. And at Disney+, core subscribers increased slightly, in line with our prior guidance from $102.9 million in the fourth quarter to $104.3 million in Q1. Disney+ core ARPU decreased by $0.19 versus the prior quarter, driven by an unfavorable foreign exchange impact and a higher mix of subscribers to our multiproduct offerings, partially offset by a benefit from the recent domestic price increase, which occurred towards the end of the first fiscal quarter.

There are a few factors worth mentioning that we expect will impact Disney+ core subscriber and ARPU growth in Q2. The Disney+ domestic price increase has been playing out as expected, with only modestly higher churn, which may also negatively impact the fiscal second quarter given the timing of the December price increase. That impact, in addition to slower than previously expected growth in some international markets, suggests core Disney+ subs may grow only modestly in Q2 at a similar pace to the first quarter. As we have said before, sub growth will vary quarter-to-quarter, and we expect to see higher core subscriber growth towards the end of the fiscal year. Disney+ core ARPU will continue to benefit in the second quarter from the domestic price increase.

And while it's only been 2 months since the launch of the Disney+ ad tier, we are pleased with the initial response, which includes continued demand from top-tier advertisers. As I mentioned last quarter, we do not expect the launch of the Disney+ ad tier to provide a meaningful financial impact until later this fiscal year. And like Bob said, we are reaffirming our guidance that Disney+ will achieve profitability by the end of fiscal 2024. Although, as I have mentioned before, our expectations are built on certain assumptions around subscriber additions based on the attractiveness of our future content, churn expectations, the financial impact of the Disney+ ad tier and price increases, our ability to quickly execute on cost rationalization while preserving revenue and macroeconomic conditions, all of which, while based on extensive internal analysis as well as recent experience provide a layer of uncertainty in our outlook.

We remain focused on showing incremental improvements in our DTC metrics, and we will continue to provide transparency into our progress and key drivers. In our prior earnings call, we noted that we expected the improvement in Q2 operating results at direct-to-consumer would be larger than the improvement in Q1. We now expect Q2 DTC operating results to improve sequentially by approximately $200 million as improvements in the first quarter materialized more quickly than previously expected. Additionally, our view on Q2 now incorporates more challenging addressable advertising headwinds. Moving on to linear networks, first quarter operating income decreased by approximately $240 million versus the prior year. Domestic channels operating income grew year-over-year but that growth was more than offset by decreases at international channels.

The increase at domestic channels was due to higher results at cable, while broadcasting results were comparable to the prior year quarter. Higher cable results were driven by lower programming and production costs, partially offset by decreases in advertising and affiliate revenue. The decrease in programming and production costs reflect lower NFL and college football playoff or CFP rights costs. The decline in NFL rights expense reflects the timing of costs under our new agreement compared to the prior NFL agreement, and lower CFP rights costs were due to timing shifts. Recall that we had two fewer games in the first quarter of fiscal 2023 versus the prior year as those games were shifted into Q2 this year. The decrease in cable advertising revenue also reflects the CFP timing shift.

ESPN advertising revenue in the first quarter was down 4% year-over-year, but was roughly flat once adjusted for the CFP shift. And quarter-to-date, domestic cash ad sales at ESPN are pacing slightly below prior year when the two additional CFP games are adjusted out. Scatter/Data pricing remains above upfront levels. Although it has softened a bit in recent months, however, we are seeing solid advertiser interest for live events such as the Oscars and demand across sports also remains solid. Total domestic affiliate revenue in the first quarter increased by 1% from the prior year, driven by 6 points of growth from contractual rate increases, partially offset by a 5-point decline due to a decrease in subscribers. International channels operating income decreased versus the prior year due to lower advertising revenue and unfavorable foreign exchange impact and a decrease in affiliate revenue, partially offset by a decrease in programming and production costs.

As a reminder, the first quarter held no IPL cricket matches versus 13 matches in the prior year due to COVID-related timing shifts. Looking ahead to the fiscal second quarter, we expect Linear Networks operating income will decrease year-over-year by approximately $1 billion. We expect Q2 will have the most challenging comparison for Linear Networks versus the prior year and anticipate a significantly lower decline in the back half of the year. There are several factors impacting the Q2 guide that I'd like to walk through. First, recall that domestic Linear Networks operating income increased in Q1 versus the prior year, benefiting from the timing of costs under a new agreement for the NFL and a timing impact for CFP. These impacts will work against us in Q2.

And as a result, ESPN is expected to account for approximately half of the $1 billion operating income decrease. Broadcasting and our other domestic cable networks will be adversely impacted in the second quarter by approximately $300 million, driven primarily by headwinds in advertising, and to a lesser extent, affiliate revenue, and international channels account for the remaining $200 million decrease. This includes timing impacts from BCCI cricket with eight additional matches versus the prior year, other contractual rights cost increases and additional top line headwinds. And at content sales, licensing and other operating results decreased versus the prior year by $114 million as higher theatrical results were more than offset by lower TV/SVOD operating income, higher overhead costs and a decrease in home entertainment operating income.

These results came in below the guidance we gave in November, primarily due to softer-than-expected performance of certain theatrical releases. In the second quarter, we believe that content sales, licensing and other operating results will be roughly breakeven. Finally, before we conclude, I'd like to say a few words about our focus on allocating capital in a disciplined and balanced way. As Bob mentioned, over the years, we have invested in our businesses to drive growth and return meaningful capital to our shareholders. Despite the impact of COVID, which had a significant adverse impact on the company's free cash flow, our balance sheet is strong and supports ongoing investment in our businesses. We still expect cash content spend company-wide to remain in the low $30 billion range for fiscal 2023.

The longer-term content cost reductions referenced earlier in the call are not expected to impact this year's guidance range. We also continue to invest in our parks and experiences globally and in other capital ticks across the enterprise and expect that fiscal 2023 capital expenditures will total approximately $6 billion. This is lower than our prior guide of $6.7 billion primarily due to decreases in CapEx on our domestic parks, reflecting, in part, some timing shifts. Like Bob mentioned, given our recovery from the pandemic, strong balance sheet and commitment to cost cutting, we believe we will be on track to declare a modest dividend by the end of this calendar year. The amount will likely be a small fraction of our pre-COVID dividend with the intention to increase it over time as our earnings power grows.

And in terms of our current outlook, as we sit here today, €“ we still expect that revenue and segment operating income growth for this fiscal year will be in the high single-digit percentage range, and we look forward to updating you on our progress as we move forward. I'd also like to note that shortly after today's call we will be posting a presentation on our Investor Relations website, which will summarize many of the themes that we are discussing here today. And with that, I'll turn it back to Alexia, and we would be happy to take your questions.

Alexia Quadrani: Thanks, Christine. Operator, we are ready for the first question.

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