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As we have articulated in the past, our studio strategy is to essentially make three types of movies, big releases with broad appeal and franchise potential under the Disney, Marvel and Lucasfilm brands. Animation, which is the heart and soul of this company is stronger than ever under the Pixar and Disney brands, and lower budget original films that entertain audiences and enhance the Disney brand through exceptional storytelling. In today's global marketplace big franchise films play extremely well, particularly those with action or family appeal.

In fact, of the world's top-20 highest grossing movies of all time, 19 are franchised drivers and almost half of those carried the Disney, Pixar, Marvel or Lucasfilm brand. With all the creative brands that are now part of our company as well as the thousands of characters and phenomenal storytelling behind them we believe we are uniquely positioned to maximize the ever-expanding global movie market. Our success with Marvel is a great example. There is no question, the phenomenal success in Avengers, strengthened the Avengers franchise and is now driving subsequent Avengers based character films to stronger box-office performance.

Iron Man 3 topped $1.2 billion in global box-office, far exceeding the $632 million for Iron Man 2. Likewise, Thor: The Dark World, has delivered more than $635 million global box-office versus $450 million for the first Thor movie. We expect this trend to continue when Captain America: The Winter Soldier opens on April 4 th , in the United States. Having seen it a few times already, I can tell you this sequel takes the Captain America story to an incredible new level and I think audiences are going to be more invested in this character than ever before.

Because, all Marvel content and characters exist in connected universe, this movie also sets some critical events in motion that will lead directly into Avengers: Age of Ultron and some facets of the story in Captain America: The Winter Soldier, will also be reflected in upcoming episodes of Marvel's Agents of S.H.I.E.L.D. on ABC.

In August, we will release Guardians of the Galaxy, introducing audiences to a new cast of great Marvel characters. As we announced last quarter, Star Wars: Episode VII premiers in December of 2015 and it looks to be one of the biggest movies we have ever released. Nothing I say here today could ever capture or convey the magnitude global anticipation for this movie, so I am just going to say the excitement is fully justified and leave it to that.

We are also very pleased with the work being done at Walt Disney Studios, blending their own form of tempo films with lower budget great original films like Saving Mr. Banks. They do so much to enhance the Disney brand image and we are excited about our upcoming slate, including Muppets Most Wanted, Angelina Jolie as Maleficent, Jon Hamm in Million Dollar Arm, George Clooney in Tomorrowland, which is directed by Brad Bird, and Disney's first even live action Cinderella. Lastly, animation is one of our biggest priorities, because it's one of our most important creative businesses.

With Pixar and the created resurgence of Disney Animation, we now have the two strongest animations brands generating some of the greatest creative work in the industry, with Frozen being the most recent example. Frozen has now surpassed The Lion King to become the most successful Disney Animation movie of all time. It exceeded $870 million in global box-office before even being released in two of our most important markets. It just opened in China in the last 24 hours and it will open in Japan on March 15 th . Frozen is not only a tremendous financial success, it's also an incredible creative trial earning the Golden Globe for Best Animated Feature Film of the Year, as well as Oscar nominations for Best Animated Film and Best Song. It has also just picked up 5 Emmy Awards for Outstanding Achievement in Animation.

Two months after opening, Frozen is still big in theaters. It was second in U.S. box-office just this past weekend. Additionally, the sound track is at the top of the charts and high demand for Frozen merchandise continues to drive strong retail sales. With tradition of The Lion King and Beauty and the Beast, Disney's Frozen will also be going to Broadway.

When we acquired Pixar in 2006, our goal was to not only support and benefit from the continued creative and commercial success of Pixar, but to rejuvenate Disney Animation under the leadership. Accomplishing this was not only a priority, but something that is and will continue to drive value across the company for years to come. We congratulate all those involved with Frozen and success speaks volumes, about the future of animation at our company. We are obviously proud of our performance this quarter and it's very satisfying to see long-term strategies come to fruition delivering results and driving greater value for our company and shareholders.

I am going to turn the call over to Jay to talk about the details of our quarter performance and be back for questions later on. Jay?

Jay Rasulo

Thanks, Bob, and good afternoon, everyone. We are pleased with our first quarter results. Segment operating income was up 27% on revenue growth of 9%. The strong financial performance was broad-based as each segment posted double-digit growth in operating income and margin expansion compared to prior year. I think, once again this quarter demonstrates that our investment strategy continues to create value.

Media Networks delivered another great quarter of financial performance led by cable networks, which generated an impressive 34% increase in operating income driven by growth at ESPN and higher equity income. This more than offset a decline in operating income at broadcasting.

Growth in ESPN's operating income was due to higher affiliate and advertising revenue. ESPN also benefited in the quarter from the absence of losses at our ESPN U.K. business, which was sold in the fourth quarter last year. Programming costs at ESPN were comparable to prior year as contractual increases for the NFL and college football were offset by the absence of costs for U.K. sports rights.

During the first quarter, ESPN deferred $18 million less in affiliate revenue than last year. As we look to the second quarter, we expect ESPN to differ approximately $75 million less in affiliate revenue than last year. Ad revenue, ESPN's was up 10% in the first quarter due to higher rates and an increase in units sold, partially offset by lower ratings. So far this quarter, ESPN ad sales are pacing up slightly despite the impact of the Winter Olympics.

Over last couple of years, we have provided insight into our cable affiliate revenue growth on an aggregate basis. Given some of the recent business model changes internationally, and the impact of foreign exchange rates, we think it might be more helpful to breakout the domestic affiliate growth as it constitutes the majority of our affiliate revenue.

As such, our domestic cable affiliate revenue growth was up high single-digits in the quarter. Adjust for the timing of deferred revenue at ESPN, growth in domestic cable affiliate revenue was still up high single-digits. It's also important to note that the growth in Q1 reflected the last quarter in which year-over-year comparisons were aided by the new affiliate deals that took effect in the second fiscal quarter of 2013. Equity income was up in the quarter due to higher income from our investment in A&E Television Networks, as well as the absence of equity losses from our investment in the ESPN STAR Sports joint venture, which we sold in the prior year.

At Broadcasting lower operating income was driven by higher programming expenses at the ABC Network, due to write-offs as well as the contractual rate increase for Modern Family. Program sales in the quarter were down compared to last year when we sold Revenge and Army Wives. Ad revenue at the Network was up low-single digits in the quarter as a result of higher rates and increased units sold, partially offset by lower ratings. Quarter-to-date scatter pricing at the ABC Network is running more than 10% above upfront levels.

At Parks and Resorts growth in operating income was once again, due to strength at our domestic operations, as investments at Walt Disney World and the Disneyland Resort continued to pay off. Results at our international operations were up modestly over the prior year, with growth in Hong Kong Disneyland partially offset by a decline at Disneyland Paris. Total segment margins were up 170 basis points in the first quarter.

Growth in operating income at our domestic operations was driven by higher guest spending at Walt Disney World and the Disneyland Resort, partially offset by higher costs primarily related to the continued rollout of MyMagic+. For the quarter, per capita spending in the Parks was up 8% on higher ticket prices and food and beverage spending.

Per room spending at our hotels was up 5%. Attendance at our domestic Parks and occupancy at the hotels were comparable to first quarter last year, in which we saw increased visitation due to the opening of Cars Land at Disney California Adventure and with the grand opening of Fantasyland expansion at Walt Disney World, the last phase of which will complete in a few months with the launch of Seven Dwarfs Mine Train.

So far this quarter, domestic resort reservations are pacing up 7% compared to prior year levels while booked rates are up 2%. As Bob said, Studio Entertainment had a great quarter as a result of the global box-office success of both, Frozen and Thor: The Dark World, compared to Wreck-It Ralph and no Marvel title in the first quarter, last year. Studio operating income was up 75%, driven by increases in our theatrical business and to a lesser extent an increase in home entertainment due to lower distribution and marketing costs partially offset by lower unit sales.

Our Consumer Products' operating income increased 24% and margins were higher by 400 basis points, reflecting strength in our Merchandise Licensing business and continued improvement at Retail. Growth in licensing was driven by the inclusion of Lucasfilm's results, as well as higher revenue from Planes, Disney Junior properties and Monsters.

On a comparable basis, earned licensing revenue for the first quarter was up 5% versus last year and that follows the 9% growth in earned revenue in the fourth quarter. We continue to be pleased with the results of our Retail business, specifically in North America where comp store sales were up due to strong sales of Frozen and Disney Junior merchandise, demonstrating the power of our franchises to drive our Retail businesses as well as the Disney Store's ability to support company franchise.

The North American stores have now posted comp store sales growth for eight consecutive quarters. At Interactive, we had another profitable quarter driven primarily by significant improvement in core gains, and to a lesser extent, continued growth in our Japan mobile business. Higher operating income in core gains was due to strong sales of Disney Infinity, compared to the Epic Mickey 2 last year.

As we look at the second quarter, I want to point out that the Easter holiday will fall entirely in Q3 this year, whereas one week of the two-week holiday period fell in Q2 last year. We estimate the impact of this one week shift on Parks results to be roughly $45 million in operating income, shifting out of Q2 into Q3.

At Interactive, we expect quarterly results to be somewhat lumpy throughout the year and they will largely follow the timing of key game releases. While the segment posted an operating profit in Q1, we expect an operating loss in the second quarter that's comparable to the loss in Q2 last year. We significantly increased our pace of share repurchase during the first quarter by buying back 25.3 million shares for about $1.7 billion. Fiscal year to-date, we have repurchased 33.7 million shares for $2.3 billion.

Overall, we feel great about the start of the fiscal year. Our financial position is strong, and given recent and ongoing investments, we remain confident in our ability to drive growth and thus create value for our shareholders.

With that, we are now ready to take your questions.

Earnings Call Part 2:

• Q&A with The Walt Disney Company CEO