THE WALT DISNEY COMPANY REPORTS FIRST QUARTER EARNINGS

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BURBANK, Calif. – The Walt Disney Company today reported earnings for its first fiscal quarter ended December 31, 2011. Diluted earnings per share (EPS) for the quarter increased 18% to $0.80 from $0.68 in the prior-year quarter.

“We’re off to a good start in this fiscal year executing on our ongoing strategy, deriving greater value from our brands – Disney, Pixar, Marvel, ESPN and ABC – in the U.S. and around the globe,” said Disney President and CEO Robert A. Iger. “We are confident that our commitment to creating and providing exceptional family entertainment on multiple platforms continues to position us to deliver long- term shareholder value.”

The following table summarizes the first quarter results for fiscal 2012 and 2011 (in millions, except per share amounts):

Quarter Ended Dec. 31, 2011

Jan. 1,

2011 Change Revenues $ 10,779 $ 10,716 1 % Segment operating income (1) $ 2,444 $ 2,208 11 % Net income (2) $ 1,464 $ 1,302 12 % Diluted EPS (2) $ 0.80 $ 0.68 18 % Cash provided by operations $ 1,734 $ 1,119 55 % Free cash flow (1) $ 1,100 $ (94 ) >100 %

(1) Aggregate segment operating income and free cash flow are non-GAAP financial measures. See the

discussion of non-GAAP financial measures below. (2) Reflects amounts attributable to shareholders of The Walt Disney Company, i.e. after deduction of

noncontrolling (minority) interests.
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SEGMENT RESULTS

The following table summarizes the first quarter segment operating results for fiscal 2012 and 2011 (in millions):

Quarter Ended Dec. 31, 2011

Jan. 1,

2011 Change Revenues:

Media Networks $ 4,779 $ 4,645 3 % Parks and Resorts 3,155 2,868 10 % Studio Entertainment 1,618 1,932 (16 ) % Consumer Products 948 922 3 % Interactive Media 279 349 (20 ) % $ 10,779 $ 10,716 1 % Segment operating income (loss):

Media Networks $ 1,193 $ 1,066 12 % Parks and Resorts 553 468 18 % Studio Entertainment 413 375 10 % Consumer Products 313 312 − % Interactive Media (28 ) (13 ) >(100 ) % $ 2,444 $ 2,208 11 %

Media Networks

Media Networks revenues for the quarter increased 3% to $4.8 billion and segment operating income increased 12% to $1.2 billion. The following table provides further detail of the Media Networks results (in millions):

Quarter Ended Dec. 31, 2011

Jan. 1,

2011 Change Revenues:

Cable Networks $ 3,309 $ 3,068 8 % Broadcasting 1,470 1,577 (7 ) % $ 4,779 $ 4,645 3 %

Segment operating income:

Cable Networks $ 967 $ 771 25 % Broadcasting 226 295 (23 ) % $ 1,193 $ 1,066 12 %

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Cable Networks

Operating income at Cable Networks increased $196 million to $967 million for the quarter due to growth at ESPN and, to a lesser extent, the worldwide Disney Channels. The increase at ESPN was driven by higher affiliate revenue reflecting contractual rate increases and a reduction in revenue deferrals related to annual program commitments. During the quarter, ESPN deferred $190 million of revenue compared to $266 million in the prior year quarter. The decrease was due to a change in the provisions related to annual programming commitments in an affiliate contract. Advertising revenues at ESPN were essentially flat as higher rates and units sold were offset by decreased ratings and a shift in the timing of the Rose Bowl, Fiesta Bowl and certain NBA games relative to our fiscal period end. Programming and production costs at ESPN were comparable to the prior-year quarter as the shift in the timing of college bowl and NBA games was offset by higher contractual rates for NFL and college football programming.

Higher operating income at the worldwide Disney Channels was due to increased advertising and affiliate revenue, partially offset by higher programming and production costs. Higher advertising revenue was driven by higher units sold and improved rates internationally. Affiliate revenue growth reflected subscriber growth internationally and contractual rate increases domestically.

Broadcasting

Operating income at Broadcasting decreased $69 million to $226 million driven by lower political advertising revenues at our owned television stations and higher marketing costs, partially offset by lower programming and production costs due to the absence of The Oprah Winfrey Show at the owned television stations. The increase in marketing costs was driven by an increase in the number of new series launches at the ABC Television Network. Advertising revenue at the ABC Television Network was essentially flat as higher advertising rates were offset by decreased ratings and units sold.

Parks and Resorts

Parks and Resorts revenues for the quarter increased 10% to $3.2 billion and segment operating income increased 18% to $553 million. Results for the quarter were driven by increases at our domestic parks and resorts and Disney Cruise Line.

Higher operating income at our domestic parks and resorts was driven by increased guest spending and attendance, partially offset by increased costs. Increased guest spending reflected higher average ticket prices and food and beverage spending. Higher costs reflected labor cost inflation across our domestic parks and resorts, enhancement costs including investments in systems infrastructure and higher employee benefits costs at Walt Disney World Resort, and new guest offerings at Disneyland Resort including the expansion of Disney California Adventure. Higher operating income at Disney Cruise Line was due to a full period of operations of the Disney Dream which launched at the end of January 2011.

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At our international parks and resorts, higher operating income at Hong Kong Disneyland Resort was offset by lower results at Disneyland Paris. The increase at Hong Kong Disneyland Resort reflected increased guest spending, driven by higher average ticket prices, daily hotel room rates, and food, beverage and merchandise spending, and increased attendance. Lower operating income at Disneyland Paris was driven by labor cost inflation and the absence of real estate sales which occurred in the prior-year quarter, partially offset by increased attendance and guest spending. Higher guest spending at Disneyland Paris was driven by increased average daily hotel room rates.

Studio Entertainment

Studio Entertainment revenues decreased 16% to $1.6 billion and segment operating income increased 10% to $413 million. The revenue decline was driven by fewer Disney branded titles in wide theatrical release in the current quarter along with an adverse impact from the timing of title availabilities in television markets and lower DVD volumes. Higher operating income was primarily due to an increase in worldwide theatrical results and lower film cost write-downs, partially offset by decreases in television distribution and worldwide home entertainment results.

Improved worldwide theatrical results reflected the benefit of lower distribution and marketing costs and production cost amortization which more than offset the revenue decline due to fewer Disney branded films in wide theatrical release. Key titles in the prior-year quarter included Tangled and Tron: Legacy while the current quarter included The Muppets.

Lower results in television distribution were driven by the timing of title availabilities, relative to our fiscal period end, in international markets. The decrease in worldwide home entertainment was primarily due to a decline in unit sales, partially offset by improved net effective pricing driven by a higher Blu-ray sales mix. The decrease in unit sales reflected the strength of Toy Story 3, Beauty and the Beast Platinum Release, A Christmas Carol and Sorcerer’s Apprentice in the prior-year quarter compared to Cars 2, The Lion King Platinum Release, Pirates of the Caribbean: On Stranger Tides and The Help in the current quarter, as well as lower sales of catalog titles.

Consumer Products

Consumer Products operating income of $313 million for the quarter was comparable to the prior-year quarter while revenues increased 3% to $948 million. At our retail business, increased revenue was driven by new stores in North America and holiday season promotions. Retail sales were driven by Cars and Tangled merchandise in the current quarter compared to Toy Story in the prior-year quarter. The revenue increase at retail was largely offset by higher operating costs associated with increased volume.

At Merchandise Licensing, operating income for the quarter was comparable to the prior-year quarter as the strength of Cars merchandise was largely offset by lower performance of Toy Story and Tangled merchandise.

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Interactive Media

Interactive Media revenues for the quarter decreased 20% to $279 million and segment operating results decreased by $15 million to a loss of $28 million. Lower operating results were driven by a decrease at our console game business partially offset by improved social game results, consistent with our ongoing shift from console games to social and other interactive platforms. Social game results were driven by lower acquisition accounting impacts which were adverse to the prior- year quarter and improved title performance in the current quarter.

The decrease at our console game business was primarily due to fewer releases and the strength of Epic Mickey in the prior-year quarter. Significant titles in the current quarter included Disney Universe while the prior-year quarter included Toy Story 3 and Tron: Evolution in addition to Epic Mickey.

OTHER FINANCIAL INFORMATION
Net Interest Expense
Net interest expense was as follows (in millions):

Quarter Ended Dec. 31, 2011

Jan. 1, 2011 Interest expense $ (116 ) $ (100 ) Interest and investment income 26 5 Net interest expense $ (90 ) $ (95 )

The increase in interest expense was driven by higher average debt balances.

The increase in interest and investment income for the quarter was driven by a gain on the sale of an investment in the current quarter and lower investment impairments in the current quarter compared to the prior-year quarter.

Income Taxes
The effective income tax rate is as follows:

Quarter Ended Dec. 31, 2011

Jan. 1, 2011 Effective Income Tax Rate 32.1% 35.4%

The effective income tax rate for the quarter decreased to 32.1% from 35.4%. The prior-year quarter included a net adverse tax rate impact of 2.5 percentage points from a gain on sale of business and an impairment charge.

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In the prior-year quarter we recognized a gain on the sale of Miramax, and our book value of Miramax included non-deductible goodwill such that the taxable gain on the sale of Miramax resulted in tax expense that exceeded the book gain and an increase in the effective tax rate. The prior-year impairment charge related to assets that had tax basis in excess of the book value resulting in a tax benefit that exceeded the pre-tax impairment charge and a decrease in the effective tax rate.

Noncontrolling Interests

Net income attributable to noncontrolling interests increased $25 million to $57 million primarily due to higher results at ESPN. Net income attributable to noncontrolling interests is determined based on income after royalties, financing costs and income taxes.

Cash Flow
Cash provided by operations and free cash flow were as follows (in millions):

Quarter Ended Dec. 31, 2011

Jan. 1,

2011 Change Cash provided by operations $ 1,734 $ 1,119 $ 615 Investments in parks, resorts and

other property (634) (1,213) 579 Free cash flow (1) $ 1,100 $ (94) $ 1,194

(1) Free cash flow is not a financial measure defined by GAAP. See the discussion of non-GAAP
financial measures that follows below.

The increase in cash provided by operations was driven by higher receivable collections, the timing of payments of accounts payable and higher segment operating results, partially offset by higher television production and programming spending.

The decrease in capital expenditures was due to the final payment on the Disney Dream which occurred during our first quarter of fiscal 2011 compared to the final payment on the Disney Fantasy which will occur in the second quarter of fiscal 2012. This decrease was partially offset by higher current year expenditures for theme park and resort expansions and new guest offerings at Walt Disney World Resort and the development of Shanghai Disney Resort.

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Capital Expenditures and Depreciation Expense
Investments in parks, resorts and other property were as follows (in millions):

Quarter Ended Dec. 31, 2011

Jan. 1, 2011 Media Networks

Cable Networks $ 20 $ 12 Broadcasting 10 21 Total Media Networks 30 33 Parks and Resorts

Domestic 358 1,012 International 123 76 Total Parks and Resorts 481 1,088 Studio Entertainment 17 24 Consumer Products 16 13 Interactive Media 4 4 Corporate 86 51 Total investments in parks, resorts and other property $ 634 $ 1,213

Depreciation expense was as follows (in millions):

Quarter Ended Dec. 31, 2011

Jan. 1, 2011 Media Networks

Cable Networks $ 34 $ 31 Broadcasting 23 24 Total Media Networks 57 55 Parks and Resorts

Domestic 224 206 International 79 79 Total Parks and Resorts 303 285 Studio Entertainment 13 17 Consumer Products 13 12 Interactive Media 4 5 Corporate 46 38 Total depreciation expense $ 436 $ 412

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Borrowings
Total borrowings and net borrowings are detailed below (in millions):

Dec. 31, 2011

Oct. 1,

2011 Change Current portion of borrowings $ 3,160 $ 3,055 $ 105 Long-term borrowings 11,226 10,922 304 Total borrowings 14,386 13,977 409 Less: cash and cash equivalents (3,766) (3,185 ) (581 ) Net borrowings (1) $ 10,620 $ 10,792 $ (172 )

(1) Net borrowings is a non-GAAP financial measure. See the discussion of non-GAAP financial
measures that follows.

The total borrowings shown above include $2,145 million and $2,311 million attributable to our consolidated international theme parks as of December 31, 2011 and October 1, 2011, respectively. Cash and cash equivalents attributable to our consolidated international theme parks totaled $625 million and $778 million as of December 31, 2011 and October 1, 2011, respectively.

Non-GAAP Financial Measures

This earnings release presents earnings per share excluding the impact of certain items, net borrowings, free cash flow, and aggregate segment operating income, all of which are important financial measures for the Company but are not financial measures defined by GAAP.

These measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as alternative measures of earnings per share, borrowings, cash flow or net income as determined in accordance with GAAP. Net borrowings, free cash flow, and aggregate segment operating income as we have calculated them may not be comparable to similarly titled measures reported by other companies.

Earnings per share excluding certain items – The Company uses earnings per share excluding certain items to evaluate the performance of the Company’s operations exclusive of certain items that impact the comparability of results from period to period. The Company believes that information about earnings per share exclusive of these impacts is useful to investors, particularly where the impact of the excluded items is significant in relation to reported earnings, because the measure allows for comparability between periods of the operating performance of the Company’s business and allows investors to evaluate the impact of these items separately from the impact of the operations of the business.
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The following table reconciles reported earnings per share to earnings per share excluding certain items:

Quarter Ended Dec. 31, 2011

Jan. 1,

2011 Change Diluted EPS attributable to Disney as reported $ 0.80 $ 0.68 18 % Exclude:

Restructuring and impairment charges − (0.01) nm Other income (1) − 0.02 nm Diluted EPS attributable to Disney excluding

certain items (2) $ 0.80 $ 0.68 18 %
(1) Other income for the prior-year quarter consists of gains on the sales of Miramax and BASS ($75 million).
(2) Diluted EPS excluding certain items may not equal the sum of the column due to rounding.
Net borrowings – The Company believes that information about net borrowings provides investors with a useful perspective on our financial condition. Net borrowings reflect the subtraction of cash and cash equivalents from total borrowings. Since we earn interest income on our cash balances that offsets a portion of the interest expense we pay on our borrowings, net borrowings can be used as a measure to gauge net interest expense. In addition, a portion of our cash and cash equivalents is available to repay outstanding indebtedness when the indebtedness matures or when other circumstances arise. However, we may not immediately apply cash and cash equivalents to the reduction of debt, nor do we expect that we would use all of our available cash and cash equivalents to repay debt in the ordinary course of business.
Free cash flow – The Company uses free cash flow (cash provided by operations less investments in parks, resorts and other property), among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures. Management believes that information about free cash flow provides investors with an important perspective on the cash available to service debt, make strategic acquisitions and investments and pay dividends or repurchase shares.
Aggregate segment operating income – The Company evaluates the performance of its operating segments based on segment operating income, and management uses aggregate segment operating income as a measure of the performance of operating businesses separate from non-operating factors. The Company believes that information about aggregate segment operating income assists investors by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect net income, thus providing separate insight into both operations and the other factors that affect reported results.
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A reconciliation of segment operating income to net income is as follows (in millions):

Quarter Ended Dec. 31, 2011

Jan. 1, 2011 Segment operating income $ 2,444 $ 2,208 Corporate and unallocated shared expenses (107) (112) Restructuring and impairment charges (6) (12) Other income − 75 Net interest expense (90) (95) Income before income taxes 2,241 2,064 Income taxes (720) (730) Net income $ 1,521 $ 1,334

CONFERENCE CALL INFORMATION

In conjunction with this release, The Walt Disney Company will host a conference call today, February 7, 2012, at 5:00 PM EST/2:00 PM PST via a live Webcast. To access the Webcast go to www.disney.com/investors. The discussion will be available via replay through February 21, 2012 at 7:00 PM EST/4:00 PM PST.

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