Walt Disney Company (DIS)

Theatrical Distribution

Walt Disney Pictures and Television, a subsidiary of the Company, produces and acquires live-action motion pictures that are distributed primarily under the Walt Disney Pictures and Touchstone Pictures banners. As part of a recently-announced shift in strategy, the Company expects to weight distribution of films more toward Disney-branded films and away from Touchstone films. Another subsidiary, Miramax Film Corp., acquires and produces motion pictures that are distributed under the Miramax banner. The Company distributed motion pictures under the Dimension banner through September 30, 2005. All releases under the Dimension banner after September 30, 2005 are owned and distributed by The Weinstein Company, a third-party company operated by the former co-chairmen of Miramax. The Company retains a license to continue to use the Dimension banner on titles that were released prior to September 30, 2005. The Company also produces and distributes animated motion pictures under the banner Walt Disney Pictures, including the films produced by Pixar. Refer to “Relationship with Pixar” section below for further information.

During fiscal 2007, we expect to distribute in domestic markets approximately 14 feature films under the Walt Disney Pictures and Touchstone Pictures banners and approximately nine films under the Miramax banner. These expected releases include several live-action family films and full-length animated films, with the remainder targeted to teenagers and/or adults. As of September 30, 2006, the Company had released domestically 894 full-length live-action features, 77 full-length animated features, approximately 542 cartoon shorts and 53 live action shorts under the Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax, and Dimension banners.

We distribute and market our filmed products principally through our own distribution and marketing companies in the U.S. In the international market, we distribute our filmed products both directly and through independent foreign distribution companies. Films released theatrically in the U.S. can be released simultaneously theatrically in international territories or generally up to six months later. The Company recently reorganized its theatrical distribution operations into one worldwide theatrical distribution unit.

The Company incurs significant marketing and advertising costs before and throughout the theatrical release of a film in an effort to generate public awareness of the film, to increase the public’s intent to view the film, and to help generate significant consumer interest in the subsequent home entertainment and other ancillary markets. These costs are expensed as incurred, therefore, we typically incur losses in the theatrical markets on a film, including the quarters before the theatrical release of the film.

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      During fiscal 2006, we expect to distribute in domestic markets approximately 18 feature films under the Walt Disney Pictures and Touchstone Pictures banners and approximately 7 films under the Miramax banner. These expected releases include several live-action family films and full-length animated films, with the remainder targeted to teenagers, families and/or adults. As of October 1, 2005, the Company had released domestically 870 full-length live-action features (primarily color), 73 full-length animated color features, approximately 540 cartoon shorts and 53 live action shorts under the Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax and Dimension banners.

      We distribute and market our filmed products principally through our own distribution and marketing companies in the U.S. In the international market, we distribute our filmed products both directly and through independent foreign distribution companies. Films released theatrically in the U.S. can be released simultaneously theatrically in international territories or generally up to six months later.

      The Company incurs significant marketing and advertising costs before and throughout the theatrical release of a film in an effort to generate public awareness of the film, to increase the public’s intent to view the film and to help generate significant consumer interest in the subsequent home entertainment and other ancillary markets. These costs are expensed as incurred, and therefore we typically incur losses in the theatrical markets on a film, including the quarters before the theatrical release of the film.