Media Networks contributed most to our profit growth for the year, led once again by Cable Networks. The Disney and ESPN brands provide consumers with high-quality programming that translates well across platforms and cuts through the clutter created by ever-expanding entertainment choices. Over the past few years, we have invested in developing our digital capabilities, which will allow us to create programming that can extend across platforms. ESPN has succeeded in delivering a media “surround” experience for consumers and advertisers across TV, internet, wireless, print and radio outlets. ESPN's coverage of Monday Night Football, Major League Baseball, NBA and NASCAR reflect the results of this investment.
Disney Channel also continues to be a great success story, both in terms of the network's ratings performance and in its ability to create new franchises that lift revenue and returns across our business segments. Successful programming like High School Musical 2 and Hannah Montana drove sales in music, video games and merchandising in fiscal 2007. Disney Channel is one of the most important drivers of the Disney brand in the US and is instrumental in building brand awareness for Disney around the world.
At Broadcasting, ABC Studios' hit shows drove demand across platforms and syndication windows, helping Broadcasting deliver strong double-digit growth in operating income. ABC's efforts in building a unique consumer experience on ABC.com and other digital platforms have created a higher consumer affinity for the network because it has enabled consumers to discover and view new shows and to catch up with their favorite shows on their own time. Making our content available on different platforms is valuable to viewers, viable for advertisers, and strengthens our network audience.
Our Studio Entertainment segment had an outstanding year, delivering record profit on the strength of Pirates of the Caribbean: Dead Man's Chest and Cars on DVD while the third installment of Pirates of the Caribbean and Ratatouille delivered strong box office performance in theatres. The success of the studio is also the result of our disciplined approach to film production whereby we have reduced our overall investment in film, while focusing more on Disney-branded movies.
The Studio's ability to create high quality Disney-branded content – particularly content with significant franchise potential – is the reason that the Studio remains one of the Company's most important creative engines. As an example, Cars, which was released theatrically in 2006, was an important driver of the Company's 2007 home video and consumer products successes. We believe that the property can be further leveraged across our other businesses. Therefore, we will be adding an entire new Cars-themed land to Disney's California Adventure at the Disneyland Resort in a few years and we are extending the Cars franchise as an online virtual world.
Our ability to create long-term returns from properties like Cars,Toy Story, or Finding Nemo illustrates the important value of our Pixar acquisition. We are extremely pleased with the integration of Pixar and Disney. The creative lift brought by Pixar is evident not just at the Disney Animation Studios, but also at Consumer Products and at Parks & Resorts, where their wonderful characters and stories can now be experienced in new and innovative ways. Pixar illustrates the level of commitment to quality and creativity we strive for at The Walt Disney Company.
Disney Parks and Resorts delivered attractive operating profit growth and substantial cash flow again this past year. The success of the Year of a Million Dreams marketing initiative across the parks helped us achieve increased revenue and profit, along with record attendance at our domestic parks for the year. Notably, we also further increased operating margins for our domestic parks. As importantly, our Parks and Resorts play a vital role in raising strategic awareness for our brands by providing an immersive experience that fully engages our audiences around the world.
In the next few years, we expect to invest in the parks to further enrich the immersive experience that our guests around the world have come to associate with our parks. At Disneyland Resort, we are expanding Disney's California Adventure in order to enhance the Disneyland Resort's appeal as a multi-day vacation destination. In addition, we are expanding further in other segments of the leisure market, particularly Disney Cruise Line and Disney Vacation Club. Disney Cruise Line has generated double-digit returns on invested capital. Given these returns, we are building two new ships, which are slated for delivery in 2011 and 2012. Disney's Vacation Club has experienced strong demand since we launched the first resort in 1991. We believe there is still room to grow and we have announced the development of Vacation Club units at Disneyland's Grand Californian Resort and in Hawaii.
Through the investment we've made in the past several years, and through continued targeted capital investments, our parks and resorts business is well positioned to leverage our brands to create strong returns. At the same time, we expect the segment will continue to generate meaningful free cash flow, even taking into account the ongoing investments we are making to further enrich the Disney theme park experience.
The strength of the Disney brand and its growing portfolio of franchises underpin the success of our Consumer Products segment. Our managers work hard to collaborate across business segments to ensure that we maximize the value of our many creative properties. Consumer Products benefits greatly from this franchise building process, particularly in licensing, where revenues from earned royalties achieved double-digit growth rates in fiscal 2007. We believe we have upside potential in the licensing business and aim to further increase our market share in key categories through our direct-to-retail licensing strategies over the next few years.
We also believe that video gaming is a key growth opportunity over the next five to seven years as it allows us to extend our existing characters and brands, and deliver stronger returns from our key franchises. We have steadily ramped up our product development capabilities and expect to continue increasing our investment in video games over time.
3 Capital expenditures excluding Euro Disney and Hong Kong Disneyland is not a financial
measure defined by GAAP. Reconciliations of non-GAAP financial measures to equivalent
GAAP financial measures are available at the end of this Financial Review.
