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Disney Profit Up 137% as Studio Offsets Park Results

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Times Staff Writer

For Walt Disney Co., the final quarter of the 2003 fiscal year yielded a treasure trove of earnings thanks to such hits as “Pirates of the Caribbean.”

The Burbank entertainment giant’s film studio continued to drive profit at the company, helping blunt disappointing theme park results.

Overall, Disney’s profit jumped 137% in the quarter ended Sept. 30, to $415 million, or 20 cents a share. Revenue was up 5% from the year-earlier quarter, to $7.01 billion. Results significantly exceeded Wall Street’s expectations.

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Disney Chief Financial Officer Thomas Staggs told analysts that the company expected to meet or exceed Wall Street’s consensus that Disney would earn 84 cents a share in the coming fiscal year.

A stronger advertising market helped stem losses at its ABC network while boosting results for its TV and radio stations and especially at cable networks such as ESPN. Although results for Disney’s theme park division were soft, the company said it was showing a gradual recovery from the severe tourism downturn. The company also saw improvement at its long-suffering consumer products group.

“It’s a great performance for year one of a turnaround,” said analyst Jeffrey Logsdon of Harris Nesbitt Gerard.

Media analyst John Tinker of Blaylock & Partners said, “The results are very solid, but the issue is still in the parks.” Tinker said one concern was whether the discounting that Disney has done to attract visitors, and the general belt tightening by tourists, would cut into revenue.

Nonetheless, Disney’s results as a whole pleased Wall Street. According to Thomson First Call, the consensus by analysts was that Disney would earn 15 cents a share. The 20 cents Disney earned included an unanticipated one-time gain of 3 cents related to resolving a tax issue.

For the fiscal year, earnings rose 3% to $1.27 billion with revenue rising 7% to $27.1 billion.

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Disney’s film unit also benefited in the quarter from the release of “Freaky Friday” while continuing to reap money from the hit animated film “Finding Nemo” made with partner Pixar Animation Studios.

Disney’s movie operation posted operating income of $205 million for the quarter, nearly three times the income a year earlier. Revenue rose 9% in the period to $2.2 billion.

The company’s Parks and Resorts unit saw operating income fall 4% in the quarter to $225 million with revenue dropping 1% to $1.6 billion. Disney said its results for the parks have been hurt by higher costs for such things as employee benefits, as well as the elimination of royalties and management fees from the ailing Euro Disney resort.

Disney’s Media Networks -- its TV and radio stations, cable operations and the ABC television network -- saw its operating income more than double to $298 million with revenue rising 8% to $2.6 billion.

In an interview, Staggs said the company expected ABC’s results to improve significantly in the coming fiscal year but “is not ready to set a specific time period for profitability yet.”

Disney shares fell 11 cents to $22.68 on the New York Stock Exchange before the earnings announcement.

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