Disney’s profit rises 11%
Walt Disney Co. reported a jump in net income for its fiscal third quarter, buoyed by the strong performance of its theme parks and its cable television channels — most notably, the ESPN sports network.
The company posted a net income of nearly $1.47 billion for the quarter that ended July 2, up 11% from a year earlier. Revenue rose to $10.67 billion, a gain of 7% from the same period last year. The results were better than Wall Street had expected.
However, the Burbank entertainment conglomerate’s earnings were affected by a charge of $34 million at the film studio related to layoffs in June. In addition, the troubled interactive group saw its losses deepen compared with a year earlier.
As analysts had expected, the company’s movie studio had a difficult quarter. Although revenue for the unit was essentially flat at $1.6 billion, operating income declined 60% from a year earlier to $49 million.
Despite the more than $1 billion in worldwide box-office receipts for “Pirates of the Caribbean: On Stranger Tides,” Disney’s early summer releases, which included Pixar Animation Studios’ “Cars 2,” did not match the theatrical performance of the previous year’s offerings, “Toy Story 3” and “Iron Man 2.” The company’s fourth-quarter DVD sales of “Cars 2” and “Thor” similarly would be down, Chief Financial Officer Jay Rasulo said on a call Tuesday with analysts.
Asked whether the movie studio would undergo another round of cuts, Disney Chief Executive Robert A. Iger said that he would focus on spending on film productions.
“It’s our intention to take a very careful look at what films cost,” Iger said. “And if we can’t get them to a level that we’re comfortable with, we think that we’re better off actually reducing the size of our slate than making films that are bigger and increasingly more risky.”
The Interactive Media Group saw its revenue for the quarter increase 27% from a year earlier to $251 million, reflecting stronger sales of console games Lego Pirates of the Caribbean and Cars 2. However, losses deepened to $86 million — a drop of 32% from a year earlier, partly because of how it accounted for last summer’s purchase of social-gaming division Playdom.
Disney’s Media Networks Group, which includes its ABC television network as well as its lucrative ESPN cable TV network, posted an operating income of nearly $2.1 billion for the quarter, up 11%. Revenue rose 5% to nearly $5 billion.
Iger touted the strength of ESPN, which each week reaches 107 million people who seek out its sports programming on TV, online and in print. Of those, the average person spends six hours and 35 minutes with the Disney-owned brand each week.
“The value of sports also continues to be reflected in the advertising marketplace,” Iger said on a call with analysts. “[At] this year’s upfront, ESPN enjoyed all-time highs in both pricing and total dollars committed.”
The parks and resorts posted operating income of $519 million — a gain of 9% from a year earlier. Revenue rose 12% to nearly $3.2 billion, driven by increased consumer spending at Disney’s domestic parks and resorts, the Disney Cruise Line and the Hong Kong Disneyland resort. Tokyo Disney Resort is still recovering from the March earthquake and tsunami, which forced the temporary closure of two theme parks and hotels.
Iger said Disney’s investments at its parks throughout the world would peak this fiscal year and next as the company completes its redesign of Disney’s California Adventure in Anaheim, launches a fourth cruise ship, expands Fantasyland at the Magic Kingdom park in Orlando and adds three new themed areas in Hong Kong.
“We continue to believe that investment in parks projects like these is an excellent use of the company’s capital,” Iger said.
Operating income for its consumer products unit jumped 32% to $155 million, due to strong sales of “Cars” merchandise and higher revenue from its Marvel comic book characters. The division’s revenue rose 13% to $685 million.
