‘Toy Story,’ soccer spur Disney
The Walt Disney Co. rode World Cup soccer, “Toy Story 3” and careful cost controls to increased revenue and profitability in the third quarter of 2010, according to the latest earnings reports released Tuesday.
Revenues topped $10 billion for the Burbank-based entertainment giant, an increase of 16% over the same quarter the prior year. Net profit was also up 40% to $1.33 billion, the company reported.
The studio entertainment unit saw $123 million in profits after taking a $12-million loss in the same quarter a year ago. “Toy Story 3,” which has earned an estimated $900 million worldwide, led the charge.
In a conference call Tuesday, Chief Financial Officer Jay Rasulo credited cutbacks in distribution and marketing expenses as contributing to studio profits.
Overall, the studio unit generated $1.6 billion in revenue, 30% more than the same quarter in 2009.
Disney-owned ESPN drove the increase in cable revenues, from $561 million in the third quarter of 2009 to $1.7 billion in the same quarter this year. ESPN’s coverage of the World Cup played a role in lifting profits.
“What ESPN did with and for FIFA World Cup was nothing short of spectacular,” said Disney President Robert Iger.
He noted that one-quarter of the World Cup revenue generated by tournament coverage on ESPN came from sources such as the Web, mobile applications and ESPN Radio.
Profit at Disney resorts fell 8%, the company reported.
In the last six weeks, the company also increased its bet on gamers while shedding a movie-making asset.
Disney announced two weeks ago it will sell Miramax Films for $660 million, while in early July it bought social site game maker Playdom Inc. for $563 million. Disney also acquired Tapulous, which makes music games for the iPad.
Iger said the company will develop games for a variety of platforms, from traditional consoles to Facebook.
“We are all aware of rapid growth of social networks and the availability of games on them,” Iger said. “It is essential for us to have a robust presence in social networks and to do so in the right way.”
The faltering DVD market and slow-growth projections for the economy will keep job growth in check at studios such as DreamWorks, Disney and Warner Bros., said Larry Gerbrandt, principal with entertainment analysts Media Valuation Partners.
The higher numbers were based largely on increased efficiency, he said.
“The robustness stems from the fact that they’ve each had some hits they could put through the pipeline, while they have taken a lot of cost out of the system,” Gerbrandt said.