Disney Co.’s Profit Surges 32% in 2nd Quarter

Walt Disney Co. on Tuesday reported record earnings of $120.15 million--up 32% from a year ago--for the three months ended March 31, despite slackening theme park attendance. The giant entertainment company’s revenue rose to $774.52 million, up 10% from $706.07 million last year.

Second-quarter operating income for theme parks and resorts was $119.72 million, about equal to the $119.65 million reported in the second quarter a year ago. For the six months ended March 31, theme parks generated operating income of $206.68 million, up 4.8%.

The Burbank-based company acknowledged that “attendance was less than the record-setting level of last year” but offered no reason other than noting that last year’s attendance was “favorably affected” by the 15th anniversary promotion of Walt Disney World in Florida and the opening of two new Disneyland attractions.

Disney’s two other business sectors combined contributed less than theme parks and resorts to the company’s operating income, but each turned in stellar results.

Filmed entertainment--boosted by two box-office hits--generated $52.09 million in operating income, up 19% from the second quarter a year ago, on revenue of $281.39 million, up 12%. The hit movies, “Three Men and a Baby” and “Good Morning, Vietnam,” are the two strongest in Disney’s history, in terms of box-office gross upon initial release.

Disney noted that its filmed entertainment unit benefited a year ago from the sale of two major packages of Disney feature films and television shows to local TV stations.

Operating income for consumer products rose 51% to $36.18 million for the second quarter, on revenue of $55.15 million, up 36%.

General and administrative expenses rose 19% to $21.21 million in the second quarter, but Disney’s interest expense dropped 87% to a mere $1 million. The company almost trebled its investment and interest income to $7.97 million.

Disney’s net income last year included results of Arvida Corp., a Florida-based real estate development company that has been sold. Disney’s income from continuing operations increased 36% for the quarter.

The company’s theme park attendance has been monitored closely by analysts because it is still Disney’s dominant business and one that is earmarked for expansion with theme park construction in France and a new studio tour attraction in Florida.

Harold Vogel, an entertainment industry analyst at Merrill Lynch, estimated that attendance may have dropped as much as 4% or 5% in the second quarter, and he noted that operating margins slipped to 27.3% from 28.8%.

Vogel had predicted in December that an increase in Walt Disney World admission fees might discourage visitors, who now must pay $78 for a three-day pass, instead of $70. On Tuesday, the analyst stopped short of blaming the admission hike for the latest trend in attendance, but he did not wholly accept the company’s explanation that results compared unfavorably because of the 15th anniversary celebration.

“There’s always some kind of anniversary,” Vogel said, noting also that the company was “running flat out in their advertising campaign . . . and second, had the benefit of the much acclaimed weaker dollar.”