Disney posts 54% jump in profit
Aggressive cost-cutting produced dividends for Walt Disney Co.’s movie studio, as its operating income jumped more than 50% on moderate revenue growth for the quarter ended Jan. 1.
The Burbank entertainment giant reported a 10% increase in revenue for the first quarter to $10.7 billion and 54% growth in net income to $1.3 billion. The company’s net income was also aided by one-time gains from the sale of its former Miramax film unit and other assets.
Chief Financial Officer Jay Rasulo attributed the increase in Walt Disney Studios’ operating income to $375 million from $243 million in large measure to a consolidation of distribution operations for theaters, DVD and digital platforms, and on television. Home entertainment marketing and distribution costs were also lower for the quarter, he said.
The studio also benefited from earlier international release dates for its summer animated hit “Toy Story 3” compared with “Up” a year earlier, although Chief Executive Bob Iger said the movie was hurt by the continuing decline of the DVD market. Total revenue for Disney’s movie studio was virtually flat at $1.9 billion.
Television remained the biggest business for Disney, with revenue up 11% to $4.6 billion and operating income up 47% to $1.1 billion.
The company’s ABC broadcast network is preparing for its first fall season under its new president, Paul Lee, an issue Iger addressed on a conference call with analysts. In recent years, ABC has spent more money developing new shows than the other broadcast networks — without success, producing a string of expensive special-effects laden dramas that have all bombed.
Iger said he has advised Lee to focus more on producing just a handful of high-quality new shows and not to produce a large number in hopes that one will turn out to be a hit.
The Burbank company’s interactive media unit, which recently laid off staff amid a restructuring, again lost money. Its operating loss widened 30% to $13 million.
It was the only Disney unit to report a loss, although its revenue grew 58% to $349 million, largely because of the performance of the video games Toy Story 3 and Epic Mickey, which sold 1.4 million and 1.3 million units, respectively, through the end of the year in the U.S., according to NPD Group data.
In the consumer products group, revenue grew 24% to $922 million and operating income was up 28% to $312 million. Disney attributed the improvements to the strength of “Toy Story 3” products and the integration of Marvel Entertainment, which it bought in 2009.
However, in response to an analyst’s question, Iger admitted that results of the first big Marvel effort by Disney, products tied to the movie “Iron Man 2,” were “slightly less than we would have liked.”
Revenue for Disney’s parks division increased 8% to $2.9 billion because of an 8% increase in average guest spending. Attendance at Disney World in Orlando rose slightly, while Anaheim’s Disneyland slumped a bit during the quarter. The division’s operating income was up 25% to $468 million.
The bottom line was helped by the sale of Miramax to a consortium of private investors led by Colony Capital and Ron Tutor. Disney recorded a $75-million gain on sales of businesses, most of which was attributed to Miramax.
After closing up less than 1% at $41.18 in regular trading, Disney stock hit $42.61 after hours, near its all-time high of $43.29.
Times staff writers Meg James and Tom Petruno contributed to this report.
