Profits drop at Disney
Tragedy in Japan and a disappointing performance by the animated film “Mars Needs Moms” undermined profits for the Walt Disney Co. in the first three months of 2011, top executives reported Tuesday.
The Burbank-based entertainment giant reported profits of $942 million on revenues of $9.1 billion for the quarter, compared with $953 million in profits on revenue of $8.6 billion in the same period last year. Overall, the company’s studio division saw revenues decline 13% to $1.3 billion, and profits fall 65% to $77 million.
Chief Financial Officer Jay Rasulo said in a conference call with investors that several factors combined to hurt profits during the reporting period, including a $50-million loss on production and advertising costs for the box-office dud “Mars Needs Moms.”
The impact of the Japanese earthquake and tsunami on Disney’s two resorts near Tokyo and cruise line operations also curbed profits.
“We predict the aftermath of the Japan earthquake will continue to impact our performance for the remainder of the year,” Rasulo said.
As with rival Time-Warner Inc., Disney’s television and cable networks experienced solid growth in advertising revenue, driven partly by sports programming. Revenue at Disney-owned ESPN jumped 43% over the same period last year because of the college football Bowl Championship Series and title game broadcasts. Overall network ad revenue grew by 17%, the company reported.
Rasulo and Iger warned that while advertising growth is robust, the second half of the year will be a tough comparison to 2010, when political advertising brought in $55 million.
Rasulo said upcoming films — including the fourth installment of the “Pirates of the Caribbean” franchise starring Johnny Depp, and Pixar’s “Cars 2” — will be “key factors” in the company’s success later this year.
Disney broke ground on its Shanghai resort in April, and Rasulo and Iger were bullish on Disney’s line of cruise ships, two of which are being built in Germany. Passenger bookings on the Disney Dream and other ships already exceed 85% of capacity for the rest of the calendar year.
“If you try to get a stateroom between now and the rest of this year, you have better contacts than I do,” Rasulo said, referring to the high-priced rooms.
Last week, the company informed employees of a change to its pension plan that will save Disney as much as $400 million over the next five years, he added.