Disney earnings rise 27 percent

LOS ANGELES – The Walt Disney Co. exceeded second-quarter profit expectations, but its performance for the rest of the year is largely up to a pirate captain named Jack Sparrow and a gourmet animated rat named Remy.

The Burbank-based media conglomerate said Tuesday that net profit rose 27 percent in the quarter that ended March 31, boosted by strong results from its film studio, advertising sales at ESPN and international sales of its TV shows, including "Desperate Housewives."

Although revenue was essentially flat, profits were helped by some cost cutting at the studio and an unexpected hit, the motorcycle road trip adventure "Wild Hogs" with John Travolta.

Going forward, the company said it is confident about the demand for advertising for its fall lineup at ABC and is pleased with revenue being produced by distribution of its shows on the Internet.

Viewers have watched nearly 92 million ad-supported episodes offered on the ABC.com Web site, Disney chief executive Robert Iger told analysts Tuesday. Viewers have also watched 91 million episodes of shows featured on the Disney Channel Web site, he said.

The company has also sold around 23.7 million TV episodes and 2 million movies on Apple Inc.'s iTunes store, he said.

Revenue for the rest of the year will be generated in large part by the performance of two upcoming films.

"Pirates of the Caribbean: At World's End," is the last of the trilogy starring Johnny Depp as Sparrow. The movie opens Memorial Day weekend.

Iger declined to predict whether the film would match the $423 million worldwide box office take of last year's second installment.

"I'm not going there," Iger said on an analyst conference call. "But I think the early success of 'Spider-Man' bodes well for the movie industry."

"Spider-Man 3" smashed box office records this past weekend, debuting with $151.1 million domestically.

The movie beat the previous record of $135.6 million set last year by "Pirates of the Caribbean: Dead Man's Chest."

The latest film from Pixar Animation Studios, "Ratatouille," opens in June. Both movies will drive profits from DVD sales this fall, typically a huge profit source for Disney.

Disney said its net income for the quarter was $931 million, or 44 cents per share, compared with $733 million, or 37 cents per share, in the same period a year ago.

Revenue grew slightly to $8.07 billion from $8.03 billion in the same period last year.

The company's per-share earnings easily beat estimates of 38 cents per share from analysts surveyed by Thomson Financial, although its revenue missed analysts' expectations of $8.13 billion.

Disney shares fell 68 cents, or 1.8 percent, to $35.87 in Wednesday morning trading. The results were released after the market closed Tuesday.

The company reported profit growth in all segments, including theme parks and consumer products.

Operating profit at Disney's film studio increased 60 percent to $235 million in the quarter, despite a 13 percent drop in revenue to $1.6 billion.

The studio has cut staff and is releasing fewer films, concentrating on Disney-branded family fare, which has historically been more profitable.

The media networks division saw operating profit climb 21 percent, although revenue remained flat at $3.6 billion.

The profit came from higher fees paid by cable operators for ESPN, as well as strong sales around the world of ABC shows.

The company's theme park division, which operates 11 parks worldwide as well as the Disney cruise line and a vacation time share business, saw a 19 percent rise in operating profit to $254 million. Revenue increased 9 percent to $2.45 billion.

Attendance grew at the company's domestic parks in Florida and California as well as at the Disneyland resort in France. Problems still remain at Disney's newest park in Hong Kong, however.

"We view Hong Kong as a valuable asset," Staggs told analysts during a conference call.

The consumer products unit, which licenses the brand to toy and clothing makers, contributed $125 million to operating profit, a 20 percent hike, on revenue of $516 million.

Share your thoughts and comment!

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll to Top