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Disney profit meets expectations, lifted by parks, ESPN

Disney plans to stimulate its growth through its $4 billion acquisition of Lucasfilm, announced on 30 Oct
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First Published: Fri, Nov 09 2012. 09 45 AM IST
The theme parks division gained from passengers spending more time on Disney cruise ships plus higher attendance at parks in Hong Kong, California and Paris, the company said.  Photo: Reuters
The theme parks division gained from passengers spending more time on Disney cruise ships plus higher attendance at parks in Hong Kong, California and Paris, the company said. Photo: Reuters
Updated: Fri, Nov 09 2012. 10 02 AM IST
Los Angeles: Media giant Walt Disney Co posted higher quarterly profit on Thursday, lifted by an increase in visitors to its theme parks and revenue gains at sports juggernaut ESPN.
The company that recently announced a blockbuster deal to buy Star Wars producer Lucasfilm reported diluted earnings per share of 68 cents. That matched expectations from Wall Street analysts surveyed by Thomson Reuters I/B/E/S.
Net income for the quarter that ended in September rose 14% to $1.2 billion.
Looking ahead, Disney faces challenges that will pressure results for its fiscal first quarter from October to December, chief financial officer Jay Rasulo told analysts on a conference call. Among them, sports rights’ costs will increase by $170 million while home video sales decline by $150 million in light of tough comparisons to Cars 2 a year earlier, he said.
Those issues will not hurt full-year earnings for fiscal 2013, Rasulo said. “I’m confident we will have solid earnings growth for the rest of the year,” he said.
CEO Bob Iger said Disney was entering a “transition year” after making investments in projects such as the “Cars Land” expansion at Disneyland Resort in California and a new cruise ship that launched this year. The company is moving from “investment mode” into “a more compelling growth mode,” he said.
Disney plans to stimulate its growth through its $4 billion acquisition of Lucasfilm, announced on 30 October, and plans for three new Star Wars films starting in 2015.
Results for the just-ended quarter were driven by the media networks unit that houses ESPN, the Disney Channels and ABC. The division posted operating income of $1.6 billion, a 7% gain from a year earlier. ESPN brought in higher rates from cable operators and reduced its marketing costs although advertising income fell, Disney said.
Increased programming costs at online video service Hulu dragged on results for the ABC broadcasting unit, Rasulo said. The quarter was “slightly negative” for ABC and would have ended “slightly higher” without Hulu, he said.
The theme parks division gained from passengers spending more time on Disney cruise ships plus higher attendance at parks in Hong Kong, California and Paris, the company said. Operating income climbed 18% to $497 million during the quarter.
Operating income at Disney’s film studio fell 32%, in part because the box office performance of animated film Brave did not match the previous year’s release of Cars 2.
Disney shares dropped 2% in after-hours trading to $49. Earlier, shares closed at $50.04, down 4 cents, on the New York Stock Exchange. They are up 33% this year.
Morningstar analyst Michael Corty said Disney produced “another solid quarter” particularly with its cable networks business, though he noted that revenue was below what some analysts expected. Overall revenue rose 3% in the quarter to $10.8 billion.
“Disney has so many good things going for it that any weakness in the stock would be a buying opportunity,” he said. Reuters
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First Published: Fri, Nov 09 2012. 09 45 AM IST
More Topics: Walt Disney Co | ESPN | Profit | Star Wars | Lucasfilm |
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