Walt Disney Co, the No. 2 US media company, will probably report a drop in first-quarter profit after disappointing sales of its Herbie: Fully Loaded and DarkWater home videos.
Profit excluding some costs fell to US$0.31 a share, from US$0.34 last year, according to Merrill Lynch's Jessica Reif Cohen, ranked the top media analyst by Institutional Investor magazine. Burbank, California-based Disney may say sales rose 4 percent to US$9.03 billion, she said.
The movie unit's profit probably dropped 78 percent, helping show why chief executive Robert Iger decided to buy the Pixar animated film studio last month. Iger agreed to pay US$7.4 billion to buy Pixar, gaining control of a company that gave Disney the hits The Incredibles and Finding Nemo.
"Their film unit has been stale," said Elizabeth Miller, a money manager in New York at Trevor, Stewart, Burton & Jacobsen, which holds about 200,000 Disney shares.
"The Pixar purchase is an attempt to improve content in animation. It's a bold move to kick-start things," she said.
Disney spokesman David Caouette said that Iger declined to comment for this story.
Iger, who turns 55 this week, earned US$11.7 million in the year ended Sept. 30. Reif Cohen's estimate excludes expenses for stock-based compensation.
Disney may also announce an agreement today to sell most of its radio assets to Citadel Broadcasting Corp for US$2.7 billion in cash and stock, the Wall Street Journal reported yesterday.
Shares of Disney fell US$0.09 to US$25.01 in New York Stock Exchange composite trading on Feb. 3. The shares dropped 14 percent last year, compared with a 10 percent decline at Time Warner Inc, the world's biggest media company.
Analysts on average are estimating Disney will post profit of US$0.30, based on the average estimate of 18 analysts surveyed by Thomson Financial. Thomson declined to provide details of the estimates.
Analysts predicted sales of US$8.8 billion. Disney has beaten estimates in five of the past six quarters.
Operating income at the film unit probably fell to US$70 million from US$323 million a year earlier, Reif Cohen wrote in a Jan. 20 note. Merrill Lynch defines operating profit at Disney as earnings before interest and tax.
Home video sales in the quarter fell 25 percent to about 65 million units, Lehman Brothers analyst Vijay Jayant said.
Operating income at the company's broadcasting division, which includes ABC television, rose 60 percent to US$200 million, Reif Cohen said in a note to investors.
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