The Walt Disney Co said net income for the latest quarter jumped 40 percent from a year ago thanks to a huge boost from ESPN and a turnaround at its movie studio because of Toy Story 3.
Disney said on Tuesday that fiscal third quarter net income was US$1.33 billion, or US$0.67 per share. That’s up from US$954 million, or US$0.51 per share, a year ago. Revenue rose 16 percent to US$10 billion, from US$8.6 billion.
Much of the 50 percent profit gain at its cable channels came from recognizing deferred revenue at ESPN earlier than expected, although that won’t affect the yearly results. However, advertising rates and the volume of sales at ESPN also increased.
PHOTO: BLOOMBERG
Cable channels represent Disney’s largest profit driver, and this quarter represented US$1.68 billion in segment operating profit, or about two-thirds of the total.
Ad revenue at ESPN was up 31 percent, thanks partly to carrying the soccer World Cup, and most of the earlier games in the tournament also fell in the quarter through July 3. Excluding the World Cup, ESPN ad revenue was still 17 percent higher than a year ago, besting its media company peers amid an ad market recovery.
“The 17 percent recurring growth in ESPN advertising in the quarter was the fastest amongst its peers,” Barclays Capital analyst Anthony DiClemente said. “I think that’s a big positive.”
Higher ad rates at broadcast network ABC were offset by lower ratings; its profits were only 2 percent higher.
The studio posted a much-anticipated turnaround thanks not only to the Pixar animated franchise Toy Story, but also Alice in Wonderland. Disney’s purchase of Marvel Entertainment last year also gave it an extra boost from the theatrical release of Iron Man 2 in early May. Write-downs for a couple of movies, Prince of Persia and Sorcerer’s Apprentice, pushed costs up, but the unit reversed a loss.
Profits at its theme parks fell 8 percent because of higher costs and lower attendance domestically. This month, Disney raised ticket prices by 3.8 percent for an adult day pass at Walt Disney World in Orlando, Florida, indicating a move further away from its recession-driven discounts.
Per guest spending rose 5 percent in the quarter. In contrast, when accounting for the calendar shift of the Easter holiday, domestic attendance was down just 1 percent, indicating that smaller discounts were not turning off many people.
Aside from the quarterly results, chief executive Bob Iger said Disney was attracted by the explosive growth in casual social games on the Internet, justifying the US$563 million Disney is paying for game-maker Playdom, in a deal announced last month. It could pay another US$200 million based on performance that would boost Disney’s earnings even more than that.
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