Disney reports higher third-quarter profit

[crazy4wdw]

Disney reports higher third-quarter profit
Wed Aug 1, 2007 4:12pm ET

LOS ANGELES (Reuters) - Walt Disney Co, the No. 2 U.S. entertainment company, reported a higher net profit on Wednesday, driven by strong performances at its television network, parks and consumer products businesses.

Disney, which runs broadcast, movie entertainment, theme parks and consumer products businesses, said its fiscal third quarter net income from continuing operations rose to $1.2 billion, or 58 cents per share from $1.1 billion, or 51 cents per share a year earlier.

Revenue rose 7 percent to $9.045 billion, from $8.47 billion a year ago.

During the quarter, Disney released the hit films "Pirates of the Caribbean: At World's End" and "Ratatouille," finalized the sale of its ABC radio stations, and concluded a probe into backdated stock options at its Pixar Animation Studio.

Disney shares traded between $36.55 and $33.40 during its fiscal third quarter, at a price-to-earnings ratio of 15.8 times estimated fiscal 2008 earnings. Shares of Time Warner Inc traded at 16.5 times estimated 2008 earnings, and Viacom Inc traded at a multiple of 14.7.

 

[crazy4wdw]

ABC, ESPN and Disney World help fill company's treasure chest

Scott Powers | Sentinel Staff Writer
August 2, 2007

Walt Disney Co. reported Wednesday double-digit profit growth in its parks and resorts, its media networks and its consumer-products division during the company's third fiscal quarter, leading to higher-than-predicted earnings of 57cents a share.

The corporation's financial report for the three-month period that ended June 30, filed with the U.S. Securities and Exchange Commission, showed that Disney rode high on the success of Walt Disney World, hit ABC network TV shows such as Grey's Anatomy, and video games based on Disney properties such as the 2006 movie Cars.

Even the company's fourth division, studio entertainment, saw some increase in revenue, thanks to Pirates of the Caribbean: At World's End, though the lack of a new DVD hit and distribution expenses led to a drop in that unit's operating profit.

"I'm pleased to report we had another solid quarter," Disney Chief Executive Officer Robert A. Iger said. "We've again achieved strong results by focusing on doing what we do best: building high-quality creative franchises across multiple platforms and multiple markets."

Revenue for the quarter of $9.05 billion was up 7 percent compared with the same three months last year. Combined operating profit for the quarter was reported at $2.29 billion, up 15 percent from the third quarter of 2006, while the company's net profit totaled $1.18 billion, a 5 percent increase from a year earlier.

Exceeding expectations

The earnings per share beat most independent forecasts. Thomson/First Call had predicted 55 cents a share, with analysts surveyed by the firm having offered predictions ranging from 47 to 60 cents.

The company's performance has looked quite good for several quarters in a row, said Robin Diedrich, a stock analyst at Edward D. Jones & Co. She said the long-term outlook also appears solid -- even though there are no blockbuster movies due out soon, ratings for ABC's hit shows have begun to sag, and no new theme-park attractions are set to open.

"I think the success they've been seeing over the past two years is pretty broad based," she said. "I don't think you can point to one or two things, or say it's just a couple of good movies."

Disney's parks and resorts saw revenue rise 6 percent to $2.9 billion during the quarter, while the segment's operating profit rose 13 percent to $621 million. Those numbers were driven by higher attendance and increased spending by guests, partially offset by increased labor and operating costs, the company reported.

Disney World shines

Chief Financial Officer Thomas Staggs noted that Disney World recorded a 4 percent increase in attendance and a slight increase in per-visitor spending during the quarter. Disney World hotels posted a higher average occupancy rate -- 93 percent -- and a 5 percent increase in per-room spending.

That buoyed the division overall, even as Hong Kong Disneyland continued to miss its financial targets and Disneyland in California saw no change in attendance and only a slight increase in per-visitor spending.

The company's largest division, media networks, which includes the ABC Network and ESPN, reported a 6 percent increase in revenue and a 23 percent rise in operating income. The company's film division reported 4 percent growth in revenue but a 20 percent drop in operating profit. Consumer products -- Disney's smallest division -- saw revenue rise 23 percent and operating profit increase 12 percent.

For the second quarter in a row, the theme parks' profit margin overall topped 20 percent -- Disney's target, Iger said, though he added: "We prefer not to stop there."

Iger said he thinks the theme parks are showing signs of being unaffected by economic cycles and changes in consumer confidence. "It appears that link has been broken the last couple of years," he said.

Iger said the parks have succeeded in buffering themselves by offering Magic Your Way tickets and more discount package deals with hotels.

Staggs said the up-and-down swings that Disney and its theme parks have experienced in the past might have been exacerbated by "down cycles in our creative efforts."

Disney buys Club Penguin

The cure, he said, has been more investment in creative capital, including last year's purchase of Pixar Animation Studios and the deal announced Wednesday to buy Club Penguin, a popular children's Internet community, for $350 million upfront and as much as $350 million later, depending on its performance.

He and Iger continued to promote their strategy of spreading Disney's creative properties, such as its movie characters, throughout all of its businesses, including TV shows, video games, toys, books, music, theme-park attractions and interactive Internet sites.

"Our strong balance sheet and cash flow provide for the financial flexibility to capitalize on acquisitions like Club Penguin and other investment opportunities as they arise," Staggs said.

Scott Powers can be reached at spowers@orlandosentinel.com or 407-420-5441.

 

[TheRustyScupper]

I heard a rumor . . .

. . . that they will share some of the extra Theme Park profits with the hourly employees, and give them a bonus and pay increase. (Of course, I was on sleep-deprecation, on a caffeine high from my fifth cup of coffee, on a four-decade old LSD flashback, and a sugar high from my third Pepsi at the time, and could have heard it incorrectly.

 

[doconeill]

I heard a rumor . . .

. . . that they will share some of the extra Theme Park profits with the hourly employees, and give them a bonus and pay increase. (Of course, I was on sleep-deprecation, on a caffeine high from my fifth cup of coffee, on a four-decade old LSD flashback, and a sugar high from my third Pepsi at the time, and could have heard it incorrectly.

And then raise the ticket prices to keep the margin up...oh, wait, the ticket prices are already going up...

 

[Another Voice]

Thank you for your kind and generous contribution to bail out the corporate executives who thought Underdog, 'The Geico Caveman TV Series' and Lindsay Lohan were good business decisions.