Walt Disney Co., the second-largest U.S. media company, will probably report later today that fiscal second-quarter profit surged 87 percent, bolstered by higher advertising rates at its ESPN cable-television sports network.
Profit likely rose to about $430.6 million in the three months ended March 31, according to the average estimate of 11 analysts surveyed by Thomson Financial. A year ago, net income at the Burbank, California-based company was $229 million.
An increase in advertising sales at ESPN, ABC Family and the Disney Channel cable networks and growing attendance at the company's theme parks may help Chief Executive Officer Michael Eisner rebut claims by former directors Roy Disney and Stanley Gold that he's mismanaged Disney.
``Disney is hardly a company firing on all cylinders, but it's improving,'' said Brian Barish, president of Denver-based Cambiar Investors LLC, which manages $2.4 billion, including about 2 million Disney shares. ``ESPN is doing great. Sports programming gets some of the highest advertising rates.''
ESPN is the only U.S. network that carries all major North American professional team sports -- baseball, football, basketball and hockey. The cable division may contribute 65 percent of Disney's quarterly profit, Lowell Singer, an analyst at SG Cowen & Co. in San Francisco, said in a report. SG Cowen doesn't provide ratings on stocks.
Revenue for the quarter is expected to rise 8.1 percent to $6.85 billion, the average estimate of 15 analysts surveyed by Thomson Financial. Disney is expected to report profit of 21 cents a share in the quarter, the average of 24 analysts polled, compared with 11 cents a year ago.
Film Studios, ABC
The former directors fault Eisner for failing to invest in the parks and for not turning around the fourth-place audience ranking of the unprofitable ABC network, which Roy Disney and Gold have said is one of Eisner's ``major failures.''
Film studio profit may fall 30 percent from a year earlier because of costs for ``The Alamo,'' ``Hidalgo'' and ``Home on the Range,'' Jessica Reif Cohen, an analyst at Merrill Lynch & Co. in New York, wrote in a report.
Eisner, 62, the longest-serving chief executive among companies in the Dow Jones Industrial Average at 19 years, failed to win the support of 45 percent of the shares voted at Disney's annual meeting in March. Roy Disney, nephew of founder Walt Disney, and Gold are leading a campaign to oust Eisner.
Disney shares have dropped 47 percent from a record closing high of $43.63 on April 28, 2000. In the same period, the Standard & Poor's 500 Index has declined 25 percent. Disney shares yesterday rose 88 cents to $22.98 in New York Stock Exchange composite trading.
Eisner, who was paid $7.25 million in salary and stock in fiscal 2003, declined to be interviewed for this story, spokesman John Spelich said.
Cable Network Profit
Operating profit at Disney's cable division may rise 16 percent to $585 million, mostly because of ESPN, which is now in its ninth straight quarter of audience-ratings growth, Merrill's Cohen said. Ratings for Disney Channel and ABC Family also rose, she said in an April note.
Eisner has told investors that business is improving at the company's parks in California and Florida. Profit at the parks unit fell to its lowest in almost a decade in the fiscal 2003 second quarter because the Iraq war and terrorism fears cut tourism.
``We had a very strong spring-break period and very encouraging trends in our bookings,'' Parks and Resorts President James Rasulo said last week in an interview at the opening of Disneyland's ``Tower of Terror'' attraction. ``Everything that we've seen happen is completely consistent with this notion of gradual recovery.''
Crowded Parks
Disneyland President Matt Ouimet said attendance at the Anaheim, California, park has been showing ``very positive'' trends, pointing to the Easter holiday.
``There were days when we had to redirect people either from Disneyland to Disney's California Adventure, or vice versa,'' depending on crowds, Ouimet said.
Disney's parks and resorts will account for 19 percent of profit, S.G. Cowen's Singer said in an April research note.
Roy Disney, 74, and Gold, 61, have said rising profit at Disney is simply a rebound from low levels.
The two have publicly campaigned to oust Eisner since they left the board last year. They plan to nominate their own slate of directors for next year's shareholder vote unless Eisner resigns. Eisner's contract expires in 2006.
In addition to complaints about Disney's operations, the dissidents have said the board doesn't hold Eisner and management accountable and wouldn't tolerate ``constructive dissent.''
Pension Funds
A group of state pension fund managers have said they plan to meet with Eisner and the board on May 21 to discuss ``performance and governance.'' The funds, with combined assets of more than $500 billion, include the California Public Employees' Retirement System, California State Teachers' Retirement System and funds in New York, Ohio, Connecticut and North Carolina.
In a March letter to Disney Chairman George Mitchell, North Carolina Treasurer Richard Moore said Disney has little interest in generating long-term shareholder value for investors. Moore called the company's campaign to support Eisner and the current board a short-term public-relations campaign.
ABC last month promoted Stephen McPherson to president of prime-time programming after Lloyd Braun, chairman of the division, and Susan Lyne, president, left. That shift, a month before advance sales of commercial time for next season, may hurt the network, said advertising buyer Andrew Donchin at Carat USA.
ABC Sales
ABC is expecting sales of ad time for the 2004-05 season to go well, Eisner said in an interview at Disneyland on May 5.
``I hear that it's looking very positive,'' Eisner said. ``There's no way for me to predict what somebody else is going to do.''
McPherson's promotion was part of a management shakeup that included the promotion of Anne Sweeney to co-chairman of Disney's media networks unit from president of ABC Cable Networks.
``ABC continues to be the fly in the ointment,'' Cambiar's Barish said. ``They haven't been able to fix that. It's been abysmal.''
Profit likely rose to about $430.6 million in the three months ended March 31, according to the average estimate of 11 analysts surveyed by Thomson Financial. A year ago, net income at the Burbank, California-based company was $229 million.
An increase in advertising sales at ESPN, ABC Family and the Disney Channel cable networks and growing attendance at the company's theme parks may help Chief Executive Officer Michael Eisner rebut claims by former directors Roy Disney and Stanley Gold that he's mismanaged Disney.
``Disney is hardly a company firing on all cylinders, but it's improving,'' said Brian Barish, president of Denver-based Cambiar Investors LLC, which manages $2.4 billion, including about 2 million Disney shares. ``ESPN is doing great. Sports programming gets some of the highest advertising rates.''
ESPN is the only U.S. network that carries all major North American professional team sports -- baseball, football, basketball and hockey. The cable division may contribute 65 percent of Disney's quarterly profit, Lowell Singer, an analyst at SG Cowen & Co. in San Francisco, said in a report. SG Cowen doesn't provide ratings on stocks.
Revenue for the quarter is expected to rise 8.1 percent to $6.85 billion, the average estimate of 15 analysts surveyed by Thomson Financial. Disney is expected to report profit of 21 cents a share in the quarter, the average of 24 analysts polled, compared with 11 cents a year ago.
Film Studios, ABC
The former directors fault Eisner for failing to invest in the parks and for not turning around the fourth-place audience ranking of the unprofitable ABC network, which Roy Disney and Gold have said is one of Eisner's ``major failures.''
Film studio profit may fall 30 percent from a year earlier because of costs for ``The Alamo,'' ``Hidalgo'' and ``Home on the Range,'' Jessica Reif Cohen, an analyst at Merrill Lynch & Co. in New York, wrote in a report.
Eisner, 62, the longest-serving chief executive among companies in the Dow Jones Industrial Average at 19 years, failed to win the support of 45 percent of the shares voted at Disney's annual meeting in March. Roy Disney, nephew of founder Walt Disney, and Gold are leading a campaign to oust Eisner.
Disney shares have dropped 47 percent from a record closing high of $43.63 on April 28, 2000. In the same period, the Standard & Poor's 500 Index has declined 25 percent. Disney shares yesterday rose 88 cents to $22.98 in New York Stock Exchange composite trading.
Eisner, who was paid $7.25 million in salary and stock in fiscal 2003, declined to be interviewed for this story, spokesman John Spelich said.
Cable Network Profit
Operating profit at Disney's cable division may rise 16 percent to $585 million, mostly because of ESPN, which is now in its ninth straight quarter of audience-ratings growth, Merrill's Cohen said. Ratings for Disney Channel and ABC Family also rose, she said in an April note.
Eisner has told investors that business is improving at the company's parks in California and Florida. Profit at the parks unit fell to its lowest in almost a decade in the fiscal 2003 second quarter because the Iraq war and terrorism fears cut tourism.
``We had a very strong spring-break period and very encouraging trends in our bookings,'' Parks and Resorts President James Rasulo said last week in an interview at the opening of Disneyland's ``Tower of Terror'' attraction. ``Everything that we've seen happen is completely consistent with this notion of gradual recovery.''
Crowded Parks
Disneyland President Matt Ouimet said attendance at the Anaheim, California, park has been showing ``very positive'' trends, pointing to the Easter holiday.
``There were days when we had to redirect people either from Disneyland to Disney's California Adventure, or vice versa,'' depending on crowds, Ouimet said.
Disney's parks and resorts will account for 19 percent of profit, S.G. Cowen's Singer said in an April research note.
Roy Disney, 74, and Gold, 61, have said rising profit at Disney is simply a rebound from low levels.
The two have publicly campaigned to oust Eisner since they left the board last year. They plan to nominate their own slate of directors for next year's shareholder vote unless Eisner resigns. Eisner's contract expires in 2006.
In addition to complaints about Disney's operations, the dissidents have said the board doesn't hold Eisner and management accountable and wouldn't tolerate ``constructive dissent.''
Pension Funds
A group of state pension fund managers have said they plan to meet with Eisner and the board on May 21 to discuss ``performance and governance.'' The funds, with combined assets of more than $500 billion, include the California Public Employees' Retirement System, California State Teachers' Retirement System and funds in New York, Ohio, Connecticut and North Carolina.
In a March letter to Disney Chairman George Mitchell, North Carolina Treasurer Richard Moore said Disney has little interest in generating long-term shareholder value for investors. Moore called the company's campaign to support Eisner and the current board a short-term public-relations campaign.
ABC last month promoted Stephen McPherson to president of prime-time programming after Lloyd Braun, chairman of the division, and Susan Lyne, president, left. That shift, a month before advance sales of commercial time for next season, may hurt the network, said advertising buyer Andrew Donchin at Carat USA.
ABC Sales
ABC is expecting sales of ad time for the 2004-05 season to go well, Eisner said in an interview at Disneyland on May 5.
``I hear that it's looking very positive,'' Eisner said. ``There's no way for me to predict what somebody else is going to do.''
McPherson's promotion was part of a management shakeup that included the promotion of Anne Sweeney to co-chairman of Disney's media networks unit from president of ABC Cable Networks.
``ABC continues to be the fly in the ointment,'' Cambiar's Barish said. ``They haven't been able to fix that. It's been abysmal.''
