IE 11 is not supported. For an optimal experience visit our site on another browser.

Disney profit up on studios, theme parks

Strong DVD sales and continued growth at domestic theme parks drove higher third-quarter profit and revenue at The Walt Disney Co.
/ Source: The Associated Press

Strong DVD sales and continued growth at domestic theme parks drove higher third-quarter profit and revenue at The Walt Disney Co.

The Burbank-based media conglomerate on Tuesday reported gains in all four business divisions, including its movie studio, which had been lagging of late and last month laid off 650 people in a worldwide restructuring.

Results also benefited from a one-time gain related to its acquisition of Pixar Animation Studios.

Disney also said it would sell its 50 percent stake in US Weekly magazine for about $300 million. Disney bought its share of the magazine for $40 million in 2001 as the magazine expanded from monthly to weekly publication. The gain will be reported next quarter.

Disney reported net income of $1.13 billion, or 53 cents per share, for the quarter ended July 1, compared with net income of $811 million, or 39 cents per share, in the same period last year.

The results handily beat analysts’ estimates of 44 cents per share, as surveyed by Thomson Financial.

Revenue grew 12 percent to $8.62 billion in the most recent quarter from $7.72 billion in the year-ago period.

Revenue at the company’s movie studio division grew 17 percent to $1.7 billion on strong DVD sales of its hit film, “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe,” and theatrical revenue from the Pixar film “Cars.”

The company also spent less in the quarter to release films under its Miramax label.

Last month, Disney announced a restructuring of its studio to concentrate more on Disney-branded films and to consolidate worldwide marketing and distribution. Disney said it expected to take an after-tax charge of $25 million for employee termination benefits, most of which will be incurred in the fourth quarter.

Disney will book profit from its blockbuster, “Pirates of the Caribbean: Dead Man’s Chest” in the fourth quarter. The film has already pulled in nearly $800 million worldwide.

Increased attendance and spending at Disney’s domestic theme parks boosted revenue at that division by 11 percent to $2.7 billion.

The company said it expects attendance to be flat in the fourth quarter because of tough comparisons with turnout for last year’s Disneyland 50th anniversary celebration.

Strong growth at the company’s ESPN television network and continued success of Disney Channel shows, including “High School Musical,” resulted in a 10 percent increase in revenue to $2.7 billion at Disney’s media networks division.

Revenue fell at ABC because of heavy spending on new fall programming. But Disney said it saw strong growth in ad sales as last season wore on. It expects continued growth as it expands its Internet delivery of shows.

The company continued to be disappointed in sales of its ESPN-branded mobile phone service. Disney recently lowered the price of calling plans and added a new handset. Executives declined to say how long they would stick with the service before possibly pulling the plug.

“The results at least initially were disappointing, and we’re monitoring this carefully,” Chief Executive Robert Iger said in a conference call with analysts.

The company just launched a Disney-branded mobile phone service.

The success of “Cars,” a film aimed squarely at young boys, fueled a 6 percent rise in revenue to $445 million at Disney’s consumer products division.

The company said it will continue to invest in its video game business in coming years.

For the first nine months of its fiscal year, Disney reported net income of $2.592 billion, or $1.28 per share, compared with $2.154 billion, or $1.03 per share, in the same period last year.

Revenue grew to $25.5 billion from $24.2 billion in the same period last year.