Walt Disney Co., the world's second-largest media conglomerate, said Monday that first-quarter earnings rose 5 percent year-over-year due to growth in the company's Media Networks and Parks and Resorts segments, partially offset by declines in Studio Entertainment operations.
Net income grew to $723 million, or 35 cents per share, from $688 million, or 33 cents per share, a year ago. The latest quarter includes a $24 million tax benefit and restructuring and impairment charges totaling $11 million related to the sale of Disney Store North America. Together, these items boosted earnings by about 1 cent.
Additionally, as a result of a reporting calendar change effective for fiscal 2005, the current quarter included an extra day, which also added a penny to earnings per share.
Analysts surveyed by Thomson First Call were looking for Disney to post earnings of 29 cents per share on sales of $8.49 billion in the latest quarter.
Revenue increased 1 percent to $8.67 billion from $8.55 billion last year.
CEO Michael Eisner said, "We remain confident in achieving double-digit earnings growth in 2005, thanks in part to the resurgence in ratings at ABC, the outstanding performance of ESPN and the recovery at our theme parks, which exemplify the strong and broad-based fundamentals of our company."
The company said Media Networks revenue increased 11 percent to $3.5 billion and segment operating income grew 36 percent to $467 million. Earnings attributable to cable operations increased by $131 million, primarily due to higher affiliate revenue at ESPN. Additionally, advertising revenue increased at ESPN due to higher rates and at ABC Family due to improved ratings.
At the ABC Television Network, higher advertising revenue as a result of more NFL and college football broadcasts in the current quarter were more than offset by associated programming costs, while owned television stations benefited from increased political advertising revenue.
The company said Parks and Resorts revenue rose 30 percent to $2.1 billion, with the consolidation of Euro Disney and Hong Kong Disneyland contributing $369 million of the increase in revenue. Growth was driven by increased theme park attendance and hotel occupancy at the Walt Disney World Resort, as well as higher guest spending at the Disneyland Resort, primarily due to ticket price increases, fewer promotional discounts and the introduction of new ticket media.
The company said higher visitation at Walt Disney World from both international and domestic tourists, as well as local Florida residents, reflected a strong holiday period and continued improvements in travel and tourism.
However, Walt Disney said Studio Entertainment revenue dropped 20 percent in the latest quarter to $2.4 billion, driven by a decline in worldwide home entertainment due to lower DVD sales of current-year titles. The company said the year-ago period included strong performances by Disney/Pixar's "Finding Nemo," "Pirates of the Caribbean" and "The Lion King" Platinum Release.
Sales of consumer products also declined during the quarter due to the absence of holiday season profits at the Disney Store, which was sold in mid-November.