TV, theme parks boost Disney's profit
LOS ANGELES -- The Walt Disney Co. DIS delivered higher third-quarter profits on strong performance from its TV networks and theme parks, and acquired the online virtual world Club Penguin, expanding its presence in Web entertainment, the company said Wednesday.
The Burbank, Calif.-based media conglomerate reported net income for the three months ended June 30 of $1.178 billion, or 57 cents a share, compared to $1.125 billion, or 53 cents a share, in the same period last year.
Revenue climbed to $9.045 billion from $8.474 billion in the year-ago period.
Analysts surveyed by Thomson First Call had expected profit of 55 cents a share on revenue of $9.015 billion.
The company saw double-digit growth in its theme parks, media networks and consumer products division in the quarter.
Despite the success of Pirates of the Caribbean: At World's End, profits fell at Disney's film studio amid lower revenue from DVD sales.
The company announced it acquired Club Penguin for $350 million in cash, with the possibility of another $350 million if certain profit goals are reached in the next few years.
The website allows kids ages 6-14 to build virtual igloos and inhabit a world where they appear on-screen as plump cartoon penguins.
Disney said it sees profit potential in virtual online environments. The company already has an online game, Toontown, and has said it is creating an online multiple-player game based on its Pirates of the Caribbean films.
Disney chief executive Robert Iger said Club Penguin has high profit margins and would contribute to the company's earnings in the first year.
Operating income at Disney's media networks division jumped 23% during the third quarter to $1.358 billion on the strength of subscription fees paid by cable companies for its ESPN channel and ad revenue at ABC, the company said.
Iger said the company sold $2.4 billion worth of advertising for primetime programming on its ABC network, and increased the amount of ads on its ABC Family and ESPN networks.
The company's consumer products division delivered a 12% increase in operating income and a 23% rise in revenue from strong video game sales and continued growth in licensing revenue from items based on the animated film Cars.
Operating profit at its parks and resorts division rose 13% on increased attendance and spending at Disneyland and Walt Disney World resorts.
Attendance at Walt Disney World in Florida increased 4% in the quarter and per-guest spending also rose, Disney's chief financial officer Tom Staggs said.
At the Disneyland resort in California, attendance was flat for the quarter, but guest spending increased slightly, he said.
Attendance at Disneyland Paris was up 9% in the quarter, but Hong Kong Disneyland attendance continued to be disappointing, Staggs said.
Disney's film studio saw operating income drop 20% in the quarter, despite a 4% rise in revenue.
Ticket sales from the latest Pirates of the Caribbean film were offset by marketing costs for its latest Pixar Animation Studios release, Ratatouille, the company said. Disney also did not have any strong DVD release in the quarter, while last year's quarter included revenue from the sale of 18 million DVDs of Chronicles of Narnia.
The company repurchased 55 million shares for $1.9 billion during the quarter.
For the first nine months of the year, Disney reported net income of $3.810 billion, or $1.81 a share, compared with $2.592 billion, or $1.28 a share, in the same period last year.
Revenue for the first nine months grew to $26.580 billion from $25.095 in last year's period.
The results were released after the close of regular trading. Shares of Disney rose 83 cents, or 2.5%, to $33.83 at the end of regular trading.