Disney profits up 21% in 2nd quarter
'Hannah Montana,' homevideo boost revenue
|
The conglom reported stellar fiscal second-quarter results propelled by the studio division and surprisingly healthy theme-park numbers. Operating profit from all segments rose 21%, and revenue increased 10% over the year-earlier period. Income from continuing operations increased 22% to $1.1 billion.
Of total revenue of $8.7 billion in the quarter ended March 29, $2.4 billion was recorded as operating profit by the conglom's four units. Only consumer products saw operating profit decline, off 14% despite a 10% rise in revenue.
Although Disney has recently emphasized the company's efforts in growing its consumer products biz, cruise lines and other non-Hollywood operations, it was the core business of movies and television that burnished the Mouse's earnings report.
Studio entertainment profit soared 61% to $377 million, due partly to favorable comparisons with the year-earlier period, when it ran up a hefty marketing and distribution tab for March 2007 release "Meet the Robinsons." Also in the quarter came a surprising B.O. showing for the studio's "Hannah Montana/Miley Cyrus: Best of Both Worlds" concert pic.
"The best thing you can have is a studio that is continuously setting up tough comparisons, and that's what we've had lately," said chief financial officer Tom Staggs during a conference call with analysts.
"In the studio business, there's a piece of the business that gets reinvented every year," he added, noting not only the studio's slimdown in terms of output but the rising influence of considerations such as Blu-ray or iTunes.
Homevid also drove studio performance, with "No Country for Old Men," "The Game Plan" and "Enchanted" all scoring, compared with the year-earlier slate of "The Prestige," "The Guardian" and a "Peter Pan" reissue.
Theme parks managed a healthy 33% gain in operating profit due to, among other factors, an earlier Easter holiday and more spending per visit at the conglom's domestic parks. Wall Street had been awaiting the parks results as a bellwether of consumer attitudes, with some noting recent dips in consumer confidence measures.
"We're much better positioned in a difficult economic cycle than we have been in the past, particularly in 1991," said chief exec Bob Iger. Execs and analysts have also noted, however, that theme parks can be a lagging indicator, meaning consumer impatience with gas prices, travel hassles and the weak dollar may yet come into play.
Media networks, including ABC, ESPN and Disney Channel, posted a 14% profit gain. Revenue inched up 5% as "Grey's Anatomy" and "Lost" picked up steam internationally and ad sales at ESPN stayed strong.
Growth in broadcasting was hurt by the 100-day writers strike, but Iger and Staggs reiterated claims that the Mouse House saved money by not making as many original skeins. Iger dodged a question about the SAG talks by saying it wasn't appropriate to comment on ongoing negotiations.
Consumer products slipped in the quarter due to lower revenue from merchandised licensing and decreased revenue from licensed product at Disney Interactive Studios, reflecting a shift toward self-published titles.
In the products realm, Iger said the company is making the branded chain of retail stores a priority, given the "new Disney's" ability to plug in franchises such as "High School Musical," "Hannah Montana," the Jonas Brothers and Pixar fare.
"That's a far cry from where we were when we had well over 300 stores," he said. Consistent with the studio's reduced output, "We're at 220 stores and will end up going less. We're more focused and can take advantage of better locations."
Also in the consumer product segment, Staggs said $200 million has been invested to date on development of Disney-branded vidgames. "We're finding what we expected to be true to be true: higher returns on Disney branded properties," he said. "We will continue to ramp up our spending."
Asked to forecast the impact companywide of June release "Wall-E," which will be closely tracked given the company's reduced theatrical output, Iger indulged in a bit of Dick Cook-style showmanship. "We've seen a fair amount of creativity already in terms of consumer products. We're poised to take advantage of success when it comes," he said. "And you'd better get in line for the Wall-E robot. It's going to be a pretty hot seller."
Disney stock tacked on more than 1% on the day to finish at $33.73, though results were released after the close of trading.
