Disney Q1 earnings double
By Staff -- Gifts and Dec, 2/9/2007 7:46:00 AM
BURBANK, Calif.—The Walt Disney Co. reported net income for the first quarter ended Dec. 30, 2006, of $1.7 billion, or $0.79 per diluted share, more than double its earnings of $734 million, or $0.37 a share, in the prior-year quarter. The company attributed the gains primarily to soaring DVD sales and the sale of its stake in E! Entertainment and Us Weekly for $1.1 billion.
Results for the current quarter also included an equity-based compensation plan modification charge of $48 million associated with a planned ABC Radio transaction as well as gains on sales of a Spanish cable equity investment and Discover Magazine totaling $70 million, according to the company.
Revenues rose 10 percent to $9.7 billion, from $8.854 billion a year ago, beating market estimates.
“I am very pleased to report such strong quarterly earnings to kick off 2007,” says Bob Iger, president and chief executive officer. “These results are particularly gratifying given the great year we had in 2006 and are another clear sign our strategy is driving growth and creating shareholder value.”
Consumer Products
Revenues in Disney’s consumer products division for the quarter decreased 6 percent to $692 million, while segment operating income fell 13 percent to $235 million. Disney credits the drop primarily due to lower contractual minimum guarantee revenues and a decline in revenues from self-published titles at Buena Vista Games, though this was partially offset by higher earned royalties across multiple licensing product categories, led by Cars and Pirates of the Caribbean merchandise. The company also noted that lower game revenues for the quarter reflect stronger performing titles in the prior-year quarter, which included the release of titles based on The Chronicles of Narnia: The Lion, The Witch and The Wardrobe and Chicken Little.
Studio Entertainment
Studio entertainment revenues for the quarter increased 29 percent to $2.6 billion and segment operating income increased from $128 million to $604 million, due to “significantly” higher unit sales at worldwide home entertainment, according to the company. The releases of Pirates of the Caribbean: Dead Man’s Chest, Disney/Pixar’s Cars, and Little MermaidPlatinum drove higher DVD sales compared to the prior year, which included Cinderella Platinum, Miyazaki’s Howl’s Moving Castle and Herbie: Fully Loaded.
The gains in this segment, however, were partially offset by lower results in worldwide theatrical motion picture distribution, which reflects current titles including Déjà Vu and Santa Clause 3 compared to the performance of The Chronicles of Narnia: The Lion, the Witch and the Wardrobe in the prior year.
Media Networks
Revenues for Disney’s Media Networks segment increased 6 percent to $3.9 billion, from $3.67 billion a year ago. Operating income at the company’s cable networks increased $81 million to $453 million for the quarter, driven by subscriber growth for international Disney Channels, and DVD sales of High School Musical and higher affiliate and advertising revenues, which boosted the domestic Disney/ABC cable networks.
However, at ESPN, increases in affiliate and advertising revenue were more than offset by higher programming costs associated with Monday Night Football (MNF) and higher revenue deferrals related to programming commitments. Operating income in the broadcasting division increased $63 million to $297 million, due to the absence of MNF at ABC, higher political advertising revenues and strong sales of Touchstone Television series, including Grey’s Anatomy and Lost. These gains were partially offset, though, by higher programming and production costs, such as higher write-offs and costs associated with the Disney branded mobile phone service, according to the company.
Parks and Resorts
Disney parks and resorts posted revenues of $2.5 billion, an increase of 4 percent, reflecting growth at Walt Disney World due to increased guest spending driven by higher average ticket prices and increased attendance. The gains were partially offset, though, by declines at Hong Kong Disneyland and the Disneyland Resort, as well as higher operating costs at Walt Disney World.
Lower results at the Disneyland Resort reflect the success of the 50th Anniversary Celebration in the prior-year quarter, according to the company.
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