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Mouse adds cheese

Disney earnings rise 18% on o'seas sales

NEW YORK — Higher profits from selling film and TV shows to the foreign TV market helped Walt Disney Co. increase net earnings 18% in the September quarter to $411 million on 5% higher revenues of $5.5 billion, it said Tuesday.

The quarter completed Disney’s fiscal year, when the House of Mouse increased net profit 48% to $1.96 billion on 6% higher sales of $22.4 billion. Analysts said the result was right in line with expectations, and Disney stock closed up 25¢ to $89.25.

The dramatic growth in the year’s profit was due partly to a one-time gain on the sale of KCAL recorded earlier in the year, as well as one-time accounting charges which depressed last year’s earnings. Even with these items excluded, however, Disney’s profit for the year rose 25%.

Increased stock buyback

Disney revealed it had ramped up its stock buyback program in the quarter, spending $363 million to repurchase 4.6 million shares. For the year in total, Disney repurchased 8.5 million shares at a cost of $633 million.

In the quarter, much of the earnings growth came from Disney’s “creative content” group, which includes both the studio and the consumer products division. While revenue rose only 2% to $2.7 billion, operating income —before interest and taxes — rose 20% to $448 million.

In contrast, the broadcasting group, which includes both ABC and ESPN, increased operating income just 1% to $241 million on 9% higher revenue of $1.49 billion. Theme parks’ operating income rose 12% to $272 million on 7% higher revenue of $1.29 billion.

Disney said the results “reflected growth in the distribution of film and television product in the international television market” as well as higher earnings from the consumer products side.

A spokesman for Disney said films such as “The Rock,” “Die Hard III” “While You Were Sleeping” and “Father of the Bride” were purchased by pay television markets overseas, providing the earnings boost.

‘Cost-containment’ program

The consumer products earnings growth reflected a “cost-containment” program at the Disney Stores, a Disney spokesman said. At the same time, the chain opened 106 new outlets domestically and overseas in the past year, taking the total number to 649 worldwide.

But it was the studio that provided most of the growth, according to Schroder Plc analyst David Londoner, who estimated that about two-thirds of the operating income of creative content came from film and TV in the quarter.

Disney said the video releases of “Sleeping Beauty” and “Pooh’s Grand Adventure” helped improve the studio’s earnings in the quarter, in addition to the theatrical releases of “Hercules” and “George of the Jungle.” The Mouse House also had foreign box office revenues from “Air Force One” and “Face/Off” late in the quarter.

In broadcasting, cable networks again provided most of the growth, although the ABC TV and radio station groups enjoyed “stronger demand for advertising,” Disney said.

The Mouse House said increased affiliate fees at ESPN and the Disney Channel were responsible for the better contribution from cable. For the year, Disney noted that the lower ratings at the ABC network hurt its contribution.

The theme park contribution “reflected increased guest spending at all properties, record attendance levels and increased occupied room nights at the Walt Disney World Resort, partially offset by reduced attendance at Disneyland and startup costs associated with new business initiatives,” the company said.

Disney is opening Animal Kingdom at Disney World next April, and is launching its cruise line next year as well.

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