But overall profits battered by TV slump, theme parks
NEW YORK — Walt Disney has been clobbered in the TV business lately by fewer ads, which is not the company’s fault, and lower ratings at ABC, which is. But Michael Eisner was ebullient about the performance of the film studio, which he called the company’s strongest performing unit by far year on year.
The Mouse House posted lower revenue and profit for its fiscal fourth quarter and full year as an already weak economy turned deadly post Sept. 11 — squeezing three core businesses, TV networks, theme parks and consumer products. The near future doesn’t look good, either. First quarter income may drop by 50%, execs predicted. Declines will be less dramatic, in the 10%-15% range, for the rest of the year.
That’s one reason chairman-CEO Eisner lavished praise on filmed entertainment. “The studio is in incredibly good shape,” he told investors during a conference call Thursday. “Bob and Harvey (Weinstein) are on fire” and the Pixar pact just turned out record-breaking “Monsters. Inc.” As for studio management, Eisner praised the upcoming slate and efforts of Nina Jacobson, Buena Vista Motion Picture Group prexy, and her team, whom he called “the next generation of young creative execs” in Hollywood.
He made no mention of filling the post of studio chairman Peter Schneider, who left earlier this year.
The Pixar deal has Disney pocketing 50% of proceeds plus a distribution fee on projects for at least four more years (including a probable “Monsters” sequel). “We have a continuing dialog with Pixar about what the future would hold beyond 2006,” he said.
Disney revenue for the September quarter eased to $5.8 billion from $6.1 billion as profit plunged 68% to $53 million. Revenue for the year was about flat at $25.3 billion and the conglom swung to a $158 million loss from a $920 million profit.
The Mouse House also reported various pro forma figures. Excluding restructuring and other one-time charges, gains and accounting changes in both periods, company said net income was $132 million for the quarter and $1.5 billion for the year.
Studio entertainment revenue was down 11% for the quarter to $1.3 billion and the unit swung to an operating loss of $121 million. Company blamed generally weaker theatrical and homevideo results from the year earlier — save “Princess Diaries” — and a writedown on “Big Trouble,” which was postponed after the Sept. 11 terrorist attacks.
For the year, however, studio revenue rose 2% to $6.1 billion and operating income more than tripled to $260 million, driven by homvid titles like “Toy Story 2,” “Lady and the Tramp II,” “Spy Kids,” “Scary Movie,” “Gone In Sixty Seconds” and “Remember The Titans.” Stage plays “Aida” and “Lion King” also helped.
Eisner said the studio is leaner than ever after a bout of cost cutting that started 18 months ago. “We want to get back in control of our business.
“All our deals make more sense,” he said. He called the studio’s marketing and distribution under Dick Cook “probably the best in the industry.”
TV isn’t so rosy, but Eisner called ABC “our most important point of focus now.”
Mouse chief operating officer Bob Iger said that while the company can’t control a weak economy and ad slump, it can tinker with ABC’s disappointing programming.
“We think we have a couple of decent new shows but we need more,” he said, preferably family-oriented comedies. He acknowleged a shaky start to the new season with intense competition from the drawn-out World Series. But he wants changes and noted that several new series will debut mid season.
Media networks, led by ABC, saw revenue for the quarter dip 3% to $2.2 billion as operating income dropped 12% to $348 million. Revenue for the year eased 2% to $9.6 billion. Operating income dipped to 13% to $1.8 billion.
Broadcasting reflected lower ratings, soft advertising, higher primetime programming and newsgathering costs at ABC.
Disney owns ESPN and recently bought Fox Family, a fully distributed U.S. cable net it plans to call ABC Family. It owns stakes in A&E, Lifetime and the History Channel.
Disney’s giant parks and resorts divisions saw revenue fall 2% for the quarter to $1.7 billion and operating income drop 13% to $313 million. For the year, revenue rose 3% to $7 billion and operating income eased 2% $1.6 billion.
In consumer products, revenue for the quarter fell 6% to $612 million and operating income rose 6% to $87 million. For the year, revenue was down 6% to $2.6 billion and income rose 4% to $401 million. Disney has been orchestrating a gradual turnaround of this division for the past two years, shuttering and streamlining stores and paring down licensing deals.
Execs said the current quarter will continue glum on both the advertising and the tourism front and said they, like other media companies, will continue to squeeze costs out of the buisness.
Disney shares, which have been hit hard in recent weeks along with most showbiz stocks, rose 2.3% in an upbeat market Thursday to $18.88.
Shares are up from a 52-week low of $15 but still well off a year high of $38.