Brass upbeat for full fiscal year, predict 50% earnings jump
This atricle was updated at 7:15 p.m.
NEW YORK — Walt Disney’s profit surged 71% last quarter on the strength of cable nets, parks and resorts and consumer products. The spike was partly offset by declines at ABC and a dip in studio entertainment, including unspecified writedowns for “The Alamo” and “Home on the Range.”
Execs see a sunnier box office for second-half pics such as “The Village,” “King Arthur,” Raising Helen” and “The Princess Diaries 2: Royal Engagement.”
Mouse revenue rose 11% to $7.2 billion for the second quarter ended in March. Profit rose to $527 million from $314 million. Disney brass were upbeat for the full fiscal year, predicting a 50% jump in earnings.
Disney said its total filmed entertainment revenue rose 16% to $2.2 billion. Profit fell 25% to $153 million on writedowns, higher marketing and distribution costs and a dip in theatrical coin as “Cold Mountain,” “Hidalgo” and “Miracle” couldn’t compete with year-earlier releases “Chicago” and “Bringing Down the House.”
DVD revenue rose on “The Lion King 1½,” “Finding Nemo,” “Pirates of the Caribbean: The Curse of the Black Pearl” and “Brother Bear.”
Cable revs up 7%
At media networks, including cable and broadcast, revenue rose 7% to $2.8 billion. Operating income soared 76% to $704 million, largely on higher affiliate fees at ESPN and stronger ad rates across the board. A payment from bankrupt satcaster DirecTV Latin America also helped. The strong perf was partly offset by lower ratings at the struggling ABC TV Network.
Chief operating officer Bob Iger seemed modestly optimistic on ABC’s prospects heading into the upfront and praised the net’s revamped management team. “Our schedule is solid in some parts. It lacks big hits. But we believe in development, and we’ll see in a couple of weeks,” he said. Iger said he’s still banking on the net turning a profit in fiscal ’05, but only if the ratings improve.
“The network may have passed on a couple of reality shows it should have jumped on, but those aren’t easy calls when they are made,” Eisner added. (ABC passed on NBC’s latest hit, “The Apprentice.”)
Eisner also noted that it’s key to have one person responsible for primetime programming “so it’s the creative community who’s making the calls. And that person is Steve McPherson.”
In late April, Disney fired ABC chairman Lloyd Braun and president Susan Lyne.
McPherson, head of Touchstone television, was named chief programming exec. And cable head Anne Sweeney was given oversight of the broadcast network as well.
Parks revs jump 12%
Parks and resorts saw revenue rise 12% to $1.7 billion and income grew 21% to $188 million.
Mouse cited higher theme park attendance and hotel occupancy at Walt Disney World Resort, promotional packages that drew visitors to Disneyland and an increase in international tourism. Higher employee benefit costs, including pension and medical, partly offset the gains. The costs grew by $34 million for the quarter and will rise $137 million for the full year.
At consumer products, revenue rose 2% to $512 million as operating income rose jumped 42% to $75 million.
Disney shares, which ended the day virtually unchanged at $23, were up 2.4% in after-hours trading on the strong numbers, which were released after the market closed.
Eisner indicated that his current job is safe.
His leadership was called into question last March when a large number of shareholders declined to vote for his re-election to the company’s board of directors. Disney responded by yanking the chairman title from Eisner and handing it to board member and former senator George Mitchell.
After its latest meeting two weeks ago, the board expressed its confidence in Disney’s current management and strategic direction.
But Eisner said, “The board will continue to analyze internal candidates and those who would be appropriate if and when I get hit by a truck, which I hope doesn’t happen any time soon.”