Tube tops, but Mouse still in a pic fix
Slumping studio profits — and some DVD problems — dragged on Disney last quarter despite ABC’s continued star turn.
Mouse income for the company’s fiscal fourth quarter plunged 27% to $379 million. Revenue nosed up 3% to $7.7 billion.
Filmed entertainment swung to a $313 million loss from a $23 million profit. Revenue fell 20% to $1.5 billion.
Execs said about $200 million of the hefty downdraft came from six Miramax pics — films that had been shelved but that Disney was contractually required to release before its pact with the Weinsteins expired this fall.
Also, Touchstone’s “Dark Water” missed, as did direct-to-video titles “Tarzan II” and “Lilo & Stitch 2.”
In light of the numbers, and as studios across the board tighten their belts, Disney said it’s trimming costs, scrutinizing production and marketing expenses, and focusing on profits.
With the DVD market tough, “We’re taking a hard look at our marketing expense…and considering reducing the number of titles we put into the marketplace,” said Bob Iger, who started as CEO on Oct. 1.
Iger also promised to launch a firestorm among ABC affiliates by predicting “a large-screen experience” for network shows via the Internet, following his recent pact with Apple to beam hit skeins to tiny iPod screens.
He said shows downloaded to a bigger screen — computer, or eventually TV — would cost more than the $1.99 per episode Apple is charging, since they’re likely to have a greater impact on “primary viewership,” referring to auds who watch the shows on network television.
“We are very much in tune with what the consumer is doing, and what the consumer wants,” Iger said. “It is imperative for us not to relegate content to its traditional boundaries, because the consumer doesn’t really care about those boundaries.”
Film problems aside, there was good news: broadcasting, led by ABC, swung to a $48 million profit from a $75 million loss the year before.
Chief financial officer Thomas Staggs said the homevid market has become particularly challenging for Disney since TV is the fastest-growing DVD segment and the Mouse’s TV library is modest compared to that of other studios.
But execs said they expect, and they are indeed likely to see, a brighter year ahead. “Chicken Little” is raking in the coin. “Chronicles of Narnia: The Lion, the Witch and the Wardrobe” hits in three weeks, followed by “Cars” in June and “Pirates of the Caribbean: Dead Man’s Chest” in July.
Staggs named “Casanova,” “The Shaggy Dog” and “Invincible” as pics Disney has less invested in but “that could have a real impact on results.”
On Pixar, Iger said he had nothing to add to Steve Jobs’ recent comment that the two are in deep discussions and hope for a resolution by year’s end.
Rumors have been flying of late — discounted by most Wall Streeters — that Disney could buy Pixar.
Iger said Disney is focused on content and on “getting animation right.” Any acquisition would likely be in content. But he said he’s also happy to partner — as he’s doing with Walden Media on “Narnia” and with Pixar.
Cable nets led by ESPN saw income rise about 12% to $584 million.
At media networks, which include broadcasting and cable, income surged 41% to $632 million. Revenue rose 16% to $3.4 billion.
Parks and resorts saw a 10% bump up in profits and a 9% revenue hike to, respectively, $309 million and $2.3 billion.
Consumer products income fell 10% to $132 million on a 16% decline in revenue to $519 million — due mostly to the sale of the Disney Stores North America in November 2004.
For the full year — Disney’s fiscal year ends Sept. 30 — earnings were up 8% to $2.5 billion.
Revenue grew 4% to nearly $32 billion.
Mouse repurchased $2.4 billion in stock, including $1 billion in the fourth quarter.