Film, TV buoy Disney dollars
NEW YORK — The film studio — and not just those popular TV housewives — drove growth at the Walt Disney Co. in the second quarter thanks mainly to sleeper hit “The Pacifier” and the might of domestic DVD sales for “The Incredibles.”
Yet what should have been a day of financial back-slapping took an unexpected turn when trading of Disney shares was abruptly halted mid-afternoon Wednesday, sparking speculation among Wall Streeters that the Mouse House had some big news to reveal beyond just the earnings — perhaps even a new Pixar deal.
It turned out that Disney asked for the halt after it mistakenly circulated an internal email outlining its financials, prompting the company to go public with the quarterly results early and while the market was still open.
Nerves appeared soothed by the time outgoing Disney chief exec Michael Eisner opened up the official earnings call at 4:30 ET, reporting to investors that the Mouse House’s profit jumped 30% to $698 million from $537 million last year in the quarter that ended April 2. Revenues rose 8.9% to $7.83 billion from $7.19 billion.
Operating income at the studio soared 65% to $253 million, while revenues rose 5% to $2.3 billion. “Pacifier” has chalked up more than $148.4 million in box office receipts worldwide, while Pixar’s “Incredibles” DVD sold 18 million units in the U.S. Under terms of their partnership, Pixar and the Mouse House split the proceeds.
Strong B.O. showing of “Pacifier” helped to obscure the less-than-mediocre perf of Disney/Buena Vista’s “Ice Princess.”
The ABC broadcast net also shone with the resurgence of its primetime lineup, with operating income almost doubling from $28 million to $54 million.
“Disney has been roaring back as we predicted,” Eisner said before turning the earnings call over to his successor, Disney prexy-chief operating officer Robert Iger.
Iger, who already has begun imposing his leadership stamp, tried to diffuse press reports Disney is considering selling its ABC Radio division. Unlike TV, radio has yet to recover from the economic downturn of the late 1990s. He said the conglom is always on the lookout to shed or acquire assets.
Nor did Iger mention the suggestion from McDonald’s earlier Wednesday that it may end its 10-year exclusive pact with Disney. Deal, which is up next year, doesn’t allow the fast-food chain to market another studio’s movie properties through promotional partnerships.
But Iger, who takes over as chief exec Oct. 1, did reveal that Disney is talking to cable operators and satcasters about carrying a new ABC video-on-demand channel that may feature such hits as “Desperate Housewives” and “Lost.”
Wall Streets applauded Disney’s performance in the second quarter of fiscal 2005 — Disney’s fiscal year began Oct. 1– and commended Iger’s appointment. Analysts said that if anyone can convince Pixar’s Steve Jobs to renew the toonmaker’s partnership deal with Disney before it expires next year, it is Iger.
Iger told investors that he wouldn’t be distracted by a suit filed earlier this week against Disney by Roy Disney and Stanley Gold, who claim the conglom failed to conduct a thorough search for Eisner’s replacement as promised.
Disney staffers, according to Iger, are “plain fed up” with Roy Disney and Gold. “They want the rhetoric to end and to concentrate on what they do best.”
Iger and Eisner also told investors that they just completed a productive trip to India, where rumors are circulating that Disney may be interested in building a theme park.
Revenues at Disney’s parks and resorts jumped 26% to $2.1 billion in the last quarter, while operating income rose 3% to $193 million on the strength of higher guest spending and increased hotel occupancy at Walt Disney World, which recently upped ticket prices.
The Mouse House said consolidation of Euro Disney and expenses at the soon-to-open Hong Kong Disneyland reduced operating income at parks and resorts by $44 million. The Hong Kong park opens Sept. 12.
Revenues at Disney’s television properties, which include ABC and cable nets ESPN, ABC Family, SoapNet, the Disney Channel and Toon Disney, rose 6% to $3 billion.
Cable side saw operating income decrease 1% from last year to $671 million. Company said ESPN was deferring $111 million in revenue until certain sports programming commitments are realized in the next fiscal year.
Iger said ABC’s position at next week’s upfront ad market in Gotham will be greatly improved from last year given the ratings urge powered by “Housewives” and “Lost.” He even predicted that the net could be profitable in fiscal 2005.
Mouse House said the jump in ABC’s operating income last quarter was somewhat offset by higher marketing, promotion and administrative expenses.
In addition to “Pacifier” and “Incredibles,” the studio’s bottom line was boosted by lower production writeoffs and increases in international distribution.
But while U.S. DVD sales were up last quarter, international homevid saw a dip. Disney pointed out that last year’s international DVD release slate for the same quarter included “Pirates of the Caribbean: The Curse of the Black Pearl” and Disney/Pixar’s “Finding Nemo.”
Mouse shares closed down 28¢ Wednesday to close at $26.67 but recovered about half the loss in after-hours trading.