Disney reports stellar earnings

Studio, media networks key to strength

Despite a fourth-quarter stumble by the film studio, the Walt Disney Co. posted record full-year results Thursday as profits surged 39% to $4.69 billion and revenue rose 5% to $35.5 billion.

The two growth engines were media networks, paced by ESPN and Disney Channel, and the film studio, thanks to the third “Pirates of the Caribbean” installment, “Ratatouille” and left-field hits “Wild Hogs” and “The Game Plan.”

Media networks’ operating income rose 23% to $4.3 billion as revenue gained 7% to $15 billion. Studio revenues were flat at $7.5 billion, but operating profit soared 65% to reach an all-time high of $1.2 billion.

The results were “powered by across-the-board creative strength,” said chief exec Bob Iger.

Confronting the inevitable question about the WGA strike on a conference call with analysts, Iger did not dispute the suggestion that ABC could be more vulnerable than other broadcast nets.

“If the writers stay out for a 4-week-plus period of time, it will definitely have an impact on ABC’s schedule,” he said. “The network is well-prepared, though our preference would be to keep the schedule intact, given the momentum we’ve had and the success we’ve had.”

Programming through the end of November sweeps will closely resemble that in a non-strike year, and then December would give the Alphabet the option of rerunning holiday-themed shows. Movies and news would be other options, Iger said, and several episodes of both scripted and reality series are already in the can, most notably for “Lost,” which was already slated for a return just after the New Year.

Theme parks and consumer products posted much less flashy gains. The expense of a massive California Adventure redo in Anaheim, Calif. and softness in overseas attendance keeping theme parks a bit below historic growth levels.

The fourth quarter, which ended Sept. 30, was not a triumph for the studio, which posted a 21% decrease in operating profit to $170 million and a revenue slump of 24% to $1.5 billion. The company blamed tough comps, with the mega-boffo “Pirates” seg creating a bar too high for this year’s lineup to clear.

Iger singled out one homevid title that the company considers a model for mining the library: “Little Mermaid,” whose new Platinum Edition DVD sold 9 million units worldwide as a promo platform for the Broadway bow of the “Mermaid” tuner in December.

Within media networks, the broadcast side grew a gaudy 48% to $703 million for the fiscal year. The company cited fewer hours of sports and therefore more chances to sell pricey ads for prime-time series, which continue to get good ratings. The broadcast subsegment recorded a loss of $30 million due to less syndication income because of the year-earlier sales of “According to Jim” and “Scrubs.”

Cable, due to ongoing strength at the Disney Channel and ESPN, saw operating income gain 12% to $9.2 billion. Execs noted the August debut of “High School Musical 2,” which tallied the best rating of any cable broadcast in history and has been viewed 100 million times, including video recorders and digital downloads. ESPN ad sales also put on a late surge, gaining 30% in the fourth quarter due to the addition of NASCAR races and the second year of Monday Night Football.

Disney shares were up fractionally to $33.63 in volatile trading.

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