ESPN, ABC Family boost bottom line as parks, pics sag
Entertainment congloms have posted better-than-expected numbers this earning season, and the Mouse House didn’t disappoint, with the last of the majors reporting an 18% jump in profits over the last three months.
Disney can thank ESPN and ABC Family for much of that coin, with higher fees collected from channels that especially air the sports cabler’s programming offsetting sluggish, if not outright dismal, performances at other Mouse House divisions.
That includes the film studio, where watching the latest changes unfolding there has almost become its own fulltime sport.
Despite a slight 3% increase in revenue of $1.3 billion for the studio, it lost $13 million during the period on a decrease in DVD sales and weak performers at the box office like “Surrogates” and “G-Force,” the latter of which resulted in a $50 million writedown. “Up” and “The Proposal” were cited as successes.
The poor performance of its film slate this year gives Disney prexy-CEO Robert Iger even more leverage as he initiates a complete overhaul of the film biz’s top executive ranks in an effort to turn around that side of the company.
Overall, Disney reported quarterly profits of $895 million, up from $760 million a year ago, on sales of nearly $9.9 billion, up 4.5%.
Revenue at Disney’s theme parks fell 4% to $2.8 billion during the period, with the recession continuing to hurt attendance levels, causing profits to drop 17% to $344 million.
Theme parks rep Disney’s second-largest business, accounting for 30% of its overall revenue. The company is moving forward with plans to open a new park in Shanghai and continues to retool its California Adventure park in Anaheim, Calif., to boost earnings.
Only a month after tapping former Disney Channel topper Rich Ross as chairman of Walt Disney Studios, Iger initiated a round of musical chairs: Thomas Staggs, senior exec VP and chief financial officer of the Walt Disney Co., and Jay Rasulo, chairman of Walt Disney Parks and Resorts, will switch jobs at the end of the year.
Staggs has helped oversee several acquisitions for Disney, including the takeover of Capital Cities/ABC, Pixar and Marvel Entertainment. Rasulo has recently been heading up the expansion of Disney’s California Adventure and the opening of Hong Kong Disneyland.
“Jay and Tom are both dynamic and versatile executives who have done a great job over the last several years and have helped me to shape Disney’s strategic direction,” Iger said in a statement. “By giving them exciting new challenges that build on both their strengths at a time when each of their respective areas are on the right strategic track, the change is good for them and good for the company.
“It’s incredibly valuable to have executives gain experience in different parts of the company,” Iger added during a conference call with investors.
On the TV front, profits from ABC and cablers like ESPN and Disney Channel rose 26% to $1.5 billion on a 14% gain in revenue to $4.7 billion. ESPN earned $128 million more from affiliates than it did during the quarter a year ago, and the division also posted a gain from the merger of A&E Networks with Lifetime’s channels.
Despite lower ratings and ad rates, Disney’s broadcasting biz posted a $2 million profit, helped by domestic and international sales of ABC Studios productions like “Grey’s Anatomy” and “According to Jim.”
“Although last year was a difficult one due in part to the weak global economy, I’m pleased with the way our businesses have responded to the downturn,” Iger said in a statement. “We’ve stayed focused on our long-term strategy, efficiently managed costs and continued to invest in initiatives to deliver future growth. We also have adapted our organization to respond to and take advantage of the changes taking place in our businesses and will continue to do so as we position Disney to thrive for years to come.”