Mouse House quarterly earnings increase 55%
“Alice in Wonderland’s” nearly $1 billion worldwide haul enchanted the Walt Disney Co.’s second quarter, with the strong box office performance of Tim Burton’s 3D pic helping boost profits at the Mouse House by 55% during the last three months — and driving home the company’s renewed focus on high-profile branded fare.
Of course, the company’s improved bottom line was also a result of across-the-board cost-cutting and layoffs that took place last year, considering overall revenue for the company rose just 6% to $8.6 billion. Profits came in at $953 million.
The studio, in particular, showed signs of a resurgence, after stumbling with “Race to Witch Mountain” and “Confessions of a Shopaholic” during the same period in 2009.
“Alice’s” $960 million worldwide haul enabled the Walt Disney Studios to post $210 million in profits. Last year, the film division earned just $13 million. The studio’s revenue rose 7% to come in at $1.5 billion, giving studio chiefs more reason to to stress the importance of backing recognizable tentpole fare at the megaplex that can rub off on the company’s other arms. As part of that effort, Disney has “Prince of Persia: The Sands of Time,” “Toy Story 3,” “The Sorcerer’s Apprentice” and “Tron: Legacy” unspooling this year, with sequels to “Cars,” “Pirates of the Caribbean” and “Monsters, Inc.” forthcoming.
“Alice in Wonderland” is Disney’s second-highest performing pic ever, the studio said.
“The incredible box office performance of Disney’s ‘Alice in Wonderland’ and acquisition of Marvel, whose ‘Iron Man 2’ has grossed $334 million in global box office in its first two weeks, clearly show the benefits of investing in high-quality branded content,” Robert A. Iger, president and CEO of the Walt Disney Co., said in a statement. “With the economy showing signs of improvement, we’re confident our strategy is the right one to provide consumers the best in entertainment while building long-term value for our shareholders.”
“Iron Man 2” should prove the first pic to considerably contribute to Disney’s warchest after the Mouse House acquired Marvel. But the company isn’t expected to benefit financially from “Iron Man 2” until the end of the current quarter.
Despite Paramount distributing “Iron Man 2,” and collecting around 10% of its B.O., analysts believe Disney could earn as much as $300 million in profit from the pic’s ticket sales, merchandise, licensing fees and product tie-ins.
Television, Disney’s biggest moneymaker, dialed in a 6% boost in revenue of $3.8 billion for the period, but profits remained flat at $1.3 billion.
Profits at Disney’s cable networks, which include the Disney Channel and ESPN, increased by $39 million to $1.2 billion, mostly because of higher affiliate and advertising dollars; ESPN bowed a new network in the U.K. during the period.
But profits fell $39 million to $123 million on the broadcasting side, driven down by a loss in advertising revenue and higher costs to produce ABC Studios’ shows.
Revenue at Disney’s theme park division — the company’s second-largest revenue generator — remained flat at $2.4 billion. Park attendance and hotel bookings were down during the post-holiday period, but visitors spent more on merchandise and food at the parks, helping offset any declines. Attendance at Hong Kong Disneyland also was up.
Still, profits fell 12% to $150 million, sinking mostly because of higher fuel costs and promotional costs to tubthump the Disney Cruise Line, and fewer visitors to Disneyland Paris.
“Consumers are still out there waiting for bargains,” said Disney chief financial officer Jay Rasulo in a conference call with analysts, citing discounting at the theme parks to attract guests. “We are waiting for each other to blink.”
The addition of Marvel comicbooks and the rollout of a new line of “Toy Story” merchandise helped the consumer products arm increase revenue by 20% to $596 million and profits 37% to $133 million.
Marvel merchandise for “Iron Man 2” is being sold at Disney theme parks to coincide with the release of the pic.
Higher Club Penguin subscriptions and lower videogame production costs also helped boost revenue at the interactive division by 20% to $155 million, which helped lower losses by 10% to $55 million.
Iger said games based on Marvel’s superheroes are in development.