TV ads, 'Tron' boost earnings to $1.3 billion
The Mouse House had a lot to squeak about Tuesday as first-quarter profits rose a whopping 54% to $1.3 billion thanks to strong advertising buys at the company’s broadcast and cable networks; hits like “Tron: Legacy,” “Tangled” and “Toy Story 3” at the studio; and an uptick in spending at theme parks over the holidays.
Revenue rose 10% to $10.7 billion during the frame ended Jan. 1 and included coin collected from the sale of Miramax Films.
“We had an excellent first quarter, driven by strong creative content and our unique ability to leverage great entertainment across the many platforms, businesses and markets in which we operate,” said Disney chief Robert Iger.
Disney’s theme park biz, which launched its new Disney Dream cruise ship last month, has long been treated as a barometer for consumer confidence.
Profits at the resorts group rose 25% to $468 million on revenue up 8% to $2.9 billion as guests spent more on higher-priced tickets, food, merchandise and hotel rooms.
Much of that business was generated overseas, as attendance at the Florida parks was up only a little more than 2% and it was down slightly in California during the period.
Doing some forecasting, Disney execs were high on the cruise biz, saying its ships are 89% booked for the year, while hotel occupancy is already up 3% at its parks.
Its new Hawaiian resort opens in August, and plans to build a Disney park in Shanghai have moved forward, though the Chinese government must still give its approval.
Iger also offered up a rare pat on the back to rival Universal and its Wizarding World of Harry Potter park, saying that U “built a great property” and was happy with the attraction’s success. “We all know that’s good for us because we get a good piece of all visitation to Orlando,” he added.
TV easily remains Disney’s biggest moneymaker, with profits up 47% to $1.06 billion and revenue up 11% to $4.6 billion.
Profits at the cable networks (which include ESPN, Disney Channels, A&E and Lifetime) increased $227 million to $771 million on higher ad sales and the addition of college football Bowl Championship Series games including the Rose Bowl on ABC and the Fiesta Bowl, which scored as the most watched telecast in cable TV history.
Higher ad rates also helped at ABC, where profits soared from $115 million to $295 million.
Although the frame included theatrical hits “Tron: Legacy” and the toon “Tangled,” the homevideo release of “Toy Story 3” was singled out for helping boost the studio division’s profits by 54% to $375 million. Revenue was flat at $1.9 billion. The success of “Tangled” added Rapunzel to Disney’s popular princesses biz, Iger noted. Unloading Miramax Films added $75 million to the coffers.
Disney’s decision not to discuss “Tron: Legacy” in its quarterly results or during a conference call with investors was a little unusual.
As the homevideo market continues to soften, Iger said the studio is focusing on “creating great entertainment and using new technologies to distribute that entertainment” but declined to elaborate on Disney’s digital media strategy until the investors conference in Anaheim, Calif., on Feb. 17.
He did divulge that Disney wasn’t tied to one company, like Apple’s iTunes, and was more interested in putting its content on growing platforms that can showcase the properties, offer it access to increased revenue and “will be around for a long time.”
“When you’re on these new platforms, you’re more relevant to the consumer,” he said. “It’s important to be out front and experimental because we haven’t discovered the silver bullet yet.”
While “Tron” moved an impressive amount of merchandise, Disney’s consumer products division again opted to cite “Toy Story” as the primary reason for a 28% increase in profits of $312 million and 24% rise in revenue of $922 million during the period.
The inclusion of Marvel’s characters and improvements at its revamped Disney Stores in North America also boosted earnings.
Iger noted the “great prospects” for Marvel’s “The Avengers” and the third installment of “Iron Man.”
On the interactive front, the acquisition of social media gamemaker Playdom hit Disney’s bottom line, forcing the group to post a $13 million loss. Revenue was up 58% to $349 million during the quarter, however, on strong sales of console games “Epic Mickey” — and yes, “Toy Story 3.”
Disney does not have a high-profile tentpole on the scale of “Alice in Wonderland” or a major homevideo release on the second-quarter sked, which will impact its results.
Attendance at its parks will also be affected because earnings from the Easter holiday will be reported in the third quarter, and the company will be hit by costs to launch the Disney Dream ship.