NEW YORK — At Disney, ABC is thriving while the film studio is lagging.
The Mouse House revealed a wild ride for the fiscal second quarter, with broadcast and cable figures giving the company a chunky profit increase of 12% to $733 million.
Film revenue sank 22% and profits dropped 39%, leading overall revenue to grow only about 3% to $8 billion — lower than the $8.2 billion some analysts had expected.
Division was hit by tough comparisons to last year, when the second quarter saw the homevid release of “The Incredibles.”
But it’s online television that gets the Mouse excited these days.
“We’re already showing you a glimpse of the future, which we’ve pretty quickly made the present,” topper Bob Iger said of ABC’s online offerings in a call with analysts.
Alphabet net was first to make shows available online, offering free viewing for Touchstone-produced shows “Lost,” “Desperate Housewives,” “Commander in Chief” and “Alias” to visitors of its Web site.
Though he declined to offer the number of streams since the deals went live a few weeks ago, Iger spent much of the call promoting the burgeoning ad-supported service.
Iger told analysts the upfront will see “more deals cut” on new platforms and integrated digital packages, even suggesting that ABC pushed to launch the service ahead of the upfronts so that advertisers would be more comfortable spending money on digital buys. Iger also gave a shout-out to one advertiser, Tylenol, whose online campaign, he said, combines traditional spots with interactive info.
Iger said the net may replace some new shows after the first phase of the program ends this summer but said the program would continue. “As we see it, this is not an experiment,” Iger said. “We’re in this for the long run.”
He said a lot of programming will remain free, but some paid content may also be added as the service expands.
How online television will fare against, or cannibalize, both broadcast and the developing iTunes platform is a critical question for the company as it remains the net most aggressive in putting primetime content into new venues. Company now cites 5 million iTunes downloads since shows like “Lost” and “Desperate Housewives” were first made available online last fall, and predicts $500 million in digital revenue over the next five years.
Back on the airwaves, the Mouse will try to translate the homegrown success of Disney Channel smash “High School Musical,” airing local versions in places like Latin America.
In other Disney divisions, profits at theme parks were up 17%, to $214 million, and profits at broadcast and cable nets rose 20%. Film proved a drag, however, with revenue down 22% to $1.8 billion, and profits down to $147 million. Consumer product profits slid 8% to $104 million.
But the company said the outlook at the studio was brightening because its dependence on the old Miramax slate was lessening; in fact, this will be almost the last quarter Disney can lay the division’s shortcomings at the feet of Bob and Harvey Weinstein. This past quarter saw weak pics like “The Libertine” among the last of the titles co-distribbed by Disney and the Weinstein Co. “Scary Movie 4,” though, should boost both studios.
Indeed, the current three-month period will prove do-or-die for Disney’s fortunes this summer, given that it will release its two most anticipated pics in a long time: “Cars” and “Pirates of the Caribbean: Dead Man’s Chest,” which Iger termed the “most important swing factors in this quarter.”
Back at the slate, when an analyst questioned the company about costs at the studio, chief financial officer Tom Staggs responded by saying that a focus on branded and animated pics will lead “to more consistency and higher margins” — reinforcing the company’s previously announced strategy that new live-action franchises will become more scarce.
Mouse House execs also predicted this would be the fourth straight year of double-digit earnings growth even as the company must make acquisition payments for Pixar, for which it paid a reported $7.4 billion.