×
You will be redirected back to your article in seconds

Mouse signing off

Radio sale frees up cash for Pixar deal

NEW YORK — Walt Disney unveiled on Monday a long-anticipated sale of its radio stations to Citadel Broadcasting. Cash and stock deal worth $2.7 billion will give the Mouse some financial breathing room as it seals the hefty $7.4 billion purchase of Pixar Animation Studios.

Disney also said Monday that its profits jumped 7% last quarter to $734 million. Robust earnings at ABC (up a whopping 87%) and theme parks offset a 60% plunge in filmed entertainment.

CEO Robert Iger confirmed that Pixar will indeed take over production of “Toy Story 3.”

Total revenue nosed up 2% to $8.85 billion.

Citadel deal includes 22 of ABC’s 71 stations and the ABC Radio Networks. It doesn’t involve stations that operate under the Radio Disney and ESPN banners. Citadel, a publicly traded Las Vegas-based radio broadcaster, will become the nation’s third largest radio group and change its name to Citadel Communications.

Shares representing 52% of the new company will be distributed to Disney shareholders, and the Mouse itself will receive a cash payout of up to $1.65 billion — depending on the price of Citadel stock when the deal closes. Citadel shareholders will own the remaining 48% of the combined company.

Pact has been approved by both boards, and it is expected to close in the fall.

Disney has been shopping its radio biz on and off for years. Sale comes at last as the conglom has focused its strategic priorities on content, animation in particular, and on new forms of distribution, like its landmark deal to air ABC series on Apple’s iPod. Apple chairman Steve Jobs, who also owns Pixar, will become Disney’s largest single shareholder when that acquisition closes.

During a conference call Monday, Iger reviewed the boons of the Pixar deal: Disney will own 100% of Pixar’s pics; the Pixar team, with a perfect track record so far, will be making sequels to their own movies; and the talents of Pixar execs Ed Catmull and John Lasseter should improve the prospects for Disney’s own animated films. Animation is such a “wavemaker” for the company, Iger stressed, that Disney’s got to get it right.

He said Disney doesn’t intend to change the release schedules for its own animated offerings “Meet the Robinsons,” due at year’s end, and “American Dog” in 2007. But when the Pixar buy closes, he said, Catmull and Lasseter “will review what we have in development and they will decide what gets made and when it gets released.”

Studio entertainment revenue fell 13% to just over $2 billion. Operating income plunged to $128 million from $323 million.

Mouse said writedowns, a “lower performing” slate of titles and higher marketing costs year on year more than offset strong perfs of “Chicken Little” and “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe.” Domestic homevid revenue was also down from the previous year.

Asked about windows, on which he’s spoken forcefully, Iger said, “It comes down to one very obvious thing… We’re watching consumer behavior change before our eyes” while companies are still wedded to old models.

“It’s tricky because you’re putting relationships on the line and, in some cases, putting current business models on the line,” he added. Iger sees enduring appeal in “going to a great movie on a bigscreen” but said, “I think the industry has to pay heed and make sure that in a competitive industry we’re serving the consumer better.”

Media networks, including heavyweights ABC and ESPN, saw revenue firm by 6% to $3.7 billion and operating income grow 7% to $606 million. A red-hot ABC led the way, with broadcast profits surging to $234 million.

Operating income at cable nets fell 15% to $372 million on higher programming commitments at ESPN and higher programming and marketing costs at ABC Family. The Mouse cited $105 million of “revenue deferrals” at ESPN under new affiliate contracts and said the revenue is expected to be recognized in the second half.

Parks and resorts had a star turn as income rose 51% to $375 million. Revenue was up 13% to $2.4 billion. Mouse chief financial officer Tom Staggs said investment in the parks is paying off, along with the ongoing 50th anniversary celebration and strong attendance at the new Hong Kong Disneyland.

At consumer products, operating income rose 17% to $270 million. Revenue was about flat at $733 million, due in part to the sale of the Disney Stores.

In the radio deal, Citadel chairman-CEO Farid Suleman will run the expanded company. Suleman, who joined Citadel in 2002, was formerly CEO of Infinity Broadcasting.

Infinity, the radio division of the former Viacom and now of the new CBS Corp., was Mel Karmazin’s old company. It’s since been renamed CBS Radio.

Citadel has 163 FM and 58 AM stations.

More Scene

  • Noah CentineoNickelodeon Kids' Choice Awards, Show,

    Kids’ Choice Awards 2019: JoJo Siwa, Noah Centineo Take on Bullying

    This year’s Nickelodeon Kids’ Choice Awards was full of positivity and encouragement to be yourself. DJ Khaled, known for his upbeat mantras, hosted the 32nd annual awards ceremony alongside JoJo Siwa at USC’s Galen center. Siwa accepted the award for favorite social music star. Siwa said in her acceptance speech, “I get hated on every [...]

  • Tina KnowlesSoul of Nation: Art in

    Jay-Z, Tina Knowles Celebrate New 'Soul of a Nation' Exhibit at Broad Museum

    “This show is so important. I mean, it’s our history — and it’s a very important part of our journey,” Tina Knowles Lawson said about Friday night’s opening of the exhibition “Soul of a Nation: Art in the Age of Black Power 1963 – 1983” at the Broad Museum in DTLA. “I’m just so impressed [...]

  • Jordan Peele'Us' film premiere, Arrivals, New

    Jordan Peele Explains the Meaning Behind the 'Us' Michael Jackson Reference

    Jordan Peele’s horror movie “Us” is filled with pop culture references, from “Jaws” to “Goonies.” But the most divisive might be right in his opening sequence. Warning, minor spoilers ahead. The movie about a couple (played by Lupita Nyong’o and Winston Duke) and their children being hunted and brutalized by a mysterious family that looks just [...]

  • Danielle Brooks'Ain't Too Proud - The

    How 'Orange Is the New Black' Star Danielle Brooks Became a Broadway Producer

    Danielle Brooks earned a Tony nomination when she made her Broadway debut as Sofia in the 2015 revival of “The Color Purple,” but now the “Orange Is the New Black” star is working behind the scenes as a producer on the new jukebox musical “Ain’t Too Proud: The Life and Times of the Temptations.” “I [...]

  • Nick Offerman Amy Poehler

    'Parks and Recreation' Cast Talks Possibility of a Revival at 10th Anniversary Reunion

    For one night, Hollywood felt a little like Pawnee. The cast of NBC’s hit comedy “Parks and Recreation” reunited at PaleyFest on Thursday in honor of the show’s 10th anniversary. The whole Pawnee gang showed up: Amy Poehler, Chris Pratt, Aubrey Plaza, Nick Offerman, Aziz Ansari, Rob Lowe, Adam Scott, Rashida Jones, Retta, and Jim [...]

  • Andy CohenThe Shops and Restaurants at

    Andy Cohen to Receive Vito Russo Award at GLAAD Media Awards

    Mazel, Andy Cohen! Bravo’s late-night talk show host is set to receive the Vito Russo Award at the 30th annual GLAAD Media Awards on May 4 in New York City. Sarah Jessica Parker will present him with the award, which is named in honor of GLAAD founder Vito Russo. The annual award goes to openly [...]

  • Variety TV Summit Europe

    Variety TV Summit Europe Coming to London on June 13

    Variety’s TV Summit Europe will coincide with London Tech Week this year, returning to the city on June 13. The international conference will be held at the Royal Lancaster and is co-produced by global events company Informa’s KNect365 division, the world’s largest business-to-business organizer. The one-day summit will focus on the intersection of content and [...]

More From Our Brands

Access exclusive content