Stung by the dismal box office returns for some Miramax movies along with a few underperforming DVDs, the Walt Disney Co. reported quarterly earnings Thursday that were 26% lower than the year-ago period.
The media conglomerate posted $379 million in net income in its fiscal fourth quarter thanks to solid gains at its television and theme parks divisions, though the results would have been healthier had Disney's movie studio not lost $313 million, reversing a $23 million profit from that unit a year ago.
Revenue for the quarter, the last in which Michael Eisner was CEO, rose 3% to $7.73 billion, about $150 million shy of what analysts estimated.
That the studio lost money was no surprise given that it rushed to get lingering Miramax titles -- including "The Great Raid," "The Brothers Grimm," "The Underclassman" and "An Unfinished Life" -- out in theaters as it revamps that unit under new management. But the financial hit was a bit larger than Disney had forecast when it warned its movie division might lose $250 million-$300 million.
Disney chief financial officer Thomas Staggs also said that the thriller "Dark Water" from Touchstone Pictures and the straight-to-DVD movies "Lilo & Stitch 2: Stitch Has a Glitch" and "Tarzan II" performed below expectations.
Staggs also lamented the tough market for DVDs -- save for those of television shows, sales of which are up 30% overall from last year, representing the fastest-growing segment of the DVD market. This year, 413 theatrical titles have been released on DVD compared with 1,500 television titles.
Trouble is, Disney has a relatively modest TV library, so it hasn't benefited as much from the trend as have rival studios, Staggs said. "Lost," "Desperate Housewives" and ESPN helped drive Disney's media-networks division to $632 million of operating income, a 41% improvement from a year ago. Revenue there climbed 16% to $3.35 billion.