LOS ANGELES - Profit at media conglomerate The Walt Disney Co. rose 19 percent in the second quarter on strong ratings at its ABC network and cable channels, and increased attendance at its theme parks.
The company, based in Burbank, also reported a drop in earnings from its film studio, which continues to struggle with lower DVD sales and modest box office success.
Disney reported net income of $733 million, or 37 cents per share, for the three months ended April 1, compared with income of $657 million, or 31 cents per share, in the same period last year.
Revenue grew to $8 billion from $7.8 billion in the same period last year.
The results beat estimates of analysts surveyed by Thomson Financial who had been expecting earnings of 31 cents per share.
Operating income fell 39 percent at Disney's film studio while revenue decreased 22 percent to $1.8 billion. This year's DVD releases have not sold as well as the DVD of the Pixar Animation Studios hit "The Incredibles" in the same period last year.
Studio performance should pick up in the second half of the year with the release of the latest Pixar film, "Cars" next month and the sequel to "Pirates of the Caribbean" in July, the company said.
Home video revenue from the DVD release of "Chronicles of Narnia: The Lion, The Witch and The Wardrobe" will also be seen in the third quarter.
The company's media networks division, which includes ABC and cable channels such as ESPN, delivered the best performance with a 20 percent jump in operating income and a 18 percent rise in revenue to $3.6 billion.
Results were helped by higher subscriber fees at ESPN and rising advertising revenue at ABC, which continues its ratings comeback.
That trend should continue as the network gets ready to negotiate new deals with advertisers for the fall schedule. ABC will present its lineup next week and expects strong increases in ad rates over last year, the company said.
Attendance at Disneyland in California grew 15 percent in the quarter as that park's 50th anniversary celebration winds down. Attendance at Walt Disney World in Florida rose a more modest 3 percent, Disney said.
The company said it does not expect rising gas prices to lower attendance at its domestic parks.
"Over the years, fuel costs have not had a demonstrable effect on our attendance," Disney Chief Financial Officer Thomas Staggs said during a conference call with analysts.
Staggs said gas prices are a small percentage of a family vacation budget. A $1 increase in the cost of a gallon of gas would mean a hike of about $40 for the entire trip.
"Unless the increase in oil prices meaningfully impacts consumer confidence and spending, we would not expect to see gas prices have a large effect on our theme parks this summer," Staggs said.
Attendance at the latest park in Hong Kong has been lower than anticipated, but Disney said it still expects to hit its one-year goal of 5.6 million visitors.
"We clearly have a lot to learn about the market," Disney Chief Executive Robert Iger said. "Overall, I don't think our marketing efforts have been as effective as they could be. But we're going to figure this out."
Looking ahead, Staggs said the acquisition of Pixar Animation Studios Inc., which closed last week, will reduce earnings per share for the year by 10 cents, spread evenly over the next two quarters. Disney issued new shares to pay for the purchase.
Iger confirmed that work on a sequel to Pixar's "Toy Story" franchise has begun, although no release date has been set.
Iger said he is pleased with the response so far to the free, advertising-supported streaming of TV shows on ABC.com. He said that option, which is in addition to the sale of ABC shows on Apple Computer Inc.'s iTunes store, will continue past the original trial date of June 30.
Disney may also join Warner Bros. in distributing its shows via a peer-to-peer computer network, Iger said.
Source : San Luis Obispo