No Cars, Pirates for Blu-ray this year

Disney earnings rise with strong Chronicles of Narnia DVD sales

By Jennifer Netherby
August 10, 2006

The DVD was a strong performer for Disney.

Disney’s biggest summer hits Cars and Pirates of the Caribbean: Dead Man’s Chest won’t be coming to Blu-ray this year, company president and CEO Bob Iger confirmed during the studios third-quarter earnings call Wednesday morning.

“We need a few things in terms of platform penetration,” Iger said. “It’s still early in the life of next-generation DVD to predict. In all likelihood, adoption of next-gen DVD will be slower to market than standard-definition DVD, which was rather dramatic.”

Iger quickly added that he believes in the long-term success of high-definition.

After a rough and tumble year, standard-definition DVD sales were on the rise, with strong performance by The Chronicles of Narnia: The Lion, the Witch and the Wardrobe helping to drive Disney third-quarter earnings increases, the company reported.

Net income jumped 39% to $1.12 billion during the quarter ended July 1. Revenue grew 12% to $8.6 billion.

The studio said it has sold 18 million units of Narnia, helping to boost DVD unit sales 9% over the last year. The company didn’t say by how much DVD revenue was up. Operating income in the studio entertainment division, which includes the home video and theatrical business, was $240 million in the quarter, compared to a loss of $44 million the previous year. Revenue in the segment grew 17% to $1.7 billion.

The company said home video benefited from fewer returns in the quarter and lower spending on marketing.
Disney’s strong results come weeks after the studio announced a restructuring to focus on Disney-branded movies. The company laid off 650 employees as part of the change and expects to take a $25 million write-off in the fourth quarter related to the layoffs.

Iger said during the Wednesday call that the company will consolidate its global marketing and distribution operations.

Throughout the call, execs talked up Disney’s online and mobile plans for its business. The company said it expects more than $500 million in revenue from Internet downloads, online ad revenue and other Internet revenue, excluding theme park bookings.

During the two months this summer that the studio offered Desperate Housewives, Lost and other TV shows for free on, the network clocked more than 5 million viewings.

Iger said he is “confident there are tremendous opportunities in online and mobile video” via subscriptions, advertising and video-on-demand.

Disney also plans to invest more in videogames in the coming year, with a focus on Disney-branded games.