Feb. 5 (Bloomberg) -- Walt Disney Co., the second-largest U.S. media company, reported first-quarter profit that beat analysts' estimates as revenue from cable networks and theme parks climbed. The stock gained 5.7 percent.

Net income was $1.25 billion, or 63 cents a share, compared with $1.7 billion, or 79 cents, in the year-earlier period that included asset sales, Burbank, California-based Disney said today in a statement. Profit beat the 52-cent average of 19 analyst estimates compiled by Bloomberg.

``High School Musical'' DVDs and higher fees from pay-TV systems to carry the Disney Channel helped Chief Executive Officer Robert Iger lift cable revenue by 13 percent, while theme-park sales advanced 11 percent. Non-U.S. travelers attracted by the cheap dollar flocked to Walt Disney World, said Janna Sampson at Oakbrook Investments LLC in Lisle, Illinois.

The popularity of Disney Channel's ``High School Musical'' movie and the show ``Hannah Montana'' allowed Chief Executive Officer Robert Iger to raise prices cable operators pay to carry the network. Cable revenue rose 13 percent, while theme-park sales advanced 11 percent. Non-U.S. travelers attracted by the cheap dollar flocked to Walt Disney World, said Janna Sampson at Oakbrook Investments LLC in Lisle, Illinois.

``This bodes well for its international diversification,'' said Sampson, who is chief investment officer overseeing $1.2 billion including Disney shares. ``It's showing the benefit of that as well as Mr. Iger's management.''

Disney rose $1.71 to $31.78 in extended trading. The shares fell 83 cents to $30.07 in regular New York Stock Exchange composite trading before the results and have dropped 14 percent in the past 12 months.

Sales Rise

Sales rose 9.1 percent to $10.5 billion, surpassing the $10.1 billion average estimate. Net income fell 27 percent from a year earlier. Excluding the sale of stakes in the E! cable- television channel and Us Weekly in the year-earlier period, earnings per share rose 29 percent.

Operating profit at the resorts division rose 25 percent to $505 million in the period ended Dec. 29, lifted by growth at Walt Disney World and Disneyland Paris, and improved results at Hong Kong Disneyland. Earnings exceeded the $430.9 million expected by JPMorgan Chase & Co. analyst Imran Khan in New York, who recommends buying Disney shares and doesn't own any. Sales rose to $2.77 billion from $2.49 billion.

International Tourism

Tourism was strong at U.S. and international theme parks, Chief Financial Officer Thomas Staggs told reporters on a conference call today.

``Our booking is modestly ahead at this point and we're pleased with the pace of business at our parks,'' Staggs said. ``Pricing on our hotel rooms at this point is running slightly ahead of last year.''

Investments in resorts will help Disney, the world's largest theme-park operator, sustain its growth, Iger said in an interview with Bloomberg Television.

``We're seeing double-digit returns on invested capital,'' Iger said.

Disney ordered two new cruise ships and is building a Hawaiian resort, and is renovating its California Adventure theme park. Cruise lines are 85 percent booked in 2008, Iger said.

Analyst Jessica Reif Cohen at Merrill Lynch & Co. expects theme-park profit to drop starting next quarter as the U.S. economy decelerates, according to a Jan. 22 report. GDP growth is projected to slow to 2.1 percent this year from 2.2 percent in 2007, according to economists' average forecast compiled by Bloomberg. Personal-income growth will narrow in each quarter this year, according to Moody's Economy.com.

`Strong Numbers'

The results showed no evidence of a slowdown, said David Bank, an analyst at RBC Capital Markets in New York, who has an ``outperform'' rating on Disney shares.

``They were very strong numbers'' across all units, Bank said in an interview with Bloomberg Television. ``It was just broad outperformance.''

Media networks, including the cable channels and ABC television, recorded a 10 percent increase in sales to $4.17 billion. Operating income rose 28 percent to $908 million. Cable-network sales rose to $2.41 billion from $2.14 billion, while broadcast sales increased 6 percent to $1.76 billion.

Disney will spend less making television pilots this year because of the three-month strike by film and TV writers, Iger told analysts on a conference call. ABC will lose revenue because it has fewer shows to sell.

The strike, started Nov. 5, will have an impact on broadcast profit, Iger said in the interview. Earnings at the unit rose 30 percent to $322 million in the first quarter.

ABC Costs

Costs at ABC need to come down, Iger said. Networks may rethink how they present new shows for the September season to advertisers each May in the ``upfronts.''

``The manner in which upfronts are presented, with all the bells and whistles, feels like a bit of an anachronism to me,'' Iger said.

Cable-network operating income rose 27 percent to $586 million, aided by the absence of programming costs for Major League Baseball at ABC Family Channel and higher affiliate and advertising rates.

Disney Channel results were boosted by DVD sales of ``High School Musical 2.'' The addition of Nascar programming increased costs at ESPN, where $234 million of revenue was deferred until the second half.

``Hannah Montana,'' among the most-watched programs on cable television, will help spur spending in a slowing economy, said Peter Sorrentino at Huntington Asset Advisors in Columbus, Ohio.

```Hannah Montana,' that's their hot property for the foreseeable future,'' Sorrentino, who helps manage $12 billion, said in an interview with Bloomberg Radio before the results. ``Anyone with young girls in the household knows that can draw spending out that you haven't intended.''

Studio entertainment profit fell 15 percent to $514 million on slowing DVD sales. Revenue was little changed at $2.64 billion from the year-earlier period, which included ``Cars,'' ``Pirates of the Caribbean: Dead Man's Chest'' and ``Little Mermaid Platinum Release.''

Licensing revenue from ``Hannah Montana'' and ``High School Musical'' merchandise helped lift revenue in the consumer products unit by 29 percent to $870 million, while operating profit rose 38 percent to $322 million.

(Disney executives held a conference call with investors. For a replay go to disney.com/investors.)

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

Last Updated: February 5, 2008 20:22 EST