Disney Earnings Exceed Estimates on Growth at Theme Parks, Cable Networks

Walt Disney Co. (DIS), the world’s biggest theme-park operator and owner of ESPN, posted a 30 percent gain in fourth-quarter profit, beating analysts’ estimates on growth in cable TV and at U.S. resorts.

Excluding items, profit totaled 59 cents a share, Burbank, California-based Disney said yesterday in a statement. That exceeded analysts’ projections of 55 cents, the average of 26 estimates compiled by Bloomberg. Sales grew 7 percent to $10.4 billion in the period ended Oct. 1, meeting estimates.

Higher fees from pay-TV operators, advertising gains and improved results at resorts drove revenue and profit higher. Audience ratings for ESPN increased 13 percent in the quarter, according to Nielsen data provided by Barclays Capital. Disney resorts benefited from higher ticket prices and a new ship.

“You had solid results in all of the segments that really matter,” said Tony Wible, an analyst at Janney Montgomery Scott LLC in Philadelphia who has a “neutral” rating on the stock. “The underlying trends look fairly healthy in the two most important segments -- media networks and parks.”

Disney rose 6.4 percent to $36.86 at 9:33 a.m. New York time, the biggest intraday gain since Feb. 9. The shares had declined 7.7 percent this year before today.

Disney sees “very promising signs” at ABC, Chief Executive Officer Robert Iger said yesterday in an interview with Bloomberg Television, citing shows such as “Once Upon a Time,” “Suburgatory” and “Revenge.”

Future Growth

While ratings are down from a year earlier, ABC doesn’t have “make-good situations” where it has to compensate advertisers for viewer shortfalls, Iger said.

“We’re positioning the network well by building a foundation for it to grow on in the years ahead,” Iger said.

Net income for the final three months of fiscal 2011 rose to $1.09 billion, or 58 cents a share, from $835 million, or 43 cents, a year ago, Disney said.

Profit from cable networks advanced 18 percent to $1.26 billion on an 11 percent rise in revenue to $3.47 billion. The gains reflected growth in sales of Disney Channel programming, higher fees from pay-TV companies and higher ad sales.

Profit at ABC broadcasting advanced 37 percent to $201 million on a 4 percent rise in revenue. ABC enjoyed higher network ad sales and a drop in programming and production costs, Disney said.

Cable Advertising

“The cable advertising market is probably pacing 4 percent to 10 percent up year over year,” Wible said in an interview. Broadcast revenue is probably rising closer to 3 percent on ad sales, syndication and streaming revenue, he said.

The theme parks boosted profit 33 percent to $421 million, as revenue jumped 11 percent to $3.13 billion. Disney credited a rise in ticket prices and guest spending, including higher room rates. Cruise profit rose after the Disney Dream entered service with its maiden voyage in January, becoming the third ship in the company’s fleet.

Domestic hotel reservations this quarter are in line with a year ago, while rates are up in the low single digits, Chief Financial Officer Jay Rasulo said on a call.

The European financial crisis will likely have some impact on visits to Disneyland Paris, Iger said in the interview.

Studio Profit

Film studio profit rose 13 percent to $117 million on 8 percent lower revenue. The company reissued the 1994 hit “The Lion King” in 3-D, generating $93.4 million in ticket sales after its Sept. 16 release, according to Box Office Mojo. That helped counter the performance of Pixar’s “Car 2,” which failed to match the year ago revenue from “Toy Story 3.”

Disney’s consumer products unit posted a 12 percent gain in revenue to $816 million, while profit increased 13 percent to $207 million, the result of “Cars” and Marvel merchandise.

The loss in interactive narrowed to $94 million from $104 million, while revenue increased 19 percent to $223 million, Disney said. The company reduced marketing outlays and product development spending for console-based games.

This week Disney formed a partnership with Google Inc. (GOOG)’s YouTube to create short, family friendly videos for young viewers. Disney Interactive will produce and program co-branded Disney.com and YouTube videos starting in early 2012.

The accord will be “very positive for Disney,” Iger said, with the agreement helping the division reach profitability by 2013, according to the company.

Iger, 60, will take on the added role of chairman next year as part of a plan to name a new Disney chief executive in 2015. He said the board has started the process, without saying when the company may name a successor.

To contact the reporter on this story: Ronald Grover in Los Angeles at rgrover5@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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