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Disney Sales, Profit Top Analysts’ Views on ESPN Gain

Disney Sales, Profit Top Analyst Views
Walt Disney Co. CEO Robert Iger. Photographer: Matthew Staver/Bloomberg

Aug. 10 (Bloomberg) -- Walt Disney Co., the world’s biggest media company, reported third-quarter sales and profit that beat analysts’ estimates on gains at the ESPN sports channel and a rebound at the film studio led by “Toy Story 3.”

Net income rose 40 percent to $1.33 billion, or 67 cents a share, from $954 million, or 51 cents, a year ago, Burbank, California-based Disney said today in a statement. Sales gained 16 percent to $10 billion in the period ended July 3, exceeding the $9.34 billion average of 16 analysts’ estimates.

ESPN recognized deferred revenue sooner, and the company’s Marvel and Pixar studios enjoyed box-office successes with two films in the period. “Iron Man 2” and “Toy Story 3” have generated more than $300 million each at U.S. and Canadian theaters.

“ESPN should see some good growth as the automotive industry returns to advertising,” Tony Wible, an analyst at Janney Montgomery Scott LLC in Philadelphia, said before results were announced. He has a “neutral” rating on the stock.

Profit beat the 59-cent average of 19 estimates.

Disney gained 51 cents to $35.80 in extended trading. The stock added 13 cents to $35.29 at 4:01 p.m. in New York Stock Exchange composite trading and has gained 9.4 percent this year.

Cable Profit

Operating profit at the media networks division increased 43 percent to $1.89 billion on $4.73 billion in revenue. Within the division, cable properties contributed $1.68 billion in operating profit, buoyed by $344 million of previously deferred revenue at ESPN, advertising gains and affiliate fees.

The National Basketball Association finals between the Los Angeles Lakers and the Boston Celtics drew record audiences to ABC and ESPN. The two networks also carried World Cup soccer.

Profit at Disney’s theme parks dropped 8.4 percent to $477 million on sales that rose 2.9 percent to $2.83 billion. The company raised U.S. ticket prices on Aug. 5.

Studio operating profit of $123 million compared with a loss of $12 million a year ago, while revenue gained 30 percent to $1.64 billion. Worldwide, “Toy Story 3” collected $895.6 million in ticket sales, while “Iron Man 2” garnered $621.4 million, according to Amazon.com Inc.’s Box Office Mojo.

“Prince of Persia: The Sands of Time,” which cost $200 million to produce and racked up $328.3 million in worldwide ticket sales since its May 28 release, was a disappointment, according to Anthony DiClemente, an analyst at Barclays Capital in New York.

“Toy Story 3” also helped drive Disney’s consumer product sales, with revenue advancing 19 percent to $606 million and operating profit increasing 22 percent to $117 million. The company’s interactive division, which includes video games, lost $65 million on sales of $197 million.

Investors want to learn more about Disney’s plans for the recently purchased online video-game companies Playdom and Tapulous, DiClemente wrote today in a note. Disney may also update investors on talks with Time Warner Cable Inc. over retransmission rights to its television networks.

(Disney executives began a conference call at 4:30 p.m. New York time. To listen, click {Live <GO>}.)

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

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

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