For the second time in as many days, a major global media company released results which suggested little adverse, or material, impact from either the writers’ strike or a feared slow down in advertising spending related to the economy.
As was the case with News Corp, Disney’s CFO Tom Staggs reported a “really strong ad market.” during Disney’s earnings call Tuesday. Revenue at the Media Networks Division which houses ABC, ESPN and the other cable networks was $4.17b versus $3.79b for the same period a year ago. Operating profit at ABC climbed to $322m, a 30% gain. The rest of the cable networks had operating profits of $586m (up 27%).
Contrary to fears, the writers’ strike hasn’t had much teeth (so far). Just the opposite, in the short term it may even be helping financially. Ratings at ABC were off 11% for prime time viewing in the 18-49 year old demographic as a result of fewer new programs but revenues for the network (and TV stations) was actually up about 6%. The strike is also helping reduce the cost overhead for developing new pilots and episodes. (If the strike continues long enough, its influence on audience draw will eventually have a negative impact).
Results at the movie studio were flat year over year, consequence of a less popular slate of films this last quarter. That notwithstanding, all of the core business units including television, theme parks, consumer products and film continued their multiyear growth trend. CEO Robert Iger characterized this quarter as “outstanding.”
A few divisional highlights:
•Consumer Products earned revenue of $870, a 29% increase fueled largely by the success of Disney’s Hannah Montana and High School Musical brands (both have also helped solidify the reputation of Disney’s Hollywood Records music label).
•The theme Park organization, largely feared to be a casualty of decreases in consumer spending, proved more resilient than expected. The segment was up 11% year over year to revenue of $2.78b. U.S. parks had a three percent attendance increase.
•The movie studios had revenue of $2.64b versus $2.63 last year.
Overall, Disney handedly beat analyst expectations with net income of $1.25b (63cents/share adjusted) on revenues of $10.45b. Excluding the sales of positions in Us Weekly and E! Television, earnings per share were up 29%. Relative to last year, income was down from $1.7b (79c/share) and revenue was up 9%. Mean consensus estimates were for 52cents a share on revenue of $10.04b.
A significant portion of the success, similar to News Corps’ successful formula, can be attributed to a combination of geographic diversification and Disney’s ability to cross promote and market their brands across different business segments. Iger called this the “Disney Difference” and said in a statement that the financial results “highlight the quality of our content and our unique ability to leverage it across our many businesses and territories.”
In other related news, Disney announced they’d reached an agreement to extend Robert Iger’s contract as CEO for another 5 years. Under the new deal his contract will expire Jan 31, 2013 instead of Sept 30, 2010 as previously structured. CFO Tom Staggs signed a similar deal.
•The Recipes of Pixar: Best Management Practices
•Disney Shopping: Increased Focus on M&A
•Disney’s Online Successes: A summary
•Disney’s Steamboat Ventures Funds Move Networks
•Disney’s Gamble on Music: CDVU+
•Disney Buys Club Penguin
•Microsoft and Disney sign Download Pact