Disney profit more than doubles on DVDs, E! sale
Walt Disney Co. said on Wednesday that first-quarter net earnings more than doubled, driven by DVD sales of the movies "Pirates of the Caribbean: Dead Man's Chest," "Cars" and the sale of a stake in E! Entertainment Television.
The company's shares rose nearly 2 percent in after-hours trading as Disney also posted increased earnings at its media networks, thanks to strength in foreign markets and theme parks.
Disney said net income rose to $1.7 billion, or 79 cents per share, from $734 million, or 37 cents per share in last year's first quarter.
Excluding the 23-cent-per-share gain from the E! sale and other items, Disney posted earnings of 50 cents per share, topping Wall Street's target of 39 cents, according to Reuters Estimates.
Revenue rose 10 percent to $9.7 billion, beating the analyst consensus of $9.5 billion.
"Great, great numbers all the way around. Very strong especially at the studio, although it will be interesting to see if the market gives them credit," said David Miller, an analyst at Sanders Morris Harris.
Studio operating profit jumped to $604 million from $128 million on DVD sales of live-action picture "Pirates" and animated films "Cars" and "Little Mermaid Platinum Release."
Media profit rose 24 percent to $750 million, in part as international Disney Channel subscriptions rose.
MONDAY NIGHT FOOTBALL
Chief Financial Officer Tom Staggs told reporters that Disney's decision to move Monday Night Football to cable sports network ESPN from ABC was "the biggest driver of the increase in profitability for the quarter for the broadcasting business."
The move resulted in increased space available for selling ads across ABC. The price for those spot ads rose about 4 percent, and continued in the current quarter to pace percentage increases in the "low single digits" ahead of last year, Staggs said.
A rise in ESPN advertising and affiliate revenue was offset by expenses associated with Monday Night Football, but advertising prices at ESPN were still up in low to mid-single digit percentages this quarter over last year, he said.
Earnings from theme parks rose 8 percent to $405 million and consumer products profit fell 13 percent to $235 million.
For the parks unit, Disney said that guests spent more at Walt Disney World in Florida but that Hong Kong Disneyland and the main Southern California-based Disneyland Resort, which had a 50th anniversary celebration the year before, both saw drops in attendance and guest spending.
"The early going in Hong Kong has been more challenging than we had hoped," Staggs said.
Staggs said current bookings for travel to Disney's domestic theme parks were up about 3 percent compared to the same point one year ago.
The Consumer Products division saw declines in revenue and operating profit in the quarter, despite collecting higher royalties on licensed products. Video game sales faced tough comparisons with the year-ago hits based on "Chicken Little" and "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe."
STOCK BUYBACK
The company repurchased $957 million of its own shares in the quarter, helping to fulfill a promise to counteract dilution resulting from last year's $7.4 billion all-stock purchase of Pixar Animation Studio.
Aside from the E! Entertainment Television stake 23-cent-per-share gain, the sale of an Us Weekly magazine stake added 8 cents a share, while an equity-based compensation related charge was a penny a share.
Disney has enjoyed robust earnings growth and a return to favor with investors since Robert Iger took over as chief executive in late 2005 and began an aggressive program to expand the company's global reach, revitalize its animation division and push the boundaries of digital distribution.
Prudential Equity Group analyst Katherine Styponias said in a note late on Wednesday that Disney "should continue to experience better operating performance and momentum than many of the other large entertainment conglomerates."
The company's share price rose 12 percent during the quarter and now trades at about 20.3 times projected 2007 earnings. Rival Time Warner Inc trades at a multiple of 21.2 times 2007 earnings and Viacom Inc , at a multiple of 20.6.
Shares rose to $36.15 in after hours trade from a closing price of $35.48 on the New York Stock Exchange.