Earnings Preview: Disney to post 4Q earnings

The Walt Disney Co., the family entertainment company that owns ABC, ESPN and several theme parks, reports its fourth-quarter earnings Thursday. The following is a summary of key developments and analysts' opinion related to the period.

OVERVIEW: Economic headwinds are expected to hurt revenue across Disney (nyse: DIS – news – people )'s businesses, from its theme parks and consumer products divisions to advertising revenue garnered at its television networks.

Disney is contemplating companywide job cuts and asking executives to recommend cuts in case the economy deteriorates further, according to a report in the Los Angeles Times.

BY THE NUMBERS: Analysts, on average, expect Disney to post 17 percent growth in earnings to 49 cents per share, on revenue up 5 percent to $9.3 billion, according to a survey by Thomson Reuters.

ANALYST TAKE: Reduced profits at ABC, the broadcast network, led by revenue declines and higher programming costs, will affect Disney in the fourth quarter, said Morgan Stanley (nyse: MS – news – people ) analyst Benjamin Swinburne.

Visitation to Orlando, Fla., home of Walt Disney World, fell in June and August, suggesting attendance at the theme park was down, he said.

Swinburne estimated Disney would post adjusted earnings of 48 cents per share on $8.9 billion in revenue.

WHAT'S AHEAD: A couple of Disney's fall releases have done well at the box office, including "High School Musical 3: Senior Year" and "Beverly Hills Chihuahua." Released straight to DVD, "Tinker Bell" also has sold well. The 3-D movie "Bolt" is due out Nov. 21.

With studios only making up about one-fifth of the company's revenue, its focus going forward is on the continuing effects of an advertising slump and the pullback in consumer spending.

STOCK PERFORMANCE: Disney shares fell 1.6 percent over the quarter, from $31.20 on June 30 to $30.69 on Sept. 30.

Disney shares have traded at a premium to its entertainment peers because of its high-quality television assets, including ESPN and the Disney channel, and its lesser exposure to the ad slowdown because it owns fewer local TV stations, Swinburne said.


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