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Disney's Profit Dips Despite Rising Revenue

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The Associated Press

Published: February 6, 2008

LOS ANGELES - The Walt Disney Co.'s quarterly profit fell 26 percent from a year earlier, when it benefited from the sale of a magazine and entertainment channel, but the media conglomerate notched a 9 percent jump in revenue powered by growth in its cable and television division.

For the fiscal first quarter ended Dec. 29, Burbank-based Disney reported net income of $1.25 billion, or 63 cents a share, compared with $1.70 billion, or 79 cents a share, in the prior-year period. Still, the results beat Wall Street expectations.

Prior-year results included gains from the company's sale of its shares in US Weekly magazine and the E! Entertainment channel and the discontinuation of its ABC Radio business.

Excluding the one-time items, earnings grew 29 percent to 63 cents a share from 49 cents in the prior-year period.

Revenue grew to $10.45 billion compared with $9.58 billion in the same quarter a year earlier.

Analysts polled by Thomson Financial had expected earnings of 52 cents a share on revenue of $10.04 billion.

"We've started off 2008 with another outstanding quarter, marked by strong creative and operational performances," Robert Iger, Disney's president and chief executive officer, said in a statement. "These results once again highlight the quality of our content and our unique ability to leverage it across our many businesses and territories."

Revenue at the company's media networks unit, which includes the Disney Channel and ESPN, jumped 10 percent to $4.17 billion, and operating income climbed 28 percent to $908 million.

Leading the segment were the ABC Family Channel, which benefited from savings in programming costs and higher advertising and affiliate revenue, and domestic Disney channels, which saw strong DVD sales of "High School Musical 2," the company said.

ESPN saw increases in advertising and affiliate revenue, largely because of NASCAR programming.

Disney's theme parks and resorts generated $2.77 billion in revenue, an 11 percent increase from the prior-year quarter.

Operating income for the unit surged 25 percent to $505 million, led by increased spending and attendance at Walt Disney World, Disneyland Resort in Paris and Hong Kong Disneyland Resort.

The company's studio entertainment division posted revenue of $2.64 billion, flat from $2.63 billion in the prior-year quarter. Operating income for the unit fell 15 percent to $514 million from $603 million.

Revenue from Disney films such as "Pirates of the Caribbean: At World's End" and "Ratatouille" posted lower unit sales compared to the slate of films the company had out in the prior-year quarter, including "Cars" and "Pirates of the Caribbean: Dead Man's Chest."

Shares of Disney slipped 83 cents to $30.07 Tuesday, but climbed $1.50 in after-hours trading.

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