ESPN, as Usual, Spurs Quarterly Growth at Disney

LOS ANGELES â€" Disney's theme park and consumer products units each produced robust fourth-quarter growth, but it was ESPN â€" as usual â€" that delivered the biggest boost to the entertainment conglomerate, the company reported Thursday.

For the fiscal quarter ended Sept. 29, Disney reported a profit of $1.24 billion, or 68 cents a share, a 14 percent increase from $1.09 billion, or 58 cents a share, a year earlier. Disney met analyst expectations (although it is customary for the company to beat them.) Revenue increased a modest 3 percent, to $10.78 billion.

Results were not uniformly positive, however. Disney's movie studio reported weak operating income of $80 million, a 32 percent decline from the year-earlier period â€" even though the studio released the DVD of its “Avengers” blockbuster in the quarter. Lower worldwide theatrical results and high marketing costs for “Frankenweenie,” which flopped at the box office, were to blame.

Still, Disney's cable television division, centered on ESPN and Disney Channel, saw operating income climb 9 percent, to $1.38 billion. The increase was powered by growth at ESPN that came from higher contractual rates from cable system affiliates, as well as decreased marketing costs. These increases were partly offset by higher ESPN programming costs tied to Major League Baseball and expanded Wimbledon rights.

The company's Parks and Resorts unit - closely watched as an informal barometer of discretionary spending in the broader economy â€" reported an 18 percent increase in operating income, to $497 million. Higher attendance at Disneyland Paris and Hong Kong Disneyland helped, but more capacity at Disney's cruise line appeared to be the largest contributor. Results for Disney's North American parks were flat.

Strong sales of Spider-Man and Avengers merchandise helped deliver operating income of $267 million, a 29 percent increase from a year earlier, at Disney's consumer products unit, a signal that efforts to rewire the division are working.

The troubled Disney Interactive, home to the company's video game business and Disney.com, reported a loss of $76 million, an improvement from a loss of $94 million a year ago. But the division has now suffered 16 consecutive quarters of losses â€" over $1 billion in total.
Disney hopes a barrage of recent changes at Disney.com and the Nov. 18 release of the video game “Epic Mickey 2: The Power of Two” will help to finally turn the tide.