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Dow 30 Earnings: The Walt Disney Company - Fiscal Third Quarter 2010
Entertainment and theme park giant Disney (DIS – Free Analyst Report) enjoyed a stellar fiscal third quarter (ended June 30th). Share earnings came in at $0.67, versus our estimate of $0.59 and the prior-year tally of $0.52. Revenue climbed an impressive 16% year over year, behind strong growth at the Media Networks and Studio Entertainment segments.
Disney's Cable Networks outperformed our expectation, posting a whopping 50% increase in operating income on higher affiliate and advertising revenue. The recognition by the ESPN network of an additional $307 million in deferred revenue also helped considerably. Earnings from the ABC broadcast network, however, were only up slightly, as the impact of rising advertising and licensing revenues was mostly offset by higher programming expenses.
The studio, meantime, turned in solid results, as we had anticipated. It recorded $123 million in operating income, as compared with a $12 million loss in 2009. The strong audience receptions for Toy Story 3 and Iron Man 2 likely set the stage for healthy DVD sales in the December quarter. These films also helped to lift Consumer Products earnings 22%.
Finally, income from the Parks and Resorts fell 8%, despite a modest top-line gain driven by price hikes. Costs rose for labor and other employee-related expenses, as well as for new attractions. Lower attendance and hotel occupancy also put a damper on income.
We have raised both our fiscal 2010 and 2011 share-net forecasts by a dime, to $2.15, and $2.45, respectively.
About The Company: The Walt Disney Company operates Media Networks such as ABC and ESPN, and Studio Entertainment. Its world famous parks and resorts include Disneyland, Walt Disney World (Magic Kingdom, Epcot, Disney’s Hollywood Studios), while the company earns royalties from Tokyo Disneyland and manages Disneyland Resort Paris and Hong Kong Disneyland. It also operates a cruise line and Consumer Products and Interactive Media segments. ABC was acquired in February, 1996, Pixar in May, 2006, and Marvel in December, 2009.