March 2, 2021

Disney Beats Expectations, Posting 11% Rise in Profit

LOS ANGELES — The Walt Disney Company, reporting a profit of $1.48 billion in its most recent quarter, told analysts that whipsawing financial markets and fears of a double-dip recession were not hurting theme park bookings — so far.

“During the last few days we haven’t see any change in the pace of activity,” said Robert A. Iger, Disney’s chief executive. Referring to the price cuts that Disney put into place at its resorts at the height of the recession, but has since scaled back, Mr. Iger added, “If the economy weakens will we reconsider a promotions strategy? Yes.”

Operating income for the period ended July 2 at Disney’s global theme park and resorts unit — scrutinized as a barometer of consumer confidence — climbed 9 percent, to $519 million, on revenue of $3.17 billion.

Ending discounts was largely the reason for the increase, although improved results from Hong Kong Disneyland and the Disney Cruise Line contributed.

Spending for each guest at Walt Disney World in Florida and Disneyland in California rose 8 percent during the period, according to James A. Rasulo, Disney’s chief financial officer. Attendance was flat.

Highlighting the difficult economics of the movie business, operating income at Walt Disney Studios fell 60 percent, to $49 million, despite hits like “Pirates of the Caribbean: On Stranger Tides” and “Thor.” Disney’s movie releases in the same quarter a year ago, “Toy Story 3” and “Iron Man 2,” were stronger ticket sellers; they were also cheaper to make and market.

Mr. Iger said executives at the studio were focused on ways to reduce production costs, including a further reduction in the number of films made each year.

Only a few days of ticket sales for “Cars 2” made it into the most recent quarter, which ended on July 2. But “Cars 2,” which has underperformed at the North American box office, did help deliver a 32 percent increase in operating income, to $155 million, at the company’s consumer products division.

Over all, Disney said net income for its fiscal third quarter, at 77 cents a share, rose 11 percent compared with the same quarter last year. Revenue climbed 7 percent, to $10.68 billion. Analysts had expected income of 73 cents a share.

As usual, the brightest spot in Disney’s portfolio of businesses was television. Operating income at the company’s media unit increased 11 percent, to $2.09 billion, largely because of higher carriage payments for ESPN from cable providers.

As at other media conglomerates, Disney’s television advertising revenue rebounded, although ESPN’s ad sales in the quarter were flat as higher rates were offset by the absence of World Cup games. Lower programming costs benefited ABC, which had increased ad sales.

Mr. Rasulo said that ESPN would experience higher programming and production costs in the coming stretch because of fees for football coverage.

On the other end of the Disney spectrum, the company’s smallest division, interactive media, continued to sputter. Although revenue climbed 27 percent, to $251 million, the unit’s loss widened to $86 million. Accounting related to last year’s purchase of Playdom, a maker of simple online games, was largely to blame.

Article source:

Speak Your Mind