September 24, 2020

Disney Profit Declines 1%, Partly on Movies and Parks

Disney, reporting financial results for its fiscal second quarter, had setbacks in three important areas — movies, theme parks and interactive media.

At Walt Disney Studios, operating income dropped 65 percent, to $77 million, because of the flop “Mars Needs Moms,” which cost about $200 million to make and market but took in only $36.7 million at the global box office. In the year-ago quarter, Disney recorded strong DVD sales of Pixar films like “Up,” “Toy Story” and “Toy Story 2.” The quarter that just ended had no Pixar DVD releases of comparable size.

Operating income at the company’s theme parks, closely watched as a barometer of consumer confidence, declined 3 percent, to $145 million, because of lower royalty payments from Tokyo Disney Resort, which closed for more than a month after the March 11 earthquake.

The parks’ performance for the period was also hurt by a calendar quirk that moved Easter out of the quarter and higher costs for fuel and other items at Disney Cruise Line.

Losses at Disney’s interactive media unit grew to $115 million, from $55 million a year earlier, because of accounting related to the acquisition last year of Playdom, a maker of simple online games. The company has been struggling to turn around the division for years, most recently with broad management changes. Yet another overhaul of Disney.com is expected within months.

Disney shares closed Tuesday at $43.91, up 1.9 percent, then slipped about 3 percent to $42.66 in after-hours trading.

For the three months ended April 2, Disney, which is based in Burbank, Calif., had net income of $942 million, or 49 cents a share, down from $953 million, or 48 cents a share, a year earlier. Revenue rose 6 percent, to more than $9.07 billion, largely because of surging advertising sales and affiliate payments at ESPN and cable channels like ABC Family.

Income for Disney’s television operation rose 17 percent, to $1.5 billion, offset by increased rights costs at ESPN, including for college bowl games. Robert A. Iger, Disney’s president and chief executive, speaking on a conference call with analysts Tuesday, sought to calm concerns about increasing programming costs at ESPN but also said that it would not be shy about pursuing expensive new content deals.

“ESPN certainly plans to look at the Olympics seriously,” Mr. Iger said.

Disney’s consumer products division was another bright spot in the quarter. Its operating income increased 7 percent, to $142 million, because of improvements at Disney retail stores.

Mr. Iger was upbeat about the future. He noted that the television advertising market was booming and that even ABC, where ratings had eroded, was expected to fare well in the coming upfront advertising period, when commitments for ad spending are made. At the theme parks, an end to price discounts put in place at the height of the recession could increase per-capita spending in the high-volume summer.

And Walt Disney Studios has several movies on deck that are expected to be blockbusters, including “Pirates of the Caribbean: On Stranger Tides” and “Cars 2,” both of which have enormous amounts of related retail merchandise.

Article source: http://feeds.nytimes.com/click.phdo?i=dd277ea60a336a77b493650a1701d3b6

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