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Disney Grows Quarterly Net Income By 12 Percent

Disney Logo - H 2011

UPDATED: The conglomerate says the studio and interactive entertainment are the two segments that didn't grow revenue in the most recent quarter.

Disney reported that net income rose 12 percent in the quarter ending Dec. 31 to $1.46 billion on revenue that was up 1 percent to $10.78 billion, news that initially sent the stock higher in after-hours trading on Tuesday though the gains quickly evaporated.

Disney blew past profit estimates, earning 80 cents per share while analysts expected about 71 cents, but was about $400 million shy of revenue expectations. Disney shares rose 1.3 percent during the regular session to $40.98 though most of the gain was wiped out after the closing bell.

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Revenue rose at three of Disney's five segments, one of the exceptions being studio entertainment  where revenue dipped 16 percent to $1.62 billion.

Disney blamed timing and lower DVD volumes for sinking studio revenue. In the year-ago quarter, Disney had Tangled and Tron: Legacy in wide release while in the most recent quarter it had The Muppets. 

Disney also said the studio segment was hurt by falling sales of DVDs worldwide, though rising Blu-ray sales helped to stem the bleeding. Comparisons were also a problem, given that a year ago Toy Story 3, Beauty and the Beast, A Christmas Carol and The Sorcerer's Apprentice were selling well.

Even with falling revenue the studio managed to grow operating income by 10 percent to $413 million, in part due to lower costs associated with having fewer theatrical releases.

The standout segment during Disney's first fiscal quarter was parks and resorts, where revenue rose 10 percent to $1.62 billion and operating income grew 18 percent to $553 million. For the growth, Disney credited the popularity of its cruise line and its domestic theme parks. In a sign that the U.S. economy is on the mend, Disney said consumers were paying higher prices to enter the theme parks and, once inside, were shelling out more money to purchase food and other items.

Media networks, which is Disney's largest segment based on sales and profit, grew its revenue 3 percent to $4.78 billion and operating income 12 percent to $1.19 billion. 

As per usual nowadays, media networks benefited from the immense popularity of ESPN and worldwide Disney Channels. Cable, in fact, grew revenue 8 percent to $3.31 billion and operating income 25 percent to $967 million while broadcasting revenue sunk 7 percent to $1.47 billion and net income there fell 23 percent to $226 million.

Lower sales of political advertising hurt the broadcast unit but the absence of costs associated with The Oprah Winfrey Show helped a bit.

Speaking to analysts during a conference call Tuesday, Disney CEO Bob Iger declined to comment on published reports that Disney is considering a partnership with Univision to create an English-language cable news network that would compete with MSNBC, CNN and Fox News Channel. The channel would allegedly launch prior to the November election for U.S. president.

Revenue at consumer products rose 3 percent to $948 million while operating income was flat at $312 million. Revenue at interactive media fell 20 percent to $279 million while its operating loss more than doubled to $28 million, the diminishing results being blamed on the strength of video games Epic Mickey, Tron: Evolution and Toy Story 3 a year ago.