Pirates, kids, cars help boost Disney Q4 profits
EmptyUPDATED: 9:20 p.m. Nov. 8, 2007
Disney reported a fiscal fourth-quarter jump in profits of 12%, buoyed by two feature films and a couple of children's TV franchises that top executives say will contribute to the bottom line for years to come.
Those properties -- the Pirates of the Caribbean, Hannah Montana and High School Musical franchises along with the "Cars" movie -- have meaningfully boosted sales across all of Disney's businesses, including the studio, theme parks and merchandise.
"HSM" is the most prominent example of Disney's ability to "cut through an increasingly cluttered media landscape," CEO Bob Iger told analysts Thursday. He added that "Hannah" can now be considered "another bona fide cultural phenomenon."
As for "Cars," the movie has, of course, sequel potential, and more than 85 million die-cast toys based on the film have sold so far. In addition, an upcoming Cars Land is the cornerstone for a massive upgrade at the California Adventure theme park.
The CEO also discussed the company's television strategy during the WGA strike that began Monday, including holding back on shows already in the can and beefing up holiday programming between now and Christmas. Reality shows, news specials and movies are lined up to replace shows impacted by the writers strike.
"The network is well prepared," he said, referring to ABC.
"If the writers stay out for a four-week-plus period of time, it will definitely have an impact upon ABC's schedule," he said.
He also warned of a trickle-down effect to the economy at large if the strike persists. "Southern California will feel it first and hard," he said.
Net income in Disney's fiscal fourth quarter rose from $782 million in the year-ago frame to $877 million. Excluding one-time items, the company earned 42 cents per share, about a penny better than Wall Street expected.
The company hoisted revenue to $8.93 billion, 3.2% more than last year but a smidgen shy of Wall Street expectations. Disney shares, which advanced fractionally to $33.63 during regular trading Thursday, fell 1.4% in after-hours trading.
Operating income, an important metric for Disney, was up 14% to $1.82 billion, the star there being a 25% surge to $1.07 billion for the media networks business, which includes ESPN, Disney Channel and ABC.
Strong showings from ESPN, in part because of NASCAR, and international Disney Channels got much of the credit, along with big sales of the "HSM" DVD.
DVD sales of "Desperate Housewives," "Grey's Anatomy" and "Lost" also boosted results for ABC Studios, while costs at the Internet group and from the shuttering of the Disney-branded mobile phone service hurt broadcasting results.
Studio entertainment was a laggard with $170 million in operating income, down 21% from the year before, when "Pirates of the Caribbean: Dead Man's Chest" was dominating.
The Disney music business helped the studio, primarily through sales of "Hannah" and "HSM" albums and digital downloads.
As for revenue regarding the individual segments, media networks was up 14% to $4.02 billion; parks and resorts was up 10% to $2.79 billion; studio entertainment was down 24% to $1.53 billion; and consumer products was up 5% to $590 million.
For the full fiscal year, Disney reported revenue of $35.51 billion, up 5%, and operating income of $7.83 billion, up 23%. Net income for the year was $4.69 billion, up from $3.37 billion a year ago.