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Walt Disney Co. CEO Robert Iger gave a shout-out Wednesday to teen star Miley Cyrus as he announced strong financial growth across most of the conglomerate’s business units.
Beyond his enthusiasm for Cyrus and her hot-selling albums, Iger praised Disneyland’s new “Finding Nemo” submarine ride, gushed over the company’s Club Penguin acquisition and predicted long-term success for “Ratatouille” even though the movie hasn’t performed as well as other Disney/Pixar films.
He also promised that a “High School Musical 2” back-to-school marketing tie-in with Wal-Mart will be “the biggest we’ve ever seen.”
Disney posted fiscal third-quarter income of $1.18 billion, up from $1.13 billion a year ago, as revenue rose 7% to $9.05 billion.
The company enjoyed a 23% surge to $1.36 billion in operating income at its media networks division, primarily thanks to higher affiliate revenue at ESPN and Disney/ABC Cable Networks.
Operating income rose 12% at consumer products and 13% at parks and resorts. At minus 20%, studio entertainment was the laggard because of tough comparisons with last year’s big-selling DVD “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe.”
As for revenue, the once-ailing consumer products division was the star, garnering $549 million in sales, 23% more than last year. Media networks was up 6% to $3.82 billion; parks and resorts was up 6% to $2.9 billion; and studio entertainment rose 4% to $1.78 billion.
Consumer products benefited from the company’s video game unit, dubbed Disney Interactive Studios, especially thanks to its self-published game based on “Pirates of the Caribbean: At World’s End.”
Disney CFO Tom Staggs also said that “Cars” merchandise is selling better than any merchandise based on a Disney movie since 1994’s “The Lion King.”
Deflecting criticism from an analyst who noted that the $200 million in domestic boxoffice for “Ratatouille” is disappointing relative to other Disney/Pixar movies, Iger said “it is going to be an extremely successful global property.”
He said “Ratatouille” is being slowly released in international markets in order to stay out of the way of “Shrek the Third,” from DreamWorks Animation SKG, and “Harry Potter and the Order of the Phoenix,” from Warner Bros. Pictures.
He also said that “Ratatouille” and whatever spinoffs it might spawn will have a long shelf life — perhaps several decades — as has been the case with “Peter Pan” and “The Little Mermaid.”
Staggs also alluded to several more Pixar-based attractions coming down the pike at Disney theme parks, though he wasn’t specific, and Iger was enthusiastic about international sales of DVDs based on TV shows.
“That’s been really interesting in terms of growth potential,” Iger said.
Disney bought 180 million shares of its stock so far this year for $6.2 billion, Staggs said. Disney shares were up 2.5% on Wednesday to $33.83 but fell fractionally in after-hours trading once quarterly earnings were announced.
Disney shares have advanced 16% in the past 52 weeks but are down 1% so far this year.
Goldman Sachs analyst Anthony Noto said Disney results exceeded his expectations, and he reiterated his “buy” recommendation Wednesday and $45 price target on shares.
“We were particularly encouraged with the quality of this quarter’s results,” said the analyst, “as the outperformance was not driven by film or one-time benefits but by organic factors such as content strength at media networks and margin expansion at theme parks.”
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