Disney downcast

'Sobering outlook' despite record year

Disney reported record full-year revenue of $37.8 billion on Thursday but forecasted tough times ahead, noting a sudden and dramatic turn for the worse in TV advertising sales and theme park bookings.

The company said net income fell 13% to $760 million in the fiscal fourth quarter compared with a year ago on revenue that climbed 6% to $9.45 billion.

The standout unit for Disney was consumer products, where revenue jumped 41% to $812 million and operating income was up 14% to $176 million.

The laggard was studio entertainment, where revenue slumped 5% to $1.45 billion and operating income was off 42% to $98 million.

Disney's largest segment, media networks, saw revenue climb 4% to $4.21 billion, with operating income flat at $1.06 billion.

Revenue at the remaining segment, parks and resorts, was up 7% to $2.97 billion, though operating income there fell 4% to $412 million.

The results mostly fell short of Wall Street's expectations, so Disney shares — down 29% already this year — fell another 4% after the closing bell Thursday, when the results were released.

During a conference call, CEO Bob Iger gave what he acknowledged was a "sobering outlook" and promised cost-cutting. "Significant savings will be delivered," he said.

"Consumer confidence is the lowest we've seen in over three decades," Iger said, "and even the best product out there is feeling the effect."

Not that it's all dire. Iger said Disney will still invest in such strong entertainment content brands as "Hannah Montana," "High School Musical," "Cars," the Jonas Brothers, princesses and fairies.

As for the latter, he said the "Tinker Bell" DVD sold 2 million copies in seven days in the U.S., indicating another lucrative franchise has likely been launched.

The poor showing from the film studio can be traced to boxoffice underperformers "Miracle at St. Anna" and "Swing Vote" and to marketing expenses for "Beverly Hills Chihuahua."

For the fiscal year, Disney's overall revenue rose 7% to that record $37.8 billion. Media Networks was up 7% to $16.12 billion; parks and resorts climbed 8% to $11.5 billion; studio entertainment fell 2% to $7.35 billion; and consumer products was up 26% to $2.88 billion.

Also hurting the studio's fiscal-year performance was the fact that DVD sales for "Ratatouille" and "Pirates of the Caribbean: At World's End" fell short of last year's "Cars" and "Pirates of the Caribbean: Dead Man's Chest." (partialdiff)