Disney Profits Up 54% in Q1

"Toy Story 3"

UPDATED: Theme parks division growth, strong ESPN ad sales boost bottom line; studio entertainment segment revenue flat.

Disney on Tuesday reported a 54% increase in profit in its fiscal first quarter, beating Wall Street's expectations and sending the stock past a 52-week high during the after-hours trading session.

Thanks to strong affiliate and ad sales at ESPN and the Disney Channels -- as well as renewed growth at its theme parks division and big sales of everything related to Toy Story 3 -- Disney earned $1.3 billion in the quarter, up from $844 million in the same frame last year. Revenue rose 10% to $10.7 billion.

Disney posted revenue gains in four of its segments, while the fifth, studio entertainment, was flat at $1.9 billion. Media Networks, the biggest segment, grew revenue by 11% to $4.6 billion; parks and resorts was up 8% to $2.9 billion; consumer products grew 24% to $922 million; and interactive media soared 58% to $349 million.

Four segments also grew their operating income, the exception being interactive media, which posted a $13 million loss compared with $10 million in red ink in the same quarter last year.

Operating income at media networks grew 47% to $1.1 billion; was up 25% to $468 million at parks and resorts; grew 54% to $375 million at studio entertainment; and jumped 28% to $312 million at consumer products.

During a conference call with analysts, Disney CEO Bob Iger noted that DVD sales in the industry are still weak but that the company's rerelease of Beauty and the Beast scored well. And he noted that Disney's direct-to-DVD releases are typically and unusually strong sellers.

Iger also praised Tangled for its near $500 million worldwide box-office tally, with an opening in Japan still to come. He called animation "the heart of Disney" and said Tangled has successfully introduced Rapunzel to its popular line of princesses.

Toy Story 3, the highest-grossing animated film of all time with 1.06 billion at the global box office, is a DVD hit -- more so than Up was during the same quarter a year ago -- and helped Disney's studio to score a healthy profit increase even as revenue remained flat.

Toy Story 3 also was instrumental in buoying the performance of the consumer products unit, as was the inclusion of Marvel and its superheroes, which Disney didn't have in the year-ago quarter.

And the Toy Story 3 video game boosted sales for the interactive media division, as did Epic Mickey, though that unit still could not manage a profit.

Disney said ESPN benefited from the addition of college football Bowl Championship Series games and the shifting of the Rose Bowl to ESPN from ABC. The latter led to lower costs at ABC but also lower advertising revenue.

Disney said guests at its theme parks and hotels spent more than they did a year ago but that the January launch of the newest cruise ship, the Disney Dream, drove up operating costs at the parks and resorts unit.

Disney said that its $663 million sale of Miramax in December didn't do much for the bottom line as that gain was offset by taxes and restructuring charges.

Disney shares rose fractionally during the regular session to $41.18 on Tuesday then were up another $1.42 after the closing bell.