Disney Quarterly Earnings Beat Expectations

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Disney CEO Bob Iger

The conglomerate's interactive unit swung to an operating profit after years of losses.

Walt Disney reported quarterly earnings that beat the expectations of analysts on Thursday, helped by the Pixar movie Monsters University, strength in theme parks and the enduring popularity of ESPN despite new competition from Fox Sports 1.

Disney said it earned 77 cents per share on revenue of $11.6 billion, whereas Wall Street had predicted the company would earn about 75 cents per share in its fiscal fourth quarter, up from 68 cents a year earlier, on a 6 percent rise in revenue to $11.4 billion.

Ahead of the earnings results on Thursday, Disney shares dropped 3 percent to $67.18. After the closing bell, when Disney released its earnings, the stock fell another 3 percent.

In a rarity, Disney showed operating income for its interactive segment, swinging to a positive $16 million from a negative $76 million in the year-ago quarter. Revenue for that segment more than doubled to $396 million, mostly due to an enthusiastic consumer response to the Disney Infinity video game. Disney CEO Robert Iger told analysts during a conference call Thursday that the company has sold more than 1 million Infinity starter packs.

Revenue at the media networks segment was up just 1 percent in the quarter to $4.9 billion, though operating income sunk due to "a reduction of $172 million in recognition of previously deferred ESPN affiliate fee revenues related to annual programming commitments," Disney said.

Parks and recreations saw an 8 percent rise in revenue to $3.7 billion and a 15 percent increase in operating income. Guests spent more at the Disneyland Resort in California, but attendance was down compared with last year, when customers flocked to the then-new Cars Land at Disney California Adventure.

Studio entertainment revenue rose 7 percent to $1.5 billion and operating income was up 35 percent, with Monsters University outperforming Brave last year, though The Lone Ranger was a drag on the quarter.

During the conference call, Iger boasted that with The Avengers and Iron Man 3 Marvel Studios became the first studio in history to release two $1 billion movies in a row.

Consumer products saw a revenue increase of 14 percent to $1 billion and an increase in operating income of 30 percent, with the acquisition of Lucasfilm helping out. Also strong during the quarter were sales of items related to Planes, Monsters University and merchandise based on shows on the Disney Junior cable channel.

"The success of franchises like Sofia the First, Jake and the Never Land Pirates and Doc McStuffins have made Disney Junior an important growth driver for our merchandise licensing business," Iger said.

E-mail: Paul.Bond@THR.com