Despite 'John Carter,' Disney Beats Quarterly Earnings Expectations

Disney Logo - H 2011

Disney Logo - H 2011

The film studio loses money and sees revenue decline, but other segments make up the difference and the stock trades higher after the closing bell.

The Walt Disney Co. beat earnings expectations in its fiscal second quarter, reporting a 6 percent boost in revenue to $9.6 billion and net income that jumped 21 percent to $1.1 billion.

The film studio was the only unit to grab less revenue during the quarter than it did during the same quarter a year ago. It was also one of only two segments -- the other being interactive media -- to lose money during the quarter.

Citing the dismal performance of John Carter -- a $275 million movie, according to Disney, that took in just $271 million at the worldwide box office -- the film studio's revenue dropped 12 percent to $1.2 billion and turned in an $84 million operating loss. In the same quarter last year, the studio reported $77 million in operating income.

In after-hours trading, Disney was up 1 percent after having closed 1 percent higher at $44.30, just shy of the stock's 52-week high of $44.50.

In its earnings release, CEO Robert Iger expressed confidence for the current quarter, partially because Marvel Entertainment's The Avengers "shattered domestic box-office records with a $207.1 million opening weekend for a global performance of more than $702 million to date."

On a conference call with analysts, Iger called Avengers "a great illustration of why we like Marvel so much." Then -- as if there were any doubts -- the CEO announced that a sequel to the blockbuster film is in the works with a release date "to be determined."

Multiple analysts asked about the licensed-product opportunities surrounding Avengers. Iger said there is stronger demand for Hulk toys since the release of the film last week, and added that there are "multiple opportunities to mine these great characters."

Iger said there are plans, for example, to add Avenger-based attractions to theme parks where existing deals with competitors make that possible. 

Iger shot down the possibility of purchasing the film rights to other Marvel characters -- Fox's rights to X-Men, for example -- on the basis that there are so many in the Marvel stable to begin with that isn't the need for more.

Iger also expressed enthusiasm for Brave, which is due June 22 and will feature Pixar's "first female hero." 

Disney's biggest segment, media networks, posted a 9 percent rise in revenue in the quarter to $4.7 billion and operating income that was up 13 percent to $1.7 billion. Cable TV operating income rose 11 percent to $1.5 billion while broadcast TV was up 37 percent to $229 million. The leap in broadcast was partially due to the absence of costs associated with The Oprah Winfrey Show.

Disney's parks and resorts segment saw revenue rise 10 percent to $2.9 billion and operating income was up 53 percent to $222 million. Helping to drive favorable comparisons was that last year's results were hurt by an earthquake and tsunami near Tokyo Disney Resort.

Consumer products revenue rose 8 percent to $679 million and operating income was up 4 percent to $148 million. Revenue at interactive media was up 13 percent to $179 million and the unit posted an operating loss of $70 million, an improvement over an operating loss of $115 million a year ago.