Disney's Q3 boosted by TV operations profit

Power Rangers sale added $43 million to coffers

A dramatic turnaround at its film studio and surging profit at its television operations helped Disney post strong financial results in its fiscal third quarter.

The company said Tuesday that overall revenue rose 16% to a little more than $10 billion while net income leapt 40% to $1.3 billion.

The overall results included a positive $43 million from the sale of the Power Rangers franchise and a negative $36 million in restructuring and impairment charges.

Every segment showed improving sales during the quarter, with Interactive Media, by far Disney's smallest business, leading the charge by growing its revenue 74% to $197 million. The unit, though, lost $65 million, up from a loss of $75 million a year earlier.

Media Networks, Disney's largest business, grew revenue 19% to $4.7 billion and grew its operating income by 43% to $1.9 billion. As is usual nowadays, cable did the heavy lifting, notching 28% growth in revenue to $3.3 billion and a 50% gain in operating income to $1.7 billion while broadcasting posted far more muted gains of 4% and 2%, respectively.

Studio Entertainment, the third largest of Disney's five segments, posted 30% growth in revenue to $1.7 billion and managed to reverse last year's $12 million loss by posting $123 million in operating income.

On a conference call with analysts, CEO Bob Iger noted that three of the year's Top 5 global film hits were from Disney: "Alice in Wonderland," "Toy Story 3," from its Pixar acquisition, and "Iron Man 2," from its Marvel acquisition.

Merchandising reached "new heights" due to "Toy Story 3," Iger said. That unit, called Consumer Products," posted a 19% revenue gain to $606 million and a 22% gain in operating income to $117 million.

Other Disney properties earning a mention by Iger during the call included "Phineas and Ferb" from Disney XD and "Good Luck Charlie" from the Disney Channel, along with "The Secret LIfe of the American Teenager" and "Pretty Little Liars" on ABC Family, ESPN World Cup soccer coverage and the new "World of Color" water show, which he called "the first of our next-generation of attractions" at Disney's California Adventure Park.

The company did not take a charge for its loss against Celador over "Who Wants to be a MIllionaire" profits, Iger said, because the company intends on fighting that legal battle until the decision is reversed.

Iger said Disney is shifting some capital away from developing video games for consoles so it can invest more on online, casual and social-networking games. Its "World of Cars" online destination, in fact, officially opens today.

Of Disney's five segments, only Parks and Resorts posted declining operating income during the quarter. It dropped 8% to $477 million even as revenue rose 3% to $2.8 billion.

Disney CFO Jay Rasulo said the country is in an "uncertain place" in terms of the overall economy, a fact that has weighed on Parks and Resorts more than other Disney business units.

Iger said Disney will continue to tinker with movie distribution windows, including an "aggressive" premium VOD window, though he declined to offer specifics.

He said he talks to his top shareholder, Apple CEO Steve Jobs, regularly, and they agree that the iPad is a "game-changer," but one that offers more opportunity than threat.

Online distribution in general, in fact, won't meaningfully cannibalize Disney's existing TV business, Iger predicted. Declining DVD sales, industry wide, remains "challenging," Iger said. "Collectibility is not as important as it once was," he said.