Disney's Q3 profit down 26%
Every segment saw a revenue declineAll five segments of Disney's business took revenue hits during the conglomerate's fiscal third quarter, and the studio's operating income turned to a loss despite the best efforts of "Up" and "Hannah Montana: The Movie."
Disney said Thursday that net income fell 26% to $954 million on revenue that dipped 7% to $8.6 billion.
Although revenue fell across the board, media networks -- the biggest unit and home to Disney Channel, ESPN and ABC -- fared best. Revenue there dropped 2% to $4 billion.
Disney's next-largest unit, parks and resorts, experienced a 9% revenue decline to $2.8 billion. Studio entertainment fell 12% to $1.3 billion, consumer products was down 10% to $510 million and interactive media dropped 20% to $113 million.
Operating income fell everywhere except at the money-losing interactive division, where a $91 million loss last year improved to a $75 million loss this time around.
The studio deteriorated from $97 million last year to minus-$12 million this year, with last year's films in theaters, on DVD and on television beating out this year's crop. A year ago, Disney's big drivers were "National Treasure 2: Book of Secrets," "Enchanted," "The Game Plan" and "Ratatouille."
During a conference call with analysts, CEO Robert Iger bemoaned a soft DVD market -- consumers aren't "building libraries like they used to," he said -- but added that rental remains good. Besides, he said, Disney sells more DVDs than just about any other studio because it makes films that families are "better off owning," given that they are replayed in homes multiple times.
Iger said "G-Force" is a hit with audiences but is not translating to a financial windfall because it was an expensive film to make, resulting in, as Disney put it in its earnings release, "write-downs and marketing expenses for future-quarter releases."
The exec said "Up" could be on its way to becoming the second-biggest Pixar film after "Finding Nemo," but he added that "we don't put it in the franchise category," so it won't be the huge multiplatform asset that "Toy Story" or "Cars" has become.
He called "The Proposal," starring Sandra Bullock, a "good value for the money" and praised next year's film slate that includes Tim Burton's "Alice in Wonderland," "Prince of Persia: The Sands of Time" and "Toy Story 3."
As in the past, Iger made vague references to an upcoming online subscription service that will start out with Disney movies only.
He said Disney XD, a cable TV destination targeting boys, has enjoyed "pretty substantial" ratings growth, albeit off a small base.
CFO Tom Staggs said the TV advertising environment is stabilizing. Cable vastly outperformed broadcasting during the quarter, with operating income falling 8% at the former compared with a 34% drop at the latter. "Grey's Anatomy" and "Criminal Minds," though, enjoyed robust international sales for ABC Studios.