ESPN, Resorts Boost Disney’s Profits
Net income rose to $1.46 billion (0.80 cents per share), up from $1.3 billion (0.68 cents per share) from the previous year, beating the 71-cent average estimate. Sales rose 0.6 percent to $10.8 billion for the quarter, missing average estimates of $11.2 billion.
So how did Disney’s sports networks and resorts contribute to first-quarter growth? ESPN brought in higher fees from pay-TV operators while a rise in consumer spending, greater attendance, and increased prices at Disney’s theme parks also contributed to growth.
Combined, these two groups produced 77 percent of the company’s 2011 operating income and 60 percent of sales, according to Bloomberg.
The future looks bright for pay-TV fees — the area will continue to grow due to agreements with Comcast and other providers, CEO Robert Iger said in a conference call. The company doesn’t see pay-TV subscribers canceling their cable services as more content is offered online, he added. Disney also doesn’t plan to sell individual channels.
Cable revenue rose 8 percent in the quarter to $3.31 billion with ESPN’s ad revenue relatively unchanged due to the work stoppage in professional basketball and college football bowl games that took place in January this year.
Disney’s ABC broadcast unit, which was also part of the Comcast (NASDAQ:CMCSA) deal, reported a 23 percent decline in profit to $226 million, with sales falling 7 percent to $1.47 billion. Lower political advertising and higher marketing costs were said to have contributed to the decline.
Parks and resorts profits increased 18 percent to $553 million with a 10 percent revenue increase to $3.16 billion. In 2011, the company increased ticket prices and launched its new Disney Dream cruise ship.
“Generally the numbers at our parks are very encouraging,” Iger told CNBC. “We’ve had increased attendance. We’ve had increased spending when people come. I think that says a lot about the American consumer.” Park reservations are “pacing up mid-single digits” in percentage terms from the previous year, according to CFO Jay Resulo, while “booked rates are also up mid-single digits.”
To contact the reporter on this story: at firstname.lastname@example.org
To contact the editor responsible for this story: Damien Hoffman at email@example.com