Here’s Disney’s Earnings Surprise

The Walt Disney Co. (NYSE:DIS) today reported second-quarter earnings that beat analysts’ expectations due to strength in the company’s core brands, according to Chairman and CEO Robert Iger.

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Disney reported diluted earnings per share of 63 cents, up 29 percent from the year-ago quarter. EPS for the current quarter included a gain related to the company’s acquisition of a controlling interest in UTV Software Communication Limited, for which the company logged a $184 million non-cash gain which together with $38 million in restructuring and impairment costs resulted in a net 5-cent benefit to EPS. Excluding these items, EPS for the quarter increased 18 percent to 58 cents, compared to 49 cents in the year-earlier quarter.

“We’re incredibly optimistic about our future, given the strength of our core brands, Disney, Pixar, Marvel, ESPN, and ABC, and our extraordinary ability to grow franchises across our businesses, such as The Avengers, which shattered domestic box office records with a $207.1 million opening weekend for a global performance of more than $702 million to date,” said Iger.

Diluted EPS for the six-months ended March 31 was $1.43, compared to $1.16 in the year-earlier quarter. The six-month EPS included gains on the sales of Miramax and BASS  ($75 million) and restructuring and impairment charges ($12 million), which together had a net negative impact on EPS of 1 cent. Excluding these items, EPS for the six-month period increased 18 percent to $1.38, compared to $1.17 in the year-ago period.

Media Networks revenues for the quarter increased 9 percent to $4.7 billion, with nearly twice as much coming from the company’s cable networks than from broadcast. Operating income at Cable Networks increased $143 million to $1.5 billion for the quarter due to growth at ESPN and, to a lesser extent, at the domestic Disney Channels. Operating income at its Broadcasting segment increased $62 million to $229 million due to lower programming and production costs and higher advertising revenue.

Parks and Resorts revenues for the quarter increased 10 percent to $2.9 billion, with operating income increasing 53 percent to $222 million, driven by increases at Tokyo Disney Resort, Hong Kong Disneyland Resort, and domestic parks and resorts. Lower revenue at Disneyland Paris partially offset gains. High operating income at domestic parks and resorts was driven by increased attendance and guest spending.

Meanwhile, Studio Entertainment revenue fell 12 percent to $1.2 billion, thanks to losses on the film John Carter, which tanked at the box office. Consumer Products revenue increased 8 percent to $679 million and operating income increased 4 percent to $148 million. Higher operating income was primarily due to an increase in Merchandise Licensing, partially offset by a decrease in retail business. Interactive Media revenues increased 13 percent to $179 million, driven by social and console game results.

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