Significant gains by the ABC broadcast network and a good performance by Walt Disney’s theme parks offset a decline in film studio earnings, enabling the US media and entertainment group to report a 12 per cent gain in second-quarter net profits on Tuesday.
Net income in the quarter ended April 1 increased to $733m, or 37 cents per share, compared with $657m, or 31 cents per share, a year ago.
Profits were boosted in particular by higher attendances at Disney’s two domestic theme parks and by increases in TV advertising rates and viewers spurred by the success of shows such as Lost and Desperate Housewives.
Revenues increased to $8.03bn, from $7.83bn in the year-ago quarter, but were held back in part by the performance by the film studio where Chicken Little trailed the previous success of The Incredibles.
Robert Iger, Disney chief executive, said: “The strategic initiatives we pursued during the quarter help position us for future creative success, new opportunities to reach consumers with our products, and long-term value creation for our shareholders.”
Operating income from Disney’s media networks segment grew by 20 per cent to $969m during the quarter on revenues that increased by 18 per cent to $3.6bn driven by strong performance at the broadcasting unit.
Income from Disney’s theme parks increased by 17 per cent to $214m despite a slow start at the new Hong Kong Disneyland theme park, about which Disney executives insisted they were not overly concerned. In a conference call with analysts, Tom Staggs, chief financial officer, said higher petrol prices were not expected to have a big effect on the theme park business.
In contrast, studio entertainment revenues fell by 22 per cent to $1.8bn, and operating profits at the movie studio fell by 39 per cent to $147m. A decline in worldwide home entertainment was partially offset by increases in domestic theatrical motion picture distribution and worldwide television distribution.
Last week, Disney completed its $8.1bn acquisition of Pixar Animation Studios, a move giving Steve Jobs, Pixar’s founder and Apple’s chief executive, a 6.3 per cent stake in the company and a seat on its board.
Mr Staggs said the Pixar acquisition would dilute fiscal 2006 earnings by about 10 cents a share. The impact would be nearly equal in its fiscal third and fourth quarters. However, he said that, overall, the company continued to expect double-digit earnings growth this year.
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