Disney 4Q beats Street on pay TV growth
LOS ANGELES—Disney said Thursday that its fourth-quarter net income rose 30 percent, thanks to higher spending by theme park visitors and growth at pay TV operations ESPN and Disney Channel.
Advertising revenue was up, but like other media companies, The Walt Disney Co. maintained a cautious outlook. The price for TV ads booked at the last minute "has slowed slightly these last few weeks," Chief Executive Bob Iger told analysts on a conference call.
Even as analysts digested the record-breaking profit and revenues for the year, they kept an eye on a potential slowdown.
"There's been a little bit of cautious commentary on the slowdown," said Janney analyst Tony Wible. "The bigger question is, is the dip we're seeing here a near-term thing or is this a bigger issue?"
Net income in the July through September period rose to $1.09 billion, or 58 cents per share. A year ago, Disney posted net income of $835 million, or 43 cents per share, for the same period.
Excluding one-time items, adjusted earnings came to 59 cents per share, beating the 54 cents expected by analysts polled by FactSet.
Revenue rose 7 percent to $10.43 billion, also beating the $10.37 billion expected by analysts.
Disney's movie studio profits grew, helped by the theatrical re-release of "The Lion King" in 3-D. The growth occurred in spite of lower revenue in home entertainment. Consumer products sales and profits grew and the company trimmed losses at its interactive unit.
Its pay TV segment revenue grew 11 percent to $3.47 billion, lifted by the spread of the Disney Channel overseas. ESPN was buoyed by 8 percent higher fees paid by distributors and 7 percent higher ad revenue, when excluding the impact of the FIFA World Cup, which boosted viewership a year ago. The ad growth is slower than the 9 percent gain in the previous quarter and the 23 percent growth in the quarter before that.
Revenue for Disney's ABC broadcast division rose just 4 percent to $1.33 billion, as local TV station ad sales were up in the single-digit percentages when excluding a bump in political spending a year ago. Last-minute buys at the ABC network were priced 25 percent higher than the bulk buying season in the spring. Meanwhile, profits grew by more than a third, due in part to cost savings from producing fewer scripted shows in prime-time and more reality programs.
The conglomerate's theme parks saw revenue grow 11 percent to $3.13 billion. Higher ticket prices and hotel rates in addition to higher food and merchandise sales contributed to the growth. Attendance at its U.S. theme parks rose 1 percent, even though the company has been scaling back discounts that it put in during the recession in 2008 and 2009.
Analysts had been looking for any sign that the weak economy would hurt consumer spending, "but there was no sign of that in the parks," said Evercore analyst Alan Gould. "The stock price should work a little higher from here."
The company's net income for its full-year fiscal 2011 grew 21 percent to a record $4.8 billion, or $2.52 per share. Annual revenue also rose 7 percent to a record $40.89 billion.
Disney's shares rose $1.02, or 3 percent, at $35.66 in after-hours trading Thursday following the release of the earnings report. They had closed the regular session up 85 cents, or 2.5 percent, at $34.64.