Disney Is On the Rice
Disney just posted excellent earnings performance. For its third quarter ended June 30, the Burbank, Californian, media giant earned $604 million, e.g. 29 cents a share. That's up from the year-ago $502 million, or 24 cents a share and revenue jumped to $7.47 billion from $6.38 billion a year earlier. The latest-quarter earnings included the effect of a 2-cent-a-share restructuring charge. The numbers were ahead of the Thomson First Call analyst consensus estimate. The company mentioned it is likely to be in the market with further stock buybacks in the near future, and planned a "modest and sustainable" dividend increase this year. "The continued growth in our earnings this quarter, led by ESPN and our other cable networks, positions us well to deliver more than 50% growth in earnings for the year, as we predicted last quarter," said CEO Michael Eisner. "Equally important, our strong earnings and cash flow growth demonstrate the overall strength of our businesses. During the recent downturn, we have remained focused on managing the company for long term performance and extending the Disney legacy and we believe that the positive trends in our businesses validate that approach."
Earnings before interest and taxes, a financial measure favored by Disney and its analysts, amounted to $1.02 billion for the latest quarter, compared to expectations of $1.12 billion.
Media networks revenue grew 8% to $2.93 billion, while operating income for the segment grew 15% to $673 million. Parks and resorts -- Disney's second largest unit -- saw revenue grow 32% to $2.29 billion, while operating income grew 20% to $421 million. Within the media networks unit, the company's troubled broadcasting business showed an operating income decline of 21% to $144 million, while cable networks' operating income grew 31% to $529 million.
Acknowledging what he termed a "cold streak" in the movie business earlier this fiscal year, Eisner spoke confidently of movies in Disney's production pipeline, including numerous sequels to the company's animated co-productions with Pixar, the Steve Jobs-led studio with which Disney has had a public falling out. "Content is alive and well, and I've got my fingers crossed," Eisner said. Asked to comment about the company's increasingly testy relationship with Miramax, Eisner said, "I really don't have to, because it's reported every day in the newspaper."
Helping results in the company's theme park division were the consolidation of Euro Disney and Hong Kong Disneyland. Those properties added $332 million in revenue for the quarter and segment operating income of $15 million. The news comes as Disney seeks to show investors that current management is indeed building shareholder value. Disney shares have languished in recent years under Eisner's leadership, but investors more or less ignored a February hostile bid from Comcast after the company in early March stripped Eisner of his chairman's post and pledged to shore up governance.